Bank of Ireland Agri Pulse finds subdued sentiment

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The Bank of Ireland Agri Pulse found farmers in the Republic of Ireland in a relatively sombre frame of mind in April. Compared with August 2017 - when the survey was last carried out - respondents were less positive about production, costs and farm profitability.

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.

Discussing the Bank of Ireland 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 ten 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.”

Farm output

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% reported deterioration in farm profitability over the past 12 months (this is double the August 2017 figure of 13%).

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.

Investment plans

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.

Business ambitions

Looking further ahead, the results show that 38% have ambitions to expand their business in the next one to three years (down from 55% 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% 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; Silver Lunch in Laois (22nd May), Agri Digi in Waterford (25th May), Flavours of Fingal, Dublin (23rd and 24th June), Agri Wexford (27th June), Future of Farming in Kildare (23rd July) and Tinahealy show in Wicklow (6th August).