Pent-up demand and and the latest jump in wholesale prices for construction products could see farmers paying more than they had anticipated for new farm building projects, according to a Teagasc specialist.
Tom Fallon, a farm buildings and infrastructure specialist with Teagasc, said there is a significant level of investment intention at this time among farmers when it comes to new on-farm building projects.
Fallon said that he is aware that “a lot” of planning applications have been submitted for farm buildings and that there is “pent up demand” because of a number of factors.
“Last year was the best year for a long time in all sectors of farming, there is money available to be spent and we also have a little bit of catch in terms of a lot dairy farmers have expanded but they need to provide extra slurry for storage and they need to provide extra calf houses and calving facilities and there is a shortfall in facilities for stock levels – that’s going to push up demand.
“There will be an uptake in farm investment particularly with the new Tillage Capital Investment Scheme under the Targeted Agricultural Modernisation Scheme (TAMS 3) which will drive it as well.
“There’s definitely going to be investment because this time last year just after the war outbreak in Ukraine and there was the supply difficulties after Covid, there wasn’t any appetite to do work because costs were so dear and everything was so uncertain,” Fallon added.
But now he said this position is reversed.
Fallon said one key trend that he is aware of is that farmers realise they need extra calf accommodation which is estimated currently at around €1,000 per calf space.
“This gives them a bit of extra flexibility, most farmers do not like to have to bring calves to the mart and then have to bring them home again so if you can keep them maybe for four weeks and you have a strong calf then you have a much better chance of selling it.
“There is a good bit of calf housing going on or planned,” he said.
Fallon has warned however that this planned level of investment could impact on building contractor availability and also construction prices.
Latest figures from the Central Statistics Office (CSO) show that wholesale prices for construction products increased by 1.5% last month month and by 11.7% in the 12 months since April 2022.
According to the latest CSO Wholesale Price Index April 2023 there were some “noteable changes” in the price of certain construction products:
- Ready mixed mortar and concrete increased by: 27.4%;
- Concrete blocks and bricks increased by 19.1%;
- Structural steel fabricated metal increased by 31.7%;
- Other structural steel decreased by 28.4%;
- Rough timber (Hardwood) decreased by 21.6%
- Stone, sand, gravel increased by 8.9%.
Jillian Delaney, statistician with the CSO, said that the building and construction (materials and wages) index also rose by 0.8% in April and was 7.7% higher than the same month last year.