Teagasc has warned some horticultural growers are considering cutting back on production for 2022 to manage their cash flow or minimise exposure to high costs.
It follows a significant rise in production input costs this year, mostly due to external macroeconomic factors.
Analysis by Teagasc Horticulture Development Department suggests input cost increases will, in many cases, exceed grower margins.
It predicted growers will be unable to absorb the rising costs, without an increase in what they are paid for their produce.
Dermot Callaghan, head of the department, said it is likely to lead to a significant reduction or cessation of both early and late season production in glasshouses.
Andy Whelton, Teagasc Horticulture Advisor added: “The horticultural sector is exposed to several input price increases, chief among them labour, packaging, and fertiliser.
“The impact on overall costs of production is very significant, particularly for crops that need to be harvested and graded by hand,” he said.
Irish horticultural producers provide local, fresh, top-quality produce and plant material to the retail market.
The diverse sector, with a farm gate value €477m is the fourth largest sector after dairy, beef and pigs in terms of gross output value.
It covers plant, and food horticulture, which includes mushrooms, potatoes, field vegetables, soft fruit, protected crops, and outdoor fruit.
Teagasc reports that considerable volatility remains as primary producers try to forward plan business for 2022 and manage cash flows.
In an environment where cost planning is difficult, it says the risk is increasing significantly for primary producers.
Across all enterprises, there has been a sharp increase in the cost of labour, packaging materials, fertiliser, energy, peat-based growing media, and a myriad of other inputs.
Total input costs have increased by between 10.5% and 17.7% depending on enterprise type, it added.
Irish Farmers Association president Tim Cullinan recently claimed the difficulty in sourcing peat was the final nail in the coffin for many horticultural operators.
“If action is not taken immediately, this Government will ultimately be responsible for the demise of this sustainable sector,” he said.
Housing, Local Government and Heritage Minister Darragh O’Brien, replying to Dail questions last week, said the final report of the chairman of the Independent Working Group, Dr Munoo Prasad, set up to review the use of peat moss in horticulture, which he received on October 20, is being considered and will be brought to Cabinet in due course.
The IFA has meanwhile welcomed comments by Tánaiste Leo Varadkar that there was no viable alternative to peat for the horticulture sector and that the Government needed to find a solution to the issue.
Horticulture chairman Paul Brophy said the importation of peat will increase the environmental footprint of Irish growers while placing them at a severe competitive disadvantage.
Agriculture Minister Charlie McConalogue this week voiced his concern on the matter at Monday's Agri-fish Council in Brussels.
Minister McConalogue said: "I am concerned about the negative developments in the fertiliser market and the rising costs of other inputs.
"Producers are facing significant input price increases in fuel, fertilisers, feed and energy, which will put margins under significant pressure if they are sustained over time. We need to examine all relevant factors, including the issue of anti-dumping duties on fertilisers."