It could take until the second half of 2022 before farmers will see any pressure on input costs reducing in any meaningful way.
This is the very clear view of Alltech vice president, Pat Charlton.
He told Agriland: “Farm margins have come under intense pressure in the wake of rising feed, fertiliser and all other input costs over recent months.
“The ongoing tension between Russia and Ukraine is fuelling further uncertainty on grain and other commodity markets at the present time. Ukraine is a major supplier of cereals and oilseeds on an international basis.
“But this is only part of the equation to be considered if matters between the two countries further escalate.”
Gas supplies and impact on input costs
According to the Alltech representative, the potential consequence that must be considered is the major fall-off in natural gas supplies to Western Europe.
“Not only is gas the major input used by fertiliser manufacturers, it also represents a major input cost for feed compounders. The repercussions down the line for farmers under these circumstances are obvious,” Charlton explained.
Specifically where Alltech is concerned, he commented: “We remain committed to introducing new technologies and management practices that improve the sustainability of the agri-food sector and support our customers.”
Impact on pig and poultry sectors
Alltech’s European growth officer, Robbie Walker confirmed that pig and poultry margins are coming under severe pressure at the moment.
“And there seems to be little likelihood of this situation changing for the better during the first two quarters of 2022,” explained.
However, Walker believes that Ireland’s grass-based sectors could manage to escape a proportion of the squeeze coming on margins at the present time.
He continued:
“The outlook for milk, beef and lamb prices over the coming months is positive. Producing these products from grazed grass is by far the most cost efficient production model to follow. And, obviously, Irish farmers have a unique advantage in this regard.”
Both Alltech representatives were speaking in the wake of the company’s recently published global feed production survey for 2022.
The data confirms that the Covid-19 pandemic has had major impacts on the agri-food sector around the world, contributing to supply chain challenges and accelerating the adoption of new technology and environmental sustainability practices.
“The results within our 2022 Alltech Agri-Food Outlook reinforce our confidence and optimism about the future of the agri-food sector,” said Dr. Mark Lyons, president and CEO of Alltech.
“We see the resilience of the agri-food sector against the challenges of Covid-19, disease and supply chain disruption, and even more importantly, there is evidence of growth, modernisation and the adoption of more sustainable practices occurring in parallel.”