Increase costs threaten grain sector

IFA President John Bryan said Irish grain farmers are facing significant income challenges that threaten the viability of the sector as a result of much increased costs and declining quotes for new crop grain.

“The current cost price squeeze coupled with the impending reduction in growers’ Single Farm Payment and extreme price volatility threatens the future viability of Irish grain production. Over the past 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%. 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 head in the opposite direction.”

He said: “Production costs for other arable crops have followed a similar pattern. Changing weather patterns have also increased the challenge to growers as evidenced in 2009 and again last year when wheat yields in particular were decimated and plantings for the 2013 season reduced by up to 50 per cent.”

The trade must reduce input prices, grain drying and storage charges immediately and increase the price paid for green grain this harvest, he said.

“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 CAP reform will force many growers to reconsider their enterprise choice.”

He claimed speculative investment in grains and oilseeds by the financial community 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. While the introduction of forward selling has helped to smooth prices it is not without financial risk, as was the experience of a significant number of growers last harvest. The EU along with other developed economies must move to limit speculative investment in agricultural commodities,” he added.

 

 

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