Margin squeeze: How farmers were battered by weather, soaring input costs and price cuts in 2018

Output prices fall by almost €580m while input costs soar by €690.0m

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Ciaran Moran

Ciaran Moran

New figures from the CSO underline the income pressures which farmers faced in 2018 as a result of farmgate price cuts, soaring input costs and historic weather events.

The final estimate of operating surplus in agriculture in 2018 shows an annual decrease of €576m (-16.8pc), down from €3,425.2m in 2017 to €2,849.2m.

The main reason for this change was an increase of €690.0m (+13.0pc) in consumption costs on farms.

The main items giving rise to this increase in intermediate consumption are feeding stuffs and fertilisers, which increased by €355.9m (+26.9pc) and €69.2m (+13.5pc) respectively. 

It comes as a 3.1pc decrease in the volume of cattle output combined with falling prices resulted in an overall drop of €101.0m (-4.3pc) in the value of cattle. Their value fell from €2,362.1m in 2017 to €2,261.1m in 2018 driven by Brexit uncertainty and strong supplies. A recent survey revealed that more than a third of beef farmers are uncertain if they will be farming in five years.

The ICMSA President said that farmers seem to have been abandoned to wild price and income volatility on both the input and output sides with only slow and tentative moves to stop their already low margins being eroded further by both processing and retail corporations. 

“It must be obvious to everyone looking at Irish farmers having to pay more than half a billion Euros in extra costs in just one year that this can’t go on, and must lead to radical and long-overdue measures to tackle this completely unsustainable income and input volatility”, said Pat McCormack.

Changes in value of farm produce in 2018

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  • Beef - Down €101m
  • Dairy - Down €38m
  • Pigs - Down €58.1m
  • Tillage - Up €265.6m
  • Sheep - Down €9m

While the volume of crops produced by Irish farmers fell, increased prices resulted in an overall increase in the value of crop output, which rose by 14.6pc from €1,824.6m to €2,090.2m, an increase of €265.6m.

Milk output increased by 4.6pc in volume, but falling prices resulted in an overall reduction in its value, which decreased from €2,594.1m to €2,555.4m, a fall of €38.7m (-1.5pc).

2018 saw a 19.8% increase in the volume of feeding stuffs consumed.
2018 saw a 19.8% increase in the volume of feeding stuffs consumed.

The value of pig output decreased by €58.1m (-11.3pc) from €516.7m to €458.6m while the volume of pig production rose by 1.3pc.

UP to 30,000 farms are now classed as economically vulnerable and at risk of poverty. The Teagasc National Farm Survey showed that the average farm income in 2018 dropped 20pc to €23,483.

Spending

Total consumption on farms was up by €690.0m (+13.0pc), increasing from €5,311.0m in 2017 to €6,001.0m in 2018.

A late spring and summer drought had a clear impact with expenditure on feeding stuffs increased by €355.9m (+26.9pc) to €1,680.3m, due primarily to a 19.8pc increase in the volume of feeding stuffs consumed.

Farm Expenditure 2018

  • Feeding stuffs - Up €355.9m
  • Fertiliser - Up €69.2m
  • Machinery, equipment, etc - Up €23m
  • Farm buildings - Up €36m
  • Veterinary expenses - Up €5m

Meanwhile, both the volume and price of fertilisers consumed by Irish farmers also increased during 2018. A volume increase of 8.9pc combined with a price increase resulted in an overall increase of 13.5pc in expenditure on fertilisers. The cost of these fertilisers increased by €69.2m to €582.1m.

Farm expenditure on energy and lubricants increased by €33.8m (+8.7pc), increasing from €390.2m in 2017 to €424.1m in 2018. 

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