Rising costs hurt everyone
They can’t do much about their biggest problem — the global rise in food prices, mainly due to climatic, economic and demand trends beyond our control.
However, greater consideration of the problems faced by food producers in Ireland, and how they can control their production costs, would not go astray.
CSO figures comparing January 2008 with January 2007 show that Irish farmers have had to carry huge annual price rises for the materials they use to produce crops and livestock.
Feedstuffs for livestock are 20% dearer, fertilisers 23% dearer, seeds 7% dearer, and motor fuels are 25% dearer.
Higher input costs for farmers and food companies must be recovered through increased prices for consumers. Year-on-year, they are paying 42% more for bakery items, and 23% more for dairy products.
Many farmers here would have been forced by this runaway inflation to nearly shut down, were they not getting 18.6% more for what they sell, on average. That more than cancels out the average 15.5% rise in the cost of farming materials. However, the average picture hides the predicament for farmers in the sectors where the cost of farming has passed out the profitability, by a wide margin. For example, cattle prices rose only 7% in the year, sheep prices less than 2%, pig prices have fallen by 3%, poultry prices are up only 4.3%, and potato growers were getting a disastrous 32.4% less for their crop last January compared to 12 months earlier.
Huge price rises of 45% for milk and 68% for cereals leave only dairy and tillage farmers able to carry the increases in farming costs.
Unless price trends in the other farming sectors recover quickly, slumps in production of cattle, sheep, pigs, poultry, and potatoes look likely here. That will leave consumers relying heavily on imports, and greatly restricted in their search for better value which the government recommends.
Our government is relatively powerless to control the jumps in fertiliser and fuel prices. The state once owned more than half of the IFI manufacturer of nitrogen-based fertiliser in Cork harbour, but has pulled out of that industry, as did many manufacturers around the world. As a result, the global nitrogen production cycle is at one of its lowest levels, and is likely to stay there for some time, partly due to the high cost of fuel to power factories. Industry sources say there are virtually no stocks of ammonium nitrate left in Britain.
All the Government here can do is continue to promote maximum recycling of manures. However, their adoption of the EU’s nitrates directive has restricted farmers’ use of these manures.
As for feedstuffs for livestock, the industry which manufactures these items says the Government must carry some of the blame for the 20% price rise.
According to the Irish Grain and Feed Association, countries which oppose genetic modification, such as Austria and Ireland, have blocked the import of feedstuffs derived from genetically modified crops, and this added €60 million to Irish livestock feed costs in 2007.
Ireland was worst hit in the EU because we import more than 50% of our animal feed ingredients, compared to 30 to 40% in Britain, France and Germany.
The IGFA warns that unless EU member states end their opposition to GM-linked feedstuffs, its members will not be able to supply the full feed requirements of our livestock farmers in 2009.
Even without that many of these farmers will have to cut back activity, due to runaway costs — and partly due to the latest apparent government move to put them out of business — charging for public water supplies.
After the heaviest March rainfall in 20 years across much of the country, it is a particularly sore point that local authorities are setting water charges as high as €1.45 per 1,000 litres, and charging farmers €350 per year in water meter rental, plus €280 per additional meter needed on fragmented farms.
This looks like the last straw for many cattle and sheep farmers, and it is not surprising that more than 1,000 farmers have attended some meetings in the past few months to learn how water charges could affect them.
However, hope of a reprieve has emerged recently, with farm organisation and MEPs revealing that social, economic or environmental exemptions can be sought from the EU’s Water Framework Directive requirement that governments recoup the cost of water recovery from water users.
The directive allows the Government to exempt any sector adversely affected by higher fees for water recovery, according to Independent MEP for Ireland South Kathy Sinnott.
Environment Minister John Gormley will be fiercely pressured to seek an exemption, but farmers won’t be holding their breaths, suspecting — like many others — that the Government is using water charges as a substitute for exchequer funding of local authorities.
Some farmers are members of community-owned and run water services, which can continue to set their own water charges. But many will inevitably have to get rid of livestock if forced to pay for water on top of 20 to 25% price increases for the main farm inputs.
Even the option of harvesting our Irish deluges of rainwater was shot down by the Government. It offered grants for rain water storage in the Farm Improvement Scheme, but scrapped the entire scheme after only four months.
Normally, high food prices would encourage farmers to increase production, and consumers would benefit when increasing supply drives down food prices.
Instead, the rising cost of farming is likely to hold back Irish food production, and when food prices fall, farming here could see a big slump.
