Grain sector on brink of 'collapse' as cereal area falls 100,000ac
Published 09/08/2016 | 02:30
Government and grain merchants have been warned that the grain sector is on the verge of collapse as the combination of poor yields and prices looks set to wipe €100m off cereal grower incomes this year.
Cereal growers are being instructed by the IFA to reject a forward price from Glanbia, who were told by the farm organisation to "get real" this week.
Glanbia have offered €162/t for dried wheat and €152/t for dried barley. The deal, which is for payment in November, was communicated to growers via text message over the last few days.
However, IFA grain chairman, Liam Dunne, said the proposed payment did not reflect recent developments in global cereals markets and was totally unacceptable.
"Glanbia need to get real on grain prices, be supportive of growers, and back this industry or else we won't have one," Mr Dunne insisted.
He said there were clear indications that the collapse in French grain yields would have a greater impact on world markets than previously believed.
Mr Dunne predicted that global markets would bounce back when the implications of the poor harvest in the France and Western Europe generally were fully appreciated.
The French cereal harvest is estimated to be back by 16m tonnes, with private analysts predicting a 26pc drop in wheat production from last year.
Cereal production forecasts for Germany, Britain and Poland have also been downgraded in recent days by anywhere from 12pc to 15pc.
Speaking at a press briefing this week, Philippe Pinta, a French grain farming leader said: "The situation is very serious. I've never known anything like this before. Yields are down for the majority. The big cereal-growing regions of the Île-de-France and Centre-Val-de-Loire have been particularly affected."
However, bumper yields across Bulgaria and Romania, and into the Black Sea Region of Ukraine and Russia, have dented the possibility of grain prices recovering in the short-term.
But experienced traders suspect prices have bottomed out and argue that there is potential for some uplift as a clearer picture emerges of where overall EU production lies.
In Britain spot feed wheat prices jumped by £3.80/t (€4.50/t) last week to £113.80/t (€134/t) ex-farm, on the back of poor harvest reports from the continent.
However, the talk from North America is very different. FC Stone has forecast US maize and soya bean production this autumn to hit record levels of over 380m tonnes and 110m tonnes respectively.
On the home front, poor weather delayed completion of the winter barley harvest particularly in the northern part of the country.
Winter oat yields range from 2.7t to 3.5t/ac. Some spring malting barley was cut over the weekend but not enough to give a handle on yield or protein trends.
Liam Dunne said without political intervention the tillage sector was in "imminent danger of collapse with major implications for the entire livestock sector and our world-renowned drinks industry".
He claims that cereal area has fallen here by 100,000ac in the last four years due to steadily declining prices during the same period.
He called on the Minister for Agriculture Michael Creed to immediately convene a meeting of all stakeholders to secure a commitment from them to use native grains and support the industry.
In addition to the abolition of tariffs and duties on fertilisers, the IFA is also seeking a review by the EU Competition Authority on the cost of sprays, access to low-cost loans, increased Glas and TAMS payments, more funding for protein crops, and simpler Greening rules.