Fears as excellent harvest drives grain prices down
Published 02/08/2014 | 02:30
IT HAS been a bountiful harvest but good conditions worldwide have sent grain prices plummeting back to what they were in the late 1990s.
The intense pressure on prices from the favourable weather conditions, as well as futures trading, have put pressure on cereal prices, leaving most growers here fearing they won't even break even.
Political uncertainty in the Ukraine, whose Black Sea Region is one of the largest producers, has done little to ease the pressure.
Farmers who are feeling the pinch most are those who paid high prices to rent land for this year's crop.
The Irish Farmers' Association (IFA) grain committee chairman, Fintan Conway said the price drop has been "phenomenal" while production costs, like fuel and fertiliser, have rocketed.
Fertiliser alone had doubled in price and where one tonne of grain used to buy one tonne of fertiliser, the ratio is now three to one, due to the control of Russian cartels.
"The vast majority of grain grown here this year will be sold below the price of production, so even people growing on their own land are affected," said Mr Conway.
Prices being quoted for dried wheat have fallen from around €205 a tonne last year back to €165 a tonne.
Similarly, dried barley is trading at around €158 a tonne, a fall of €34 a tonne from last year.
Spring barley is the country's biggest grain crop which this year will only command prices of €140 a tonne.
The IFA maintains €156 a tonne is necessary to cover the cost of production.
"Yields are also back slightly on last year and you need very good yields when prices are under pressure," he said.
And the biggest offender for putting pressure on prices is investment funds speculating on prices in a volatile market.
"Many equity people got burnt on property so the big move in money is onto soft commodities and that's driving the prices," added Mr Conway.