The agricultural sectors in Iceland (excluding pig and poultry farming) reported earnings of approximately 2.5 billion ISK in 2023. The total profit was nearly entirely due to increased earnings in sheep farming. Total revenue also increased by roughly 8% and in line with the year’s inflation. However, there were clear signs of the impact of higher interest rates as financial expenses increased by 16% with subsequent impact on earnings and financial position. Lastly, the number of farms continued to decline. In 2023 there were nearly 2,500 entities operating in the five agricultural sectors or 4% fewer than the year before.
Revenue growth in line with inflation
Total revenue of the five agricultural sectors increased by nearly 4.8 billion ISK in 2023 to be roughly 62.7 billion compared with 57.9 billion in 2022. This was an increase of 8.3% and moderately less than in 2022 when revenues rose by nearly 13%. The revenue rise was also in line with the year’s inflation but the consumer price index (CPI) increased by 8.8% in 2023.
Most of the increase in revenue can be attributed to dairy farms whose sales increased by nearly 2.5 billion ISK in 2023 with approximately 1.3 billion coming from farms in the South region. The dairy farm sector was also the largest sector with total revenue of 33 billion ISK or roughly half of the total. Sheep farm revenue also increased by 840 million ISK where 619 million came from the North region. Lastly, revenue in growing of crops and plant propagation increased by roughly 1 billion ISK in 2023. Revenue of dairy farms, other cattle farms and sheep farms increased in all regions except in the West and the Capital region with the greatest increase occurring in the North and South. Overall, revenues increased in all sectors of agriculture.
Increased profit in sheep farming
Total earnings in agriculture also improved in 2023 with the sectors reporting a total profit of 2.5 billion ISK or 27% more (529 million ISK) than in 2022. This was nearly entirely due to improved earnings of sheep farms whose profits increased by 505 million ISK. Thereof, the Northeast region experienced an improvement in earnings of 317 million ISK. All sectors reported positive earnings except fur farming. However, profits still decreased in growing of crops and plant propagation and at dairy farms. Dairy farming was nonetheless the most profitable sector in agriculture earning a profit of 1.2 billion ISK in 2023. Overall, earnings improved most in the Northeast region.
Increased financial cost
Operating expenses increased by roughly 6% in 2023 totalling 54 billion ISK compared with 51 billion in 2022. Goods and raw material cost changed relatively little in most sectors, increasing in total by 2.4%. In sheep farming the cost item decreased by 3.1% which furthermore fuelled the rise in profits. Wages also rose in tandem with inflation. Other operating expenses were more prominent, rising by nearly 1.5 billion ISK, along with financial expenses which increased by nearly 16% in 2023. In dairy farming, financial expenses were the main culprit in lower earnings increasing by 22%. In sheep farming the opposite effects occurred as financial cost decreased along with lower indebtedness.
Continued decrease in the number of farms
Lastly, the number of farms continued to decline. In 2023, there were 2,479 entities operating in the five sectors of agriculture or 4% fewer than in 2022 when there were 2,571 operating. Sheep farms experienced the greatest decline in number (-71) but overall there were declines in all sectors except other cattle farming (+1). The number of farms declined in all regions and most in the South. Since 2008 the total number of farms and operating entities in agriculture has declined by 470 or 16%.
About the data
All published figures are preliminary and will be updated at the next release.
Revenue: Breakdown of revenue was discontinued in 2017 due to cessation of the RSK 1.09 tax statement in 2016 that detailed revenue segments.
Classification: Farms with mixed operations are classified according to their revenue, e.g. if the majority of a farm’s revenue comes from sheep farming it is considered to be a sheep farm even though it has significant dairy farming or cattle operations as well.
Number of farms: Data on the number of farms includes all types of tax-filing entities operating in the sector. The data can include entities that had no revenue in the year and only assets or liabilities.