Farm Ireland

Monday 22 January 2018

Farm incomes hit by spiralling input costs

Figures reveal fertiliser, feed and energy prices eating into incomes

Darragh McCullough

Darragh McCullough

Farm incomes continue to tighten, despite the record prices being achieved by stock and crops over the past 12 months.

The latest figures from the Central Statistics Office (CSO) show that the bounce in farm incomes over the past year has almost been completely eroded by spiralling input costs.

Despite cattle and cereal prices soaring by 20pc and 30pc respectively since last year, hikes of up to 20pc in fertiliser, feed and energy costs have reduced the real improvement for farmers to less than 3pc.

The figures will worry farm families who have seen the viability of their enterprises slip over the last five years, despite 2010 and this year being some of the most profitable in recent memory.

The number of unviable farms has increased from less than a third of total units to more than 40pc during the period from 2007 to 2010, according to research carried out by Teagasc's Cathal O'Donoghue. During the same period, the proportion of viable units fell by a third to just one in five of all farms.

Mr O'Donoghue, who presented his findings at the Agricultural Economics Society's annual conference in Dublin last week, said that while farm input costs increased at the same rate as inflation in the wider economy, farm output prices rose at a slower rate.

Falling levels of off-farm employment have also hit overall incomes. The downturn in the wider economy meant that off-farm income dropped to levels not seen since 1996, according to Mr O'Donoghue.

The CSO preliminary figures, published last week, showed that, this year, milk prices were 14pc higher, cattle were up 19pc, sheep were 7pc higher, while pigs and poultry were up by 10pc and 9pc respectively. Cereals were up by 31pc but vegetables were unchanged at 1pc. Potatoes were by far the worst performing enterprise, with prices down 32pc on average compared to last year.

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On the input side, fertiliser was estimated to have risen by 22pc, feed by 16pc and energy was up by 15pc. Seed prices increased by 2.5pc, veterinary expenses remained unchanged and plant protection products were down by just over 2pc.

Relative to other sectors in the economy, farm household incomes have fallen since 1987, when they were 20pc higher than the national average. They are now at or below that. However, they are still about 10pc higher than those for non-farming rural households.

Meanwhile, forward prices for grain appear to be softening on the back of the international financial turmoil. Dried barley and wheat are both trading at €181-186/t. Oats prices remained static, trading at €200-204/t, with a premium of €4-6/t on offer for quality oats destined for the horse market.

Irish winter cereal sowings for the 2012 harvest have already increased by nearly 30,000ac. There is a 15pc rise in the winter barley and 9pc increase in winter wheat.

Indo Farming