Farmer input costs ‘surging’ while output prices ‘fall or remain constant’

Figures released today, Tuesday, February 13, by the Central Statistics Office (CSO) have been described as “confirmation of what the farmer already strongly suspected from their own accounts and enterprises”.

President of the Irish Creamery Milk Suppliers’ Association (ICMSA), Pat McCormack, has said that the statistics published “proved beyond doubt” that farmers are being caught in the ‘cost – price squeeze’.

Input costs are surging while output prices fall or at best remain constant.

He pointed out that in years when farm-gate prices ran ahead of input inflation, farmers could “just about deal with the steady erosion of their margins from rising input costs”.

He added: “In situations such as we’ve had for the last 18-odd months, where milk prices were under pressure and beef prices were being hammered by the factories, input inflation quickly emerged as a major negative factor.”

“It transformed already very tight break-even situations into losses and pushed more and more farmers into cross-subsidisation where their direct payments were eaten up by bills.”

ICMSA’s findings

Continuing, McCormack explained: “The first thing we notice is that the Agricultural Input Index increased by 6.3% from December 2017 to December 2018 while the corresponding Agricultural Output Price Index was down by 3.1% over the same period.”

The ICMSA president highlighted: “Farmers’ milk price was down by in excess of 10% in that period, but if we look across to the inputs paid by those same milk producers, we see energy costs up 5.4%, while fertilisers are up overall by 9.7% and veterinary costs up by over 3.1%.

Feedstuffs alone went up overall by 10.8%. This is a very significant input inflation at a time when we’re constantly told about low inflation – property costs aside – and relatively low interest rates.

“While farmer prices either remain constant, see-saw or even fall significantly; our inputs costs only ever go in one direction and that’s upwards at a continuous and constant rate.”

Concluding, McCormack said: “It’s very simple. If farming as we know it is to continue then output prices are going to have to increase at a higher rate than input prices.”