IFA National Grain Committee Chairman Liam Dunne has said Irish grain farmers are facing a significant income challenge that threatens the viability of the sector as a result of significantly increased costs, a much reduced Basic / Greening Payment and declining quotes for new crop grain. Poor returns over the last three years have seen the area sown to cereals, oilseeds and proteins (COP) drop by 36,000 since 2012.
Mr Dunne said, “The current price cost squeeze, coupled with a reduction in growers’ Basic / Greening Payment, and extreme price volatility threaten the future viability of Irish grain production. Over the last 12 years there has been a substantial increase in input, land rental and machinery costs. Fertiliser prices alone have increased by a massive 270%. Variable production costs (including machinery) for spring barley, according to Teagasc data, have gone from €640/ha (excluding vat) in 2003 to over €1,000/ha today while grain prices head in the opposite direction. Production costs for other arable crops have followed a similar pattern. Changing weather patterns have also increased the challenge to growers as seen in 2009, 2012 and so far this harvest.”
Liam Dunne said, “The trade must reduce input prices, grain drying, handling and storage charges immediately and increase the price paid for green grain this harvest. Current price offers of sub €140/t for green barley and €10/t to €15/t over for green wheat will see many growers struggle to break even this year even on their own land. Marginal returns coupled with weather-related production risks, competition for land, a reduced Basic / Greening Payment and increasingly complex compliance rules arising out of CAP reform will force more growers to reconsider their enterprise choice. This is already happening, as evidenced by the significant reduction in the COP area of 36,000ha over the last three years.”
“Speculative investment in grains and oilseeds by the financial community has accentuated the price volatility in recent years, creating serious financial difficulties for arable and livestock producers alike. The resulting peaks and troughs in prices are creating boom / bust cycles. While the introduction of forward selling has helped to smooth prices it is not without financial risk. The EU along with other developed economies must move to limit speculative investment in agricultural commodities.”