Irish farm incomes staged a significant increase in 2005, though much of this was due to the carryover of more than €600m (£414m) of direct payments from the previous year as the country switched to the new single farm payment.

According to figures from the Central Statistics Office, total farm income rose by almost 23% last year to €508m (£350m).

Cattle output was up €70m (£48m), though cereal and milk output fell by €56m (£39m) and €82m (£57m), respectively.

But the Irish Farmers’ Association says this is misleading, pointing to the carryover of 2004 CAP payments.

“Leaving this factor aside, the underlying economic trends facing farmers were unfavourable in 2005, as output prices increased by only 0.5%, while input prices increased by 4.3%, due mainly to higher fertiliser and energy prices,” said IFA president Padraig Walshe.

“With the SFP fully in place, the key determinant of income in 2006 will be the balance between product prices and production costs.

Farming needs to be profitable independently of the SFP if the level of production is to be sustained.”