Bank of Ireland says farm profitability is feeling the pinch

Dr Loretta O’Sulivan, group chief economist with Bank of Ireland, says “with input costs heading north and market prices going south, farm profitability is feeling the pinch”.

She was commenting on a recent Bank of Ireland survey in which 250 farmers gave their views on topics including farm profitability, market prices and investments.

The survey found that farm profitability has deteriorated on 46% of farms over the past 12 months.

Production

One in four respondents indicated that production was higher than a year ago, as the benefits of milder weather conditions were felt.

Over a third of those surveyed expect to increase farm output over the next 12 months. Sentiment was mixed across the sector, with dairy leading the way and suckler cows bringing up the rear.

The survey also found that cost pressures continue, with 75% of respondents stating that input costs (excluding labour) were up on this time a year ago.

The outlook for the next 12 months does not appear to be much brighter.

Almost half of farmers who took part in the survey believe the market prices they’ll receive will fall.

The majority are looking at sums of up to €50,000, particularly farmers with larger holdings, while smaller farmers are typically planning outlays of up to €20,000

Interestingly, two in five of respondents say they are involved in outside activities to supplement the family farm income. Almost half (47%) of respondents believe market prices will fall in the next 12 months.

While the majority of farmers (54%) do not intend to invest in the next 12 months, one in four do expect to invest, with dairy and tillage farmers leading the way.

The majority are looking at sums of up to €50,000, particularly farmers with larger holdings, while smaller farmers are typically planning outlays of up to €20,000.

Overall, 43% of survey respondents plan to grow their operations in the next one to three years.

Same size

Two in five intend to keep their farms the same size, with 18% (generally older farmers and those in the cattle and sheep trade) looking to downsize.

Brexit fears still persist in the sector, as worries about prices and access to UK markets continue to rattle nerves. More than eight in every 10 farmers surveyed expect the UK departure from the EU to have a negative impact on their business.