Farm Ireland
Independent.ie

Tuesday 19 March 2019

'Our inputs costs only ever go in one direction and that’s upwards' - Surging input costs hit farmers pockets just as prices slump

Bobby Miller, chairman of the Irish Grain Growers Group, makes his point at a previous protest at the Guinness Hop Store in Dublin. Photo: Colin O'Riordan
Bobby Miller, chairman of the Irish Grain Growers Group, makes his point at a previous protest at the Guinness Hop Store in Dublin. Photo: Colin O'Riordan
Ciaran Moran

Ciaran Moran

Farmers have said they have been caught in a 'costs-price squeeze' as overheads continue to rise while farmgate prices flatline or fall.

The Central Statistics Office (CSO) today published figures which show that inputs prices on farms increased by 4.6pc in 2018 compared with 2017.

The price rise comes as the prices farmers receive for their products fell 2.0pc over the same period.

A further comparison of the 2018 output sub-indices with the 2017 sub-indices shows that the largest decrease was in pigs and milk which were down 12.6pc and 6.0pc respectively.

On the input side, the biggest increase was in energy up 8.9pc while Feeding Stuffs were up 6.6pc on 2017 prices.

The President of ICMSA said the figures were confirmation of what farmers already strongly suspected from their own accounts and enterprises.

Photo: Liam Burke
Photo: Liam Burke

Key farm input price rises

  • Feeding Stuffs: 6.6pc
  • Energy: 8.9%
  • Fertiliser: 9.7%
  • Veterinary Expenses: 3.1%

Pat McCormack said that the statistics proved beyond doubt that the state’s farmers are being caught again in the ‘costs-price squeeze’ that sees input costs surging while the output prices received fall or at best remain constant. 

"In those years when the prices farmers received ran ahead of input inflation, farmers could just about deal with the steady erosion of their margins through rising input costs.

"However, in situations such as we’ve had for the last 18-odd months, where milk prices were low and under pressure and farmer beef prices were being hammered by the factories.

"That input inflation quickly emerged as a major negative factor that transformed already very tight ‘breakeven’ situations into losses and pushed more and more farmers into cross-subsidisation where their direct payments were eaten up by bills," he said.

"Milk price – that is, the price paid to farmers as opposed to the price paid by consumers – was down by in excess of 10pc in that period, but if we look across to the inputs paid by those same milk producers, we see energy costs up 5.4pc,  while fertilisers are up overall by 9.7pc and veterinary costs up by over 3.1%. 

"Feedstuffs alone went up overall by 10.8pc," he said.

Key farm output prices

  • Cattle: -1.5%
  • Milk: -6.0%
  • Lamb:  -5.4%
  • Cereals: 21.7%
  • Pigs: -12.6%

"While farmer prices either remain constant, see-saw or even fall significantly; our inputs costs only ever go in one direction and that’s upwards at a continuous and constant rate. 

“It’s very simple, if farming as we know it is to continue then output prices are going to have to increase at a higher rate than input prices and it’s simply not good enough to tell farmers that they should be happy with output prices they received ten or twenty years ago when their input costs are rising at the rate the Government’s own CSO figures confirm”, concluded Mr. McCormack.

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