Weather conditions and renewed Brexit uncertainty over the summer period dampened the mood of farmers, according to the latest findings of the Bank of Ireland Agri Pulse for August 2018.

Compared with April – when the survey was last carried out – sentiment was softer on a number of fronts, including current production, costs, farm profitability and the outlook for market prices.

However, production expectations were up and investment plans were little changed compared with the similar survey in April.

This, according to Agri Pulse, suggests that a number of farmers are also looking through present difficulties and keeping an eye on potential opportunities.

Discussing the Bank of Ireland Agri Pulse, Dr. Loretta O’Sullivan – group chief economist for Bank of Ireland – said: “With the summer drought coming on top of the bad weather and the fodder crisis earlier in the year, the farming mood understandably was muted in August.

“Costs were up on this time last year for most farmers, with a knock-on impact on business profitability.

“Notwithstanding a difficult year in 2018 and Brexit to come, two in five farming businesses remain on a growth trajectory.”

Farm output

Farmers’ assessment of their current situation was subdued in August, with one in four indicating that output was down on the same time a year ago and just over a half citing no change.

Unsurprisingly, weather conditions were the main factor limiting production. However, land shortages remain a concern – particularly for the dairy and tillage sectors.

However, farmers were more positive about production prospects. Three in 10 expect to increase output over the coming 12 months and just under half expect to keep it constant.

Input costs and market prices

The August data point to ongoing cost pressures.

Excluding labour, but including inputs such as feed, fertiliser, fuel, veterinary and land rental, 71% reported that costs were higher than a year ago.

This is similar to the figure from April but is well up on the 2016 and 2017 survey findings of one in two.

While the picture for market prices was muted on the whole, it was mixed across the sectors.

A large number of cattle and sheep farmers expect the prices they receive to fall in the next 12 months; whereas the bulk of tillage farmers are anticipating an increase, and half of dairy farmers expect prices to hold steady.

Investment plans

On the investment front, around a quarter are planning on increasing investment in the farm over the coming year (dairy farmers are leading the way), a figure which is consistent with the survey earlier this year.

Along with replacing and maintaining worn-out buildings, equipment and vehicles, consideration is being given to purchasing livestock as well as investing in new farm buildings, land and equipment & vehicles.

The majority are factoring in an outlay of up to €50,000 – most smaller farmers are looking at spending less than €20,000 with the bigger sums coming from larger-sized businesses in the main.

Business ambitions

When it comes to business ambitions, the results show that two in five see themselves as being on a growth track (dairy and younger farmers especially).

Another two in five expect the farm to stay the same size in the next one to three years, while 18% (generally older and cattle farmers) intend to scale down.

Brexit remains a cloud on the horizon. Pricing and market access are key worries, with three in four farmers expecting the UK’s withdrawal from the EU to negatively impact their business.

About Agri Pulse

The Bank of Ireland Agri Pulse provides an insight into what is happening in the sector, the issues and the trends.

250 farmers in Ireland are asked for their views on a wide range of topics including farm output, input costs, market prices, their investment plans and business ambitions.

Dairy, cattle (suckler cow and other), tillage, sheep and other farming activities are covered, with the fieldwork for the surveys undertaken by Ipsos MRBI on behalf of Bank of Ireland.