Costs rise on 71pc of farms as weather hits production
Three in four farmers expect Brexit to impact negatively on their business, according to latest Bank of Ireland Agri Pulse results.
The BoI report found that renewed Brexit uncertainty and adverse weather conditions over the summer period have dampened the mood of farmers.
Weather was the main factor limiting production, though land shortages remain a concern, particularly for the dairy and tillage sectors.
Seventy-one per cent reported that costs were higher than a year ago. This is similar to the figure from April but is well up on the 2016 and 2017 survey findings of one in two.
A large number of cattle and sheep farmers expect the prices they receive to fall in the next 12 months, whereas the bulk of tillage farmers are anticipating an increase, and half of dairy farmers expect prices to hold steady.
However, production expectations were up and investment plans were little changed compared with the similar survey in April, which suggests that a number of farmers are also looking through present difficulties and keeping an eye on potential opportunities.
Three in ten expect to increase output over the coming 12 months, and just under half expect to keep it constant.
Around a quarter are planning on increasing investment in the farm over the coming year, with dairy farmers leading the way.
The majority of are factoring in an outlay of up to €50,000 - most smaller farmers are looking at spending less than €20,000, with the bigger sums coming from larger-sized businesses in the main. Discussing the research Dr Loretta O'Sullivan, Bank of Ireland's group chief economist, said: "With the summer drought coming on top of the bad weather and the fodder crisis earlier in the year, the farming mood understandably was muted in August.
"Costs were up on this time last year for most farmers, with a knock-on impact on business profitability.
"Notwithstanding a difficult year in 2018 and Brexit to come, two in five farming businesses remain on a growth trajectory."
Meanwhile, An Economic Letter by Central Bank economist Thomas Conefrey, which was published last week, finds that a number of challenges face the industry, including profitability, Brexit, possible future Common Agricultural Policy (CAP) reform and climate change.