Farm Ireland

Tuesday 20 March 2018

Infectious optimism needs dose of caution

The news that combine sales are up 50pc to smash last year's 10-year high is as strong an indicator of the levels of optimism in the tillage sector as you are likely to find.

But the optimism is spread over a much broader base in the agriculture sector at the moment.

Tractor sales are also up, with more tractors sold so far this year than in the whole of 2010.

At over €100,000 a pop for many tractors and €200,000 in the case of combines, these are not insignificant purchases.

We're also hearing of dairy farmers shelling out six-figure sums on industrial-unit style sheds to expand their operations.

Land, too, is moving at a lively pace. Parcels are making €12,000-13,000/ac again, prices that used to be known as Celtic Tiger prices.

It seems the amount of land changing hands at auctions is only the tip of the iceberg.

Blocks of anywhere from 20ac to 50ac are changing hands in private deals around the country on a weekly basis.

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This level of investment has generated plenty of commentary as the mainstream media, banks and consultancy businesses all attempt to hop on the bandwagon.

The changes happening now have the potential to become one of the most dynamic shifts in Irish agriculture in more than a generation but farmers must never lose sight of caution. The optimism in farming is just as infectious as the pessimism that is gripping other sectors of the economy. This is just human nature.

Record farm-gate prices over the last two years at some point become a double-edged sword. Granted, they were badly needed to repair the damage of the disastrous prices of the previous years.

But technology has a way of continuously shaking up the marketplace.

For example, an email dropped into our inbox last week heralding a new product containing vegetable fibres and corn starch that looks, tastes and cooks just like meat. The only difference is that it's cheaper.

Similarly, a new alternative to sugar called stevia is being promoted to food companies looking for alternatives to traditional, but increasingly pricey, sources.

In short, it would be foolhardy for any farmer to base his or her expansion plans on current prices.

Equally, cost-saving measures such as machinery pooling or rationalisation of our co-ops should not be long-fingered just because everything is sitting pretty at the moment.

Investing hundreds of thousands in expansion is much more exciting than rationalisation. But the real winners manage to combine both.

Indo Farming