There is a growing concern that farmers in Northern Ireland (NI) are not buying enough fertiliser to meet their full needs in 2022.
This may well be a direct response to the explosion in all commodity prices but a failure to grow enough grass now could leave farmers short of silage next winter, according to Ulster Bank’s senior agriculture manager, Cormac McKervey.
Speaking at the launch of the 2022 Balmoral Show, he said:
“Given the strict limitations on commercial credit right now, I thought that we would have had greater numbers of farmers contacting the bank, seeking finance to secure their 2022 fertiliser supplies.
“This hasn’t happened up to now, which leads me to conclude that some farmers might have taken the decision to cut back significantly on the actual amounts of fertiliser they acquire in 2022.”
However, McKervey firmly believes that such an approach represents a false economy.
“Any shortfalls in silage availability next winter will have to be made up for through the purchase of very expensive concentrate feeds,” he said.
According to McKervey, farmers should not be using their overdrafts to purchase fertiliser at the present time.
“A better option is to sort out a loan arrangement with the bank, which can be paid back over a six-month period, or settled in full when the 2022 single payment monies arrive.”
All production sectors within agriculture are faring reasonably well at the present time, he said.
“Yes there will be a time lag between input costs rising and farmgate returns responding in kind.
“International producer prices have increased by 54% over the past two years and inflation in the UK is currently at 6.2%. No doubt, this figure will increase again over the coming months.”
McKervey also pointed out that the likes of farmgate milk prices will remain strong into the medium term, at least.
“This is because dairy production levels are falling internationally at the present time,” he said.
“And, this trend looks set to continue into the future. We are currently seeing farm business turnovers increasing at a steady rate. The challenge is that of allowing farmers to keep pace with the rocketing increases in their input costs.”
“The economics of production agriculture remain fundamentally sound. And the banks are available to support farmers in meeting the challenge of fast-rising input costs.”
Pig farmers under pressure
McKervey admitted that pig farmers have been under significant financial pressure for the past six months.
“But, here again, the banks have stood ready to support producers in a meaningful way,” he said.
“More importantly, the rise in pig prices of recent days gives some hope that the tide is turning, somewhat, in favour of farmers.”