Farm Ireland

Saturday 18 November 2017

Real threat of a 'mass exodus' from the tillage sector

Growers are facing four years of dismal prices
Growers are facing four years of dismal prices

Ken Whelan

The Irish tillage sector is in crisis.

Growers are facing into a fourth year of dismal prices and escalating production costs and both Teagasc and leading cereal growers are warning of a mass exodus from the sector if urgent action is not taken.

The tillage industry's statistics are certainly impressive. There are close to 280,000ha under crops and output from the 2m tonnes of grain produced is worth around €270m to the 9,000 or so growers.

But the big figures mean little if the bills can't be paid - and many of the bills will not be paid this autumn.

Already there has been talk of growers defaulting on or deferring land rental payments; and the current trickle could become a flood.

The cash-flow pressures are rumoured to have migrated upstream, with merchants dealing with the country's growers reporting a noticeable downturn in business.

The problems come down to profit margins on crops - and these were non-existent this year. Surveys carried out through the harvest found that losses on winter barley grown on rented land exceeded €150/ha in some cases, while those on spring barley or spring wheat came to €70-80/ha.

The cause of these losses have been well documented but what is the outlook for the future.

Also Read

Shay Phelan of Teagasc believes only a major weather event in the major exporting countries such as Russia, Ukraine and the US will be required to bring a degree of profit normality back to the sector.

But Mr Phelan is not optimistic that this is likely to happen in 2017.

A similar view is taken by Colm Fingleton, a leading tillage farmer from Ratheniska Co Laois. He believes the Government has no plan to deal with the crisis within the sector.

Both say that it is only a matter of time before the smaller tillage farmers drift out of the sector simply because they can't make ends meet.

"Cheap grain imports are keeping prices down and until the Government addresses this issue with the merchants prices will remain flat. At the moment most tillage farmers are not breaking even and there is only so much they can take. The margins are not there," Fingleton told the Farming Independent this week.

In plain money terms he says the tillage farmers are getting €120/t for their product when they require €200/t plus to be viable.

Mr Fingleton says the Government has to take action on the cheap American and Russian imports which the grain merchants are buying to maintain low market prices.

"Irish tillage farmers are 'up to their eyes' in regulations and quality assurance demands from the authorities but these standards do not apply to the imports," Wilkinson says.

"We can't compete with cheap imports which have no strict quality standards," he says.

Added to the imports disadvantage are the increasing costs of inputs such as seeds and fertilizers and day-to-day machinery or contracting costs. The weather over the past few years - especially for tillage farmers in the west of Ireland - is also critical in deepening the current crisis, said Mr Fingleton.

He is particularly critical of the booming Irish craft beers and distilling industries, many of which are using imported grain.

"Surely if they are producing Irish made beers and liquors the Government can insist that they are made from Irish barley and not cheap and sometimes GM originated grains from abroad," he points out.

"The cost of production and the prices available on the market are getting further and further and further apart and all we are doing is creating talking shops like the recently convened tillage forum. They have been talking about addressing the crisis in tillage for the past few years but all the talk will stop once the harvest is over and won't begin again until the next harvest," he adds.

Shay Phelan says things will not improve until the glut of feeds on the international market comes back to normality and that will depend on a weather event in the large exporting countries. He says the glut looks certain to continue into next year.

On a related issue Mr Phelan does not expect British tillage farmers to take the GM route post Brexit which could add to the current market problems.

He believes British tillage farmers will continue with best farm practice even when the anti GM rules of the EU are lifted once the Brexit negotiations are completed.

Meanwhile the IFA's tillage chairman, Liam Dunne put some context on the cost of the bad weather on this Irish growing season at a meeting with the Agricultural Commission last Friday. He outlined that some 400 tillage farmers in the worst affected areas of the West of Ireland stood to lose up to an aggregate of €3m because of the spring and autumn downpours in the region.

Indo Farming