Falling prices blamed for income drop

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Falling prices are being blamed as the main contributor to a drop of £53m in farm incomes in Northern Ireland.

Provisional estimates from DARD revealed that the total income from farming decreased by 16 per cent (17 per cent in real terms) from £336 million in 2013 to £283 million in 2014.

The figures also show that the Single Farm Payment accounted for 87 per-cent of total income in 2014.

Total gross output for agriculture in Northern Ireland fell by 3 per cent in 2014 to £1.89 billion.

Agriculture Minister Michelle O’Neill said all sectors in the industry had been affected by the reduction in incomes.

“Falling prices have been the major contributor to this downturn. Fluctuating markets is not a new problem, but it remains a very difficult issue for farmers to address,” she added.

“For me, it is one of the reasons why direct CAP payments are so important to the agricultural industry, as these funds provide a buffer against the effect of market volatility.”

The minister warned that farmers couldn’t rely on direct CAP payments to get through difficult times and had to continue to work to improve efficiency and competitiveness and help build resilience.

“This is why it is so important that we get the best out of the ‘Going for Growth’ initiative and the new 2014-2020 Rural Development Programme. I am determined that we use these mechanisms to build a stronger industry that can face the future with confidence,” she added.

“There has been a recovery in beef prices of late and there are early signs that global dairy prices are perhaps beginning to improve at last, which is encouraging. Nevertheless, I intend keeping pressure on the Commission to respond more positively to the financial problems facing farmers.”

Ulster Farmers’ Union president Ian Marshall said that while the figures were not surprising, they highlight the challenging cash flow problems currently facing farmers across the province.

He continued: “2014 was a tough year financially for farmers. In particular market volatility across all sectors meant farm gate prices were hit hard and this unpredictability has posed a serious challenge to managing business cash flows.

“Hardly any of our commodities have been spared, beef producers experienced an 8 per cent decrease in their prices throughout the year, while dairy and pig prices suffered as well.

“Also, farmers in the arable sector bore their share of the effects of market volatility with the total output value of field crops falling 19 per cent in 2014, largely due to the reduction in producer prices for barley and potatoes.”

Mr Marshall said a disappointing sterling to euro exchange rate only compounded the issue, with farmers losing a total of £20 million from their 2014 Single Farm Payments.

“Despite this, it is clear from the figures that the Single Farm Payment continues to play a vital role in our farming industry, making up 87 per cent of our total farm income,” he added.

“Based on the latest figures, it is safe to say that farm business profitability remains one of the most important issues facing farmers today. It is startling that the Single Farm Payment still makes up the majority of our farming income and with the recent major reforms to the CAP many farmers, in particular many beef farmers, are facing a future with a greatly reduced direct payment. Never has a single integrated supply chain, which delivers profitability for all partners, been more important. Processors and retailers who continue to rely on farmers receiving direct payments to pad out cheaper food prices for consumers are putting Northern Ireland’s entire agri-food industry at risk. The NI Government has made a commitment to investing in our agri-food industry with the Farm Business Improvement Scheme but without farm businesses being profitable, the uptake of this scheme on the ground is questionable.”

Mr Marshall concluded: “While there have been slight improvements in producer prices in some sectors recently, such as beef and we are seeing signs that dairy prices could be turning a corner, we have to be realistic that market volatility is not something that is going to go away.

“The UFU continues to keep a close eye on the situation and has already met with both Agriculture Minister Michelle O’Neill and DEFRA Minister Liz Truss to table proposals, which, if implemented, would go some of the way to helping farmers cope with an increasingly volatile market place.”