IFA’s air of quiet confidence
Not surprisingly, she is concerned at underlying uncertainties in the eurozone, weakness in the British market, and the CAP negotiations, which will intensify this year.
But she confidently predicts any easing back from the commodity price peak of 2011 should be moderate, and even holds out hope for beef prices in the EU to increase. It isn’t often that IFA gives such hostages to fortune. But that’s typical of the air of quiet confidence that can be detected throughout by reading between the lines of this document.
Farming is a up-and-down business, with income falling in 2008 and 2009, and rising the last two years, adding up to a near 60% swing in three years.
So farmers can be forgiven for being cagey about their prospects — with an average age of 55, they are unlikely to ever be carried away by blind optimism.
But nor can IFA be accused of pessimism in this document; it is clearly prepared to look at both the upsides and downsides.
The slump in the value of the euro is welcomed, because it makes our agrifood exports more competitive.
On the other hand, the higher cost of imported farm inputs due to a weak euro is acknowledged. But IFA sees another positive, that the higher cost of imported farm inputs could be counterbalanced by lower international demand for inputs. Overall, it’s a realistic assessment of farming prospects — and the few warnings in it should be heeded, rather than dismissed as alarmist.
One of the obvious ones is that a probable super-levy fine may be a significant cost to farmers in 2012, with every 1% of milk produced in excess of the national quota incurring a fine of about €15m.
It is also made clear that farmers towards the lower end of the income range are in a precarious position.
Since 2008, due to pressure on farm incomes, and the loss of off-farm employment, the number of farmers getting Farm Assist from the Department of Social Protection has increased almost 50%. By the end of 2011, there were 11,300 families in receipt of Farm Assist.
The proportion of farmers with an off-farm job fell from 41% in 2007 to 32% in 2010. However, IFA hopes for improvement in 2011 from the 2010 situation of more than 40% of family farm incomes coming in under €6,500, and only 13% greater than €40,000.
When all direct payments are included (mainly single farm payment, REPS, Disadvantaged Area payment, suckler cow payment), these comprised 98% of family farm income in 2010, and over 100% of family farm income on cattle and sheep farms. So concern over CAP negotiations is perfectly understandable, with IFA particularly anxious to get a single farm payment model that targets support for active farmers.
Bilateral trade discussions between the EU and Mercosur countries also hang over farmers.
But IFA and Rowena Dwyer are constructive in calling for a solution to farm commodity price volatility, in the form of market instruments which guarantee forward prices, such as contracts or forward selling.
They want these instruments available for all major commodities, saying there are very clear benefits for both farmer and processor of providing some price and supply certainty.
Such improvements could add momentum to favourable trends acknowledged by IFA — the slight increase in borrowing and deposits for agriculture in 2011, indicating a return to confidence; net investment increasing 200% from 2009 to 2010; farm borrowing increasing slightly in 2011; and stabilising costs of borrowing in 2012.
