Waging war against the soaring cost of farming

Since 2005, farm input costs have increased by 42%, while general inflation has risen by about 13%.

This was one of the important findings in a recent outlook and review report by IFA economist Kevin Kilcline.

So it’s no surprise that new IFA president Eddie Downey pinpoints reducing input costs as one of the keys to improving farm incomes, along with securing premium prices.

His predecessor John Bryan recently said input costs have to drop, and that IFA would be directing more resources towards challenging all providers of inputs and services to the farming sector to improve efficiencies and competitiveness.

Downey said high input costs was one of the strong messages coming from farms across the country, which he visited over the last six months, and during his election campaign.

Kevin Kilcline found the gains from significant rises in product prices at the farm gate over the past number of years have been almost totally eroded by increases in farm input prices.

The dreadful weather which extended into the first half of 2013 left farmers even more at the mercy of high input prices, because of the necessary increased purchases of feed and fertiliser.

High input expenditure helped to limit the rise in national farm income in 2013 to 2.4%, despite significantly increased output volume of goods in the dairy and cereals sector, plus increased production volumes for cattle, sheep and poultry.

In real terms, the long-term farm income trend continued downwards, with national farm income in 2013 estimated at only 66% of farm income in 1993.

Average farm income stays at about 66% of the average industrial wage.

It’s not just an Irish problem.

The cost-price squeeze is an EU problem. Statistics from 2011 show that since 1996, agricultural product prices at the farm gate increased on average by 1.1% each year — but the prices of input used in farming increased by 2.9%.

That trend undermines the latest pep talks for farmers from EU Agriculture and

Rural Development Commissioner Dacian Ciolos.

He said the EU provides strong potential for agricultural exports, and that agri-food exports (notably quality products rather than commodities) are vital for helping Europe emerge from economic crisis.

He said this recession-busting role for agriculture can be seen in Ireland, Spain, Greece and Portugal.

To help, he is moving to treble the budget for promotion of food exports out of the EU.

However, he said EU farmers must be leaders in food safety and better sustainability, and protecting biodiversity, soil fertility and water, to the point of setting standards and norms as a global leader.

What he didn’t mention is that it looks like EU farmers will also have to continue to carry a heavier and heavier inputs industry burden on their backs.

Maybe that is the true role of farmers in the EU plan — to create economic activity not just in food production but also in the industry producing farm inputs — along with being occasionally sacrificed in trade deals so that other EU industries can benefit?

The fight against input price inflation is an obvious cause for Eddie Downey, and it’s one where he could find allies across the EU.


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