Ireland’s oat farmers going to seed as world markets dictate prices

John Flahavan takes a scoop of oats from the roaster.

They are still warm, smell like breakfast, and taste delicious.

We’ve just been around John’s mill, at Kilmacthomas, in West Waterford, and it all seems so simple. Our tour followed the oats from entry to the factory to where they are now, ready for packing. The oats were cleaned, shelled, cleaned again, chopped and then roasted, after being softened by high-pressure steam. That steam came from a boiler heated by incinerating the oat by-product. A turbine, turned by the River Mahon as it flows past, powers the mill for much of the year.

But nothing is as simple as it seems.

With us is farmer Bill Shanahan: the winter oats have just been harvested, and Bill has been delivering trailer loads to Flahavan’s.

The mill has been in the Flahavan family since 1785. They have a guaranteed supply, in a 50- to 60-mile radius, from farmers like Bill, who have been drawing to Flahavans for generations. It is a good relationship; no doubt the supplier would like a better price, just as the processor would like lower costs.

John Flahavan can buy oats from anywhere, but he prides himself on the Irishness of his eight lines of finished product. It adds a premium to Flahavans in the market. But the oat-growers are at the mercy of the world market, which sets the price, and markets are an unforgiving master.

“There are very few young farmers getting into oats,” says Bill. “The farmer who’s in it now is doing it out of tradition almost. Each year is a gamble, and it’s the farmer who’s doing the gambling.”

Oat-growing isn’t just sowing seed in October and returning with the combine in early August. After preparing the land, it is sown with recommended-seed only. Once rolled, the seed is reliant on the kindness of the weather. Diseases, such as barley yellow dwarf virus, can destroy a crop. A murder of crows can clean out a field of fresh seed — and crows run out of alternative feeds at the very time oats are sown.

There is nothing Bill can do to prevent a wet summer, which can destroy a crop. Even if the crop is saved, high moisture content can drive the price down. In a difficult autumn, when he harvests successfully against the odds, the oats, though scarce, may be of little value. A crop of oats that’s more moisture than grain isn’t of much use to the miller, though it is all the farmer can bring to market.

A new variety of seed is only allowed on the market after extensive trials. It can take up to 12 years for a variety to make it from the breeder to a full commercial harvest. The seed used by Bill, and by most other Irish growers since 1986, is Barra. It was only in 2010 that the Seed Technology Company recommended a new oat, Husky, which may supplant Barra in the long-term. Roy Power, of Seed Technology, whose family has been in the grain business for generations, says that it is a 500/1 shot that any new seed variety will become one of the success stories. An oat seed has to be disease-resistant and suitable for Irish weather conditions (mildew is a big problem). Stalk strength, bushel weight, moisture content and grain size are premium considerations in seed trials. Husky is comparable to Barra on all indices, but is ahead in the key one, kernel content, by 1%. That 1%, though, when multiplied across many acres of crop, can make a huge difference.

Like all aspects of Irish farming, whether dairy, beef or tillage, European regulations and payments have had a huge impact. The smaller Irish farmer, in contrast to the Continental norm, has been affected hugely over the 40 years of our EU membership. Policies that may be more suited to the larger farms are still enforced on the smaller holdings — policies that may have come originally from the prairies of the Midwest USA.

A big bone of contention for Bill, and for other Irish grain growers, is the crop diversification being introduced under next year’s new EU Basic Payment Scheme.

This new set of rules will replace the Single Payment Scheme (SPS).

As Bill says, it will be very difficult for the grain producer. A farm of up to 10 hectares can stay with a single crop. For a farm of over 10 hectares and less than 30 hectares, they will have to sow at least two different crops. The larger crop cannot take up more than 75% of the land sown.

On farms of more than 30 hectares, there will have to be at least three crops grown on the arable land, and the largest crop cannot take more than 75% of the land, while the two larger crops together cannot take more than 95% of the available land.

Irish farms are not on prairies, like in the USA or in the larger European countries. In Ireland, traditional land ownership is in smaller holdings, which can be disjointed and spread out over unconnected lots. For a farmer to break up the crops over such land banks will be next to impossible.

“How can a guy sow oats in this field, and then halve one field for wheat and barley, just to meet the rules, especially if his farm is spread over different townlands and small fields?” asks Bill.

Farmers have also seen a steep rise in land rental prices, attributed to preparation for abolition of EU milk quotas next year. Acreage for dairy farming is in demand, because financial returns from that sector are high. Land that was fetching, maybe, €150 per acre two years ago is now demanding, and getting, up to €350.

It is expected that the growth in Irish dairying will continue for the foreseeable future. With both tillage and dairy farmers pursuing the same land, the rental price has risen accordingly. This can make it almost impossible for a tillage farmer to turn a profit.

“Yet,” says Bill, “the farmer, who is locked into a Single Payment Scheme set ten years ago, has to keep renting. What is the alternative? Lose the SPS, or part of it, making the farm unprofitable, or plough on and hope next year will see better times?”

The prospect of an Irish oat farmer turning a profit anytime soon is unlikely. Grain price is set by the world market, which is fed by farms of a much larger size, with lower costs. That price has dropped dramatically, in real terms, over the last 30 years. In 1983, it was £115 a ton, but reached £155 a ton in 2013. With inflation, that £155 should be about €330 now. The fertiliser for the crop costs around €450 a ton, compared to £97 in 1983.

The Irish oat farmer is in a particular bind, doing the work out of tradition and hope — which may not be sustainable. “Oats is a minority grain,” says Bill. “Other grains produce a hundred times more crop, and that gap is getting bigger, not smaller.”

In the 1850s, Ireland had more than a million acres under oats, but today it is less than 14,000. What will it be in a few years’ time?

John Flahavan has grown a very successful business on the strong image of the quality of the Irish oat. Through hard work, they have found markets from Russia to South Korea, to the supermarket shelves of the USA. If Irish oat farming is to survive, the grain grower will have to value his product accordingly, market it as the premium product that it is, and fight for the sustainable price that their oats deserve.

As I leave Bill Shanahan, he’s heading to check the blades on a combine. Will those blades be cutting oats in the future?

Tradition can’t dictate farm output for much longer. The harsh reality of market price, EU regulations, and rental costs will change Irish oat production, possibly forever.

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