Big increase in grain costs a growing concern

The viability of Irish grain production is in question as a result of the relentless increase in costs over the past few years and reduced grain prices for the 2013 harvest. This is according to IFA national grain committee chairman Noel Delany.

“Over the last 10 years there has been a substantial increase in input costs particularly for fuel and fertiliser. Fertiliser prices alone have increased by a massive 260 per cent while fuel prices have gone up by over 200 per cent. Variable production costs (including machinery hire) for spring barley have gone from €640/ha (excluding vat) in 2003 to approximately €1,000/ha today while grain prices are falling.
“Production costs for other arable crops have followed a similar pattern. This relentless cost price squeeze coupled with the impending reduction in growers’ Single Farm Payment, additional compliance costs due to CAP Reform proposals and extreme price volatility threatens the future viability of Irish grain production. Changing weather patterns have also increased the challenge to growers as evidenced in 2009 and again last year.”
The trade must realise the seriousness of the situation and put pressure on suppliers to increase input rebates that can be passed back to growers, reduce grain drying and storage charges and up the price paid for green grain this harvest, the national grain chairman added.
“Current price offers of €140/t to €150/t for spring barley and €10/t over for wheat will see many growers struggle to break even this year even on their own land. Marginal returns coupled with weather related production risks and increasingly complex compliance rules arising out of Common Agricultural Policy Reform will force many growers to reconsider their enterprise choice.
Delany continued: “Speculative investment in grains and oilseeds by the financial community must be curtailed as it has accentuated the price volatility in recent years creating serious financial difficulties for arable and livestock producers alike. The resulting peaks and troughs in prices are creating boom / bust cycles.”
The introduction of forward selling has helped smooth prices it is not without financial risk, as was the experience of a significant number of growers last harvest, he noted.

 

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