Farm Ireland

Wednesday 17 January 2018

Rising costs putting squeeze on profits

Figures released from the CSO show that despite strong farmgate prices, farmers' margins are being squeezed by declining terms of trade.

However, Irish farmers appear to be faring much better than most EU counterparts, when input and output price changes are compared for the first quarter of this year.

The domestic agricultural output price index decreased by 1.9pc in May. Input costs continued to climb during the same period, leaving the terms of trade 2.7pc lower than April.

Despite strong increases over the last year in poultry, cattle and egg prices (up 21pc, 15pc and 10pc respectively), and corresponding falls in sheep, potato and milk prices have reduced the overall increase in farm commodity prices to just 1.8pc. Wool is also back by 21pc.

Over the same 12 month period, input prices rose by 2pc, resulting in a slight erosion of agricultural margins.

The main increases in input costs over the last year have been in energy and seeds, which were up by 8pc, and fertiliser, which was up 3pc.


Electricity input rose by 14pc, according to the figures released last week. However, the erosion of farm margins has been more severe across the rest of the EU. Input costs were up 9pc in the first quarter of 2012 in Poland. The corresponding figure in Ireland was 2pc -- still below the EU average increase of 3pc.

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On the flip side, Irish farmers experienced bigger increases in output prices than any other EU state during the same period.

Farm outputs increased by 12pc here on the back of steep cattle price rises, compared to an EU average increase of 0.4pc.

Darragh McCullough

Indo Farming