Saturday 20 December 2014

Farm buildings investment jumps 58pc to €450m in 2013

Published 09/07/2014 | 02:30

Much of the money being invested is in dairying.
Much of the money being invested is in dairying.

Investment in farm buildings jumped last year by 58pc to over €450m as confidence in the sector continues to rise.

Total capital investment at farm level is now at one of the highest levels in the last decade, when the boom years of the Farm Waste Management Scheme (FWMS) are excluded. During 2007 and 2008, the FWMS was injecting close to €1bn in grant aid into the sector.

The rate of investment in buildings subsequently collapsed by nearly 90pc to €150m in 2010, but figures from the Department of Agriculture's annual review show that this had almost trebled to over €450m in 2013.

Much of the money is being invested in dairying as the sector gears up for life after quotas next April.

The overall increase in capital investment on farms, including stock, equipment and land improvement showed a slower rate of growth, coming in at just under 10pc higher for 2013 compared to 2012.

Grown

Overall investment at farm level, excluding values for breeding stock, has grown by 79pc since 2010.

Farmers also appear to be scaling back their overall indebtedness, with borrowings down by close to 3pc on 2012.

Compared to the peak of €5.2bn of loans in 2008, agricultural borrowing is back by €1bn to €4.2bn in 2013.

However, banks maintain that 'new lending' to the sector increased by 9pc last year.

Other highlights from the report include:

* Price forecasts for the main sectors, including an upbeat price forecast for the average EU beef price in 2015, another dip in 2016 to this year's levels, followed by a sustained increase up to 2022.

EU dairy prices are also forecast to increase at a steady rate over the next eight years.

* Farm incomes were up by €122m nationally last year, due to the improving terms of trade, with output increasing faster than the cost of production.

* The true strength of dairy prices was demonstrated in the average milk price of 39.5c/l that dairy farmers received last year.

The average for the shoulder months of the year in October and November was even higher, at 46c/l.

* The continued growth of the dairy sector is beginning to dwarf some of the other traditional sectors. A 15pc increase in the value of dairy exports meant the sector accounted for 30pc of total agri-food exports in 2013. In contrast, the sheep sector only represented 2pc of Ireland's €10bn exports. This was despite a 4pc increase in output over 2012 to €220m.

* The report admits that the target of reducing Ireland's greenhouse gas (GHG) emissions by 20pc from 2005 levels "presents a very considerable challenge for the agricultural sector."

The Department has calculated that emissions from the farm sector will increase by 10pc over levels in 2010. The Department has committed €30m to projects aimed at finding ways to mitigate farm emissions since 2005.

Indo Farming

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