Dairygold Co-op praised for its grain prices announcement

Dairygold Co-op was praised by farmers this week for its grain prices announcement, writes Stephen Cadogan.

Dairygold Co-op praised for its grain prices announcement

IFA President Joe Healy said many of the country’s 3,000 specialised tillage farmers are seriously questioning the long-term viability of their tillage farming, and it is reassuring for them that the co-op’s prices were not based on the lowest common denominator of imported feed ingredients.

He hoped other other grain buyers will follow suit.

Dairygold said grain prices are very sluggish, but it was demonstrating its support for and commitment to its grain growers by paying leading prices, and is committed to maximizing native Irish cereals in its range of feedstuffs.

It’s a bit of welcome news for growers nationally, who came into October with 5% of crops still unharvested, due to bad weather.

That included about 30% of beans, and about 20% of straw was still to be baled.

It’s another year of low grain prices and bad weather, likely to continue the 14% decline in the last five years of Ireland’s tillage acreage, led by reductions in Cos Cork, Kilkenny and Wexford.

A specialised tillage farmer needs hundreds of acres to generate an income, but is now less able to compete for the leased land used for 50% of the national tillage area sown.

Since the change in the taxation status of rented land, more and more one-year conacre land is going into long-term leases, and tillage farmers are up against dairy farmers who can better afford to offer leases of up to 15 years.

Average land lease prices have increased by €30-50 over the past four or five years.

After five years of low grain prices, also squeezing tillage farmers is the convergence of the single farm payment, which hits tillage farmers hardest, because they have the highest payments, accounting for about 75% of their incomes. However, convergence means these high payments per hectare are being reduced, in order to lift the country’s lowest payments.

Dairygold’s grain prices of up to €160/tonne (excluding VAT), are welcomed by farmers, but is there any way growers can improve their prospects?

Short of developing a market for Irish-only product, many grain growers here seem to run the risk of being squeezed out.

Perhaps their biggest problem is the onward global march of genetically modified (GM) farming.

We have about 3,000 specialised tillage farmers, producing 2.2-2.5 million tonnes per year of grain, mostly used for the six million tonnes of animal feed used in Ireland.

But it is the four million tonnes of predominantly genetically-modified animal feed grains that we import from the world market which dictates the low grain price paid to our own farmers.

As in any business, market trends determine survival, and Irish grain growers are swamped by the ever-increasing supply from the world’s 185 million hectares of GM crops. Farmers in north and south America are likely to capitalise on the improved productivity and profitability of GM crops by continuing to set new annual records for GM acreages.

The flood of that grain onto world markets keeps pressure on the price an Irish grower can get.

The best prospects for Irish growers may be in specialisation.

Going organic is an obvious option. There is estimated demand for about 10,000 hectares of land to convert to organic grain production.

However, there is no Irish scheme presently to subsidise new organic farmers.

Even without such a scheme, converting from high-input, high-output production to organic farming is a huge leap.

On the other hand, such factors ensure that the Irish organic grain market is never likely to be over-supplied.

For others, supplying the Irish drinks sector may keep them profitable, with for example, malting barley fetching €15 per tonne more than animal feed barley.

With drinks exports growing 4% per year, and 60% of the raw materials purchased in Ireland, the drinks industry already buys about 10% of Ireland’s annual grain harvest

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