What are the real prospects for 2015?

Cormac McKervey
Cormac McKervey

Ulster Bank agricultural manager Cormac McKervey believes that many sectors of agriculture in Northern Ireland can look forward to a period of sustainable growth in 2015.

“Underpinning much of this will be the recent easing in energy and grain prices,” he commented.

“These trends will help to improve margins in all sectors. For lots of reasons, beef producers have found the last twelve months difficult. However, a combination of lower input costs and strengthening market returns should serve to improve the margins generated by the sector in 2015. A tightening in the numbers of cattle coming forward for slaughter, in tandem with the UK supermarkets’ commitment to support locally produced beef, should combine to strengthen farmgate returns.”

The Ulster Bank representative also believes that the pig and poultry sectors will secure further, sustainable growth in 2015.

“Again the envisaged reduction in input costs will act as the key driver in this regard,” he commented.

“Where pigs are concerned we are receiving a growing number of requests to support the construction of specialised pig finishing units. This reflects the growing confidence within the sector.”

“There is also strong evidence to show that the pig industry is now going down the road of vertical integration, a business model that has worked so well for the poultry sector.

“But, in addition, we have also seen tremendous investment and innovation being brought to bear within the sector

Cormac also believes that 2015 will be marked by a further expansion of the poultry meat sector at primary producer level.

“The growth-led business plan for the industry will continue to be rolled out,” he explained.

Nor does Cormac view the poultry litter management challenge being one that will stymie the growth of the sector.

“It’s a case of work in progress where this issue is concerned,” he stressed.

“However, I am confident that the industry will come up with a sustainable solution.”

The egg sector can also look forward to a buoyant 2015, according to Cormac McKervey

“Again, it’s a case of lower input costs and good markets secured by egg packers driving the industry forward. And this should continue to ensure steady and sustainable growth for egg producers.”

One of the most significant developments for agriculture in 2015 will be the opening of the Farm Business Investment Scheme, as part of the new Rural Development Programme (RDP).

“The scale of the on-farm investment which the new scheme will facilitate is immense. Adding to the impetus this can generate is the fact that we have a new generation of highly educated young farmers now committing to a future within agriculture,” McKervey commented.

“The new RDP will also facilitate the establishment of a vibrant discussion group ethos in Northern Ireland. There is strong evidence to confirm that discussion groups represent one of the most effective ways of communicating new thinking within agriculture.”

Commenting on the prospects for dairy over the next twelve months, the Ulster Bank agri specialist admitted that most farm incomes will come under pressure.

“Our aim is to work with clients on an individual basis so as to get them through the period ahead in the most feasible way possible. With this in mind we are contacting our farmer customers directly. But it is important for farmers to be proactive in their own right and come to us if they foresee problems ahead. And the earlier this is done the better,” he said.

“A 12 month cash flow is key: it helps both the farmer and bank manager to assess where and when the funding gap arises, how much is needed and how best that gap can be filled.

“The milk sector has experienced periods of volatility before. The challenge ahead for the industry is that of developing hedging mechanisms that will producers them with a degree of certainty for the future.

“DARD, DETI and processors are working to secure additional third country markets for many of our products. This is a longer term project, made more difficult by the strengthening sterling which weakens our competitive advantage. However these countries do may a premium for some of the products which can be produced here and the efforts of Government and Industry are to be applauded.”