Bank of Ireland's annual farmer survey has found a subdued sentiment among farmers with 67 per cent of farmers reporting higher input costs and 70 per cent believeing that Brexit will negatively impact their business.
The survey, Agri Pulse, was carried out in April by Ipsos MRBI on behalf of Bank of Ireland. Two hundred and fifty farmers were asked their views on a wide range of topics. Compared with April 2017, when the survey was last carried out, repsondents were less positive. Adverse weather conditions, the fodder crisis and the lack of progress in moving the Brexit talks on have all taken a toll on farming sentiment and also look to have tempered growth ambitions somewhat.
Commenting on Agri Pulse, Dr Loretta O’Sullivan, group chief economist, Bank of Ireland said: “The mood was subdued in April, with farmers downgrading their assessment of the current situation. Sentiment has dropped across a number of fronts, which isn’t surprising given the recent environment. Brexit is clearly weighing heavily, with seven in 10 respondents feeling that it will negatively impact their business.
“The results also highlight that one in four expects to increase investment in their farm in the next 12 months, and almost two in five have ambitions to expand their business in the next one to three years, albeit this is down on August last year.”
Production has been held back by the bad weather, with land shortages weighing on activity as well, especially in the dairy and tillage sectors. Expectations for the next 12 months were also softer. While most farmers still expect to increase or keep production the same, one quarter expect to produce less.
Input costs and market prices
The April data point to significant cost pressures. Excluding labour, but including inputs like feed, fuel, fertiliser, veterinary and land rental, two thirds of farmers indicated that costs were higher than a year ago. With input costs rising and bottom lines feeling the pinch, 25 per cent reported deterioration in farm profitability over the past 12 months (this is double the August 2017 figure of 13 per cent). On the pricing front, around half expect no change to the prices they receive on the market. Dairy farmers were more downbeat though and were mostly of the view that prices will fall over the coming year.
More positively, one in four expects to increase investment in the farm in the next 12 months, led by dairy and tillage farmers. Replacing and maintaining worn-out buildings, equipment and vehicles is a key focus, with purchasing livestock and investment in new farm buildings, land and equipment and vehicles on the cards as well. The majority are factoring in an outlay of up to €50,000.
Looking further ahead, the results show that 38 per cent have ambitions to expand their business in the next one to three years (down from 55 per cent last August). A similar number indicated that they see the farm remaining the same size, while one in four (mainly older farmers) are planning on scaling down (up from 14 per cent in August). Given the importance of the UK market for agricultural produce, Brexit remains a headwind for farming businesses, whereas the opening up of the Chinese market to Irish beef and the new EU-Japanese trade deal may provide a potential boost going forward.
There are a number of upcoming Bank of Ireland agri events taking place across the country including: Agri Digi in Waterford (May 25), Flavours of Fingal, Dublin (June 23 & 24), Agri Wexford (June 27), Future of Farming in Kildare (July 23) and Tinahealy show in Wicklow (August 6).