Farm Ireland

Sunday 25 February 2018

Viewpoint: Strong leaders required as spring outlook turns gloomy

Rabobank's Kevin Bellamy
Rabobank's Kevin Bellamy

Louise Hogan

It's turning into a difficult and expensive spring.

We've already highlighted the high costs farmers are paying for the lack of grass growth due to chilly temperatures in recent weeks.

Many are facing expensive meal top-ups, rapidly depleting silage pits and a surprising demand for those black bales that once looked so populous.

Without doubt cashflow is something that every farmer has to watch this year, with dairy farmers facing into another month's low milk cheque.

The income woes are hitting all sectors with tillage farmers in some cases considering leaving land fallow amid dismally low grain prices, while cattle and sheep farmers are also counting the costs of rehousing animals.

Galway dairy farmer Henry Walsh sums up the situation for many this week when he points out: "The simple truth is we are enduring a very difficult and expensive spring with very low milk prices with no sign of light in the tunnel."

Meanwhile, Rabobank's latest research concludes that the global dairy market outlook will remain weak throughout 2016.

It also states that production levels will not drop off, which will require a new pricing balance mechanism on global markets.

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However, long-term there is a chink of light as the report predicts there will be more upward pressure on prices as market surpluses are eroded and demand increases from China and South-East Asia.

But Rabobank's Kevin Bellamy warns that with returns from the commodity market placing milk at 26c/l, co-ops will have to continue to dip into reserves or there is the possibility of further weakening of farmgate prices.

Some Southern Hemisphere producers and analysts have been laying the blame for the rise in milk production and lower prices at Europe's door - and more pointedly at the gates of Irish and Dutch farmers.

Yet as Mr Bellamy points out there is little appreciation that Irish dairy farmers are among the most efficient in cost production terms in the world and have as much right to produce milk as any New Zealander or Californian producer.

Glanbia's Jim Bergin says that Ireland was cut off from dairy expansion in 1984 before farmers could realise dairy's potential.

Now, he says Ireland must be allowed realise its capacity. "That's called competition," he says.

It looks like there will be no quick solutions to the current trough, but the analysts point out the long-term prospects for dairy remain strong.

Yet, with so many concerns arising over farm incomes throughout the industry, real leadership is required.

Now is the time for politicians to put their heads together and deliver a stable government - and an Agriculture Minister - that can get to work on the key issues that keep the rural economy afloat.

Indo Farming