Farm incomes for 2012 to be 30% lower than last year, says Teagasc
The Teagasc analysts are already predicting an even bleaker end to the year. With Irish cattle feeding indoors due to unrelenting domestic rainfall, foul weather globally is also driving up the cost of grain imports, which account for the vast majority of grain consumed in Ireland.
Reacting to the Teagasc presentation, IFA president John Bryan said: “The outlook midway through 2012 confirms the serious downturn in farm incomes. Higher input costs, coupled with disastrous weather conditions and price falls in some commodities, are all combining to make 2012 a very challenging year for farming. In addition, cuts to farm schemes over the last four years are beginning to impact very severely on thousands of low-income farmers.”
Mr Bryan again warned there can be no more cuts in the budget, and direct payments under the various farm schemes must be made in full.
“If farmers are to farm their way through this, it is critical that a fair price is given for their product. With over 40% of our exports going into the UK, the continued weakening of the euro should provide a positive boost to product prices.”
At a briefing yesterday attended by agri-food industry representatives, Teagasc economists confirmed that many Irish farmers will experience a drop in income in 2012. They said that drought in the US and poor weather conditions in Europe have reduced the grain harvest potential, leading to an increase in grain and animal feed prices internationally.
Teagasc economist Thia Hennessy said: “Irish livestock farmers will have to pay higher prices for animal feed, and high summer rainfall levels mean that the volume of feed used on dairy and beef farms will increase. Higher grain prices should be good news for Irish cereal farmers, but the adverse weather conditions this summer means that crop disease is expected to reduce cereal yields.
“The fall in Irish cereal production is likely to offset most of the grain price increase on cereal farms, leaving incomes on cereal farms more or less unchanged on last year’s level. Dairy farmers are being hit from both sides at present as they face higher input costs and lower sales prices for their output.”
The Teagasc report noted that milk prices are likely to be 15% lower in 2012 than they were last year due to increases in production in some of the world’s key dairy exporting nations. Coupled with rising production costs, this means dairy farmers are likely to see their incomes falling by up to 30% this year.
The Teagasc economists noted that Irish cattle and sheep farmers will fare better in 2012 than last year.
Beef prices are expected to be 15% higher in 2012 relative to the previous year due to a continued fall in the supply of beef in the EU. In addition, the weaker euro is aiding the competitiveness of Irish beef exports to the UK.
Overall, despite the rise in feed expenditure, incomes should increase on Irish beef farms this year. Sheep prices this year are expected to remain relatively strong and profit margins should be on a par with 2011.
The outlook for pigmeat prices remains positive for the remainder of 2012. More stringent animal welfare legislation has led to a contraction of supply from northern Europe and growing global demand from Asian markets, in particular, is pushing up pigmeat prices.
However, increasing feed prices will offset the rise in pig prices and profitability in Irish pig farming will remain low in 2012.
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