The continuing weakness of Sterling, which has been further accentuated over recent days, is helping to boost farm business prospects across all sectors, according to Ulster Bank’s Head of Agriculture Cormac McKervey.
“We saw the recovery kick-in initially with pigs. But lambs, beef and dairy have, subsequently, followed suit in that order,” he said.
“Arable farmers are also benefitting from the strength of the Euro and the US Dollar, as grain prices are set in one or other of these currencies. The strong demand for straw is also helping boost the fortunes of cereal growers.
“But I am also aware of the impact the continuing bad weather has had on the grain sector.”
Mr McKervey also confirmed the continuing growth of the local poultry sector.
“We are coming to the end of the most recent expansion plan put in place by Moy Park and the growth in demand for free range eggs continues apace.”
The Ulster Bank representative explained that the state of current exchange rates will help boost the size of the Basic Payments, in Sterling terms, received by local farmers over the next few weeks.
“This will further improve farm cash-flows,” he said.
“The one down side to all of this is the distinct probability that farm input costs may start to increase, again as a consequence of the changing exchange rates.
“But local farmers should remain on the right side of the fence, provided these increases are introduced on a gradual basis and their scale is lower than the farmgate price rises, which they are now receiving.”
Looking ahead, McKervey referred to Brexit as the “elephant in the room.”
“We don’t really know what is coming down the track,” he added.
“There is talk of Northern Ireland being made a special case. But we don’t what this really means.
“The last thing we want is for local agriculture to be caught between a rock and a hard place, as separate Brexit deals are sorted out for Great Britain and the Republic of Ireland.
“Farmers seeking to minimise their exposure to risk over the coming years should give serious consideration to the option of locking-in to long-term supply contracts with buyers.”
Mr McKervey also pointed to the uncertainty with regard to the type of support payments that will be made available to local farmers, once Brexit becomes a reality.
“The current Basic Payment is guaranteed up to 2022. But what happens after that? Again, no one really knows.
“And this is a genuine issue for farmers seeking to buy land at the present time. Given current circumstances, we have no option but to significantly discount
the Basic Payment, or whatever takes its place, as a
farm income stream beyond 2022.
“On the positive side I welcome the recent launch of the land Mobility Service, which is being co-ordinated by the Young Farmers’ Clubs of Ulster, in tandem with the Ulster Farmers’ Union.
“Anything that can be done to get local farming off the conacre hook is a very positive development.”