Horticulture production input costs have risen significantly in 2021 and, in many cases, will exceed grower margins, according to a new report published today (Wednesday, November 10).
Depending on the enterprise, the increase in costs ranges between 10.5% and 17.7%.
Farmers in the sector are under increased pressure with many unable to absorb these input-cost increases unless they receive more for their produce, the report found.
Valued at €477 million (farm-gate value), horticulture is the fourth largest sector after dairy, beef and pigs in terms of gross agricultural commodity output value.
The report – Horticulture Input Costs 2021 – Impact Assessment – is the result of research carried out by the Teagasc Horticulture Development Department.
It recently assessed the key input costs that have seen the biggest increases, gathered and validated data. The information was sourced from a range of businesses and trade suppliers.
Across all enterprises, it found there has been a sharp increase in the cost of:
- Labour;
- Packaging materials;
- Fertiliser;
- Energy;
- Peat-based growing media;
- And a myriad of other inputs that are key components of production.
Horticulture is diverse and covers plant and food horticulture. Horticulture food includes mushrooms, potatoes, field vegetables, soft fruit, protected crops and outdoor fruit. Amenity horticulture consists of nursery stock, protected crops, cut foliage, and outdoor flowers and bulbs.
The key objective of the report was to “surface facts about specific inputs cost increases and to apportion the relative importance of input costs to the different sectors of horticulture production”.
The report also looks at the current and potential impacts of very high input costs for primary producers now and for the 2022 season.
Dermot Callaghan, head of the Teagasc Horticulture Development Department said:
“Given that growers’ costs have increased substantially during 2021, producers are potentially facing significant decreases in margins.
“In some cases, input cost increases will exceed grower margins. Some growers are considering cutting back on production for 2022 in order to manage their cashflow, or to minimise their exposure to high costs.
“Where energy is required for early and late season production in glasshouses, where a three-fold increase in energy costs persists for 2022, it is likely to lead to a significant reduction and/or cessation of both early and late production.”
Teagasc horticulture advisor, Andy Whelton, said that the sector is exposed mainly to a rise in costs associated with labour, packaging and fertiliser.
“The impact on overall costs of production are very significant, particularly for crops that need to be harvested and graded by hand.”