Financial planning and innovation boost farm output: advisory firm

Innovation and financial planning are playing a key role in the expanding output evident in Irish agriculture, business advisory firm Grant Thornton has said.

While the latest CSO figures reveal a 0.5% monthly decrease in the agricultural output price index for March versus February, Grant Thornton has signalled the 11% increase for Mar 2012 against Mar 2013 is more significant.

Traditionally, farm output decreases in March as dairy farmers strive to avoid exceeding their EU quotas before the March 31 deadline.

Ciara Jackson, head of food and beverage with Grant Thornton, said the 2012 versus 2011 figures underline the importance the agri-food sector to the recovery of the economy.

“Strong output costs are vital to maintaining a healthy and demand driven sector,” said Ms Jackson. “We have seen in recent times a resurgence in the agri-food sector that has sparked a renaissance among food producers. Indeed, the recent announcement by Bord Bia, Teagasc, and Enterprise Ireland of the Foodworks initiative shows the importance of the sector for Ireland Inc.”

“The other side of the equation — input costs — also needs to be considered. While the overall growth year on year is relatively modest, the harsh reality facing many businesses in the sector is that seed, energy and fertiliser costs have grown 7.7%, 7.6%, and 3.1% respectively, in some cases almost completely wiping out any gain made on the output side.”

While the CSO’s output figures declined from February to March, the agricultural input price index increased by 0.7% over the same period. Thus, the resulting terms of trade index decreased by 1.2% in Mar 2012.

The seasonally adjusted output price index in Mar 2012 was 0.8% higher than in Feb 2012.

The rise in input prices will present farmers with a management challenge this year, notes Grant Thornton.