Higher costs, tax bills, delayed payments and a drop in farmgate prices are combining to create a financial storm for farmers, which some may not be able to weather, a farming organisation warned today (Wednesday, November 15).
The Irish Farmers’ Association (IFA) has urged farmers to “assess” their current financial situation and seek advice if necessary.
Rosemary McDonagh, IFA Farm Business chair, said: “We are in constant discussions with banks and credit unions in relation to farm finance and the advice is to get in contact with your bank or credit union as soon as possible, if there is a likelihood of a need for finance over the next number of months.
“After a year of high input costs, combined with falling product prices for most sectors, it is imperative that all farmers look at their finances and see what their cashflows will look like into 2024.”
Latest research from the Central Statistics Office (CSO) highlights that there has been noticeable falls in output prices over the 12 months to September 2023.
According to the CSO in the 12 months to September 2023, the Agricultural Output Price Index was down 16.2%, while the Agricultural Input Price Index fell by 12.3%.
The Money Advice and Budgeting Service (MABS) has warned that the farming sector in Ireland is “unique” in how it is linked to the family and household budget and any reduction in the price farmers can get for their products can have a significant impact on budgets.
It said that in cases, “there may be no separation”, which MABS has highlighted can make budgeting and planning difficult.
It has advised that its crucial for farmers to “set out an annual budget” and review it on a quarterly or monthly basis.
“Doing this will mean that it is up-to-date and accurate, reducing the possibility of surprises.
“Reviewing your budget regularly will help reduce costs, and one way to increase your margins is to reduce costs,” according to MABS.
Farmers and cashflow
The organisation also said that one way to identify “costs that are unique to your farming enterprise” is to review bank statements from the last 12-24 months.
It believes that this can help to identify trends over time and to identify annual costs that can be planned versus one-off costs.
“One of the biggest mistakes many self-employed people including farmers make, is not having a separate bank account for the business and the household,” MABS has warned.
Meanwhile the IFA Farm business chair said that banks and credit unions have a number of products to help farmers.
“There is also the option with some of the lenders to retrospectively finance capital investments that may have been made in the last two years out of cashflow.
“The earlier you identify a possible problem, the more options you will have to find a solution,” McDonagh added.