Tillage men question their future due to low margins

Many professional tillage farmers are questioning the long-term viability of cereal production given the relentless price cost squeeze and the subsequent low or negative margins, according to IFA National Grain Committee Chairman Liam Dunne.

“Any enterprise that is not making sufficient profits to reinvest in its business has no future.”

Liam said that input manufacturers, suppliers, seed assemblers and the merchant trade need to recognise the gravity of current situation, cut their margins accordingly and pass back savings to growers for the current harvest. Longer term there needs to be a serious realignment of input costs to reflect substantially reduced grain prices.

“On the political front there is an onus on political leaders the world over to reduce the role of speculative investors in soft commodity pricing. The massive inflow and outflow of funds in recent years, particularly grains, by the investment community is resulting in marked price volatility and this coupled with spiralling input costs is undermining the viability of many family farming units. In addition the operation of price cartels among some of the world’s major fertiliser manufacturers must also be tackled. Urgent political action is needed on these two fronts to curb price volatility and excessive input costs.”

He also said that marginal returns coupled with weather related production risks and increasingly complex compliance rules under the new CAP will force many growers to reconsider their enterprise choice. “The industry, if for nothing else other than self-interest, must support growers to get through what is a very challenging financial year.”