IFA: Fuel and energy prices putting inordinate pressure on farms

Spiralling fuel and energy costs are aggravating income pressures on farms due the worst summer weather for decades, says IFA president John Bryan.

The IFA leader said that fuel prices are putting inordinate pressure on farmers’ margins, but also on the agricultural supply and processing sectors, as agricultural goods and inputs tend to be high volume and export-orientated.

“In the last two years alone, agricultural diesel has gone up by a massive 55% while road diesel has increased by almost 35%,” Mr Bryan said. “Escalating energy costs are impacting negatively on Ireland’s economic and employment recovery as our productive food and drinks sector are heavily dependent on exports. The Government need to factor this in fully in framing the next budget.”

Fuel is one of the main expenditure items on farms. Agricultural diesel is breaking through the €1/lt mark and road diesel is fast approaching €1.70/lt.

The combination of increased prices and use, due to higher than normal grain moistures and abnormally wet silage, is putting serious upward pressure on costs and rapidly eroding farmers’ margins.

This latest crude oil price increases in dollar terms builds on prior year increases of 43% in 2009, 21% in 2010, 13% in 2011 and 9% on a year-to-date basis, Mr Bryan said.

However, a weakening euro has aggravated the price increase for Irish farmers and consumers. The imposition of a carbon tax across all carbon fuels on top of already high excise duty and Vat rates has seen the Government’s take on auto diesel increase to 79 cent per litre.

Mr Bryan said the recent spike in fuel prices has been driven by speculative investment by hedge and pension funds on foot of the ongoing eurozone debt crisis. He also cited the ongoing geopolitical tensions across the Middle East and North Africa with the threat of supply disruption.


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