Production costs expected to decline in 2014 – Teagasc

“The overall outlook for production costs in 2014 is positive with costs declining.” This is according to Dr Fiona Thorne of Teagasc who was speaking today at the its Outlook 2014 conference in Dublin this morning.

According to the economist: “Lower input costs are forecast across the board in 2014, particularly in feed and fertiliser due to price and usage changes.”

Teagasc is estimating that a price decline of in the region of 10 per cent on foot of the cereal price decline at the end of 2013.

Dr Thorne also noted, assuming weather conditions return to normal, feed usage should decline up to 20 per cent.

More positive news for farmers is the forecast reduction in fertiliser costs.

“Significant price reductions in 2014 are estimated. This is on foot of in energy and commodity prices at the moment given which are creating less pressure in fertiliser markets. There is also more competition in the market,” she added.

Teagasc is estimating the price to be down 10 to 15 per cent depending on the product and it also says usage should be down 10 per cent still above normal levels.

Teagasc is also estimating that fuel costs declining in the region of three to four per cent with no change in electricity costs.

In a review of agriculture inputs for 2013, Dr Thorne and the economic team at Teagasc observed: “Overall production costs increased significantly in 2013 as a result of the fodder crisis.”

She continued: “There was steep upward trajectory in feed prices from June July 2012 to the earlier part of 2013. Then there was some stabilisation in prices. Our best estimate is that feed prices moved for cattle and dairy side about 10 per cent in 2013 relative to 2012. So an upward movement in feed prices for the last year.”

On the feed usage she outlined that there was an upward movement in the volume of feed usage in 2012 and again for 2013 on foot of the Fodder Crisis in the spring of this year.  Teagasc is estimating that feed usage for the dairy and drystock sectors were up about 10 per cent in 2013 relative to 2012.

According to the economist, this increase in price and volume on Irish farms led to average upward movement in the feed bill on grassland farms of 20 per cent in 2013 relative to 2012.

“This is an average and you have to remember there are system and farm specific stories behind that increase.

“It was more than likely the low feed grassland systems that were intensively using grass that were worse effected as a result of the fodder crisis earlier in the year,” she added.

In terms of fertiliser costs in 2013 she noted that volume used is the big news this year due to the Fodder Crisis.

“There was a significant upward movement in fertiliser usage with nitrogen up 20 per cent and P and K up 30 per cent in 2013 relative to 2012.”

Due to this Teagasc has calculated that expenditure on fertiliser on livestock farms was up 23 to 25 per cent in 2013 relative to 2012.

AgriLand is reporting live from the Teagasc Outlook 2014 conference, more reports to follow