Weather related pressures now impacting on farm businesses: Ulster Bank analysis

This is according to Ulster Bank’s head of agriculture, Cormac McKervey.

He further explained: “What a difference 12 months can make! This time last year cattle, spring calving cows and breeding ewes and lambs were all out at grass.

“Ground conditions were perfect and all field work had been undertaken in a timely and appropriate manner.

“Adding to the feel good factor for farmers during the early spring of last year was the fact that no financial head winds were impacting on agriculture at the time.

“However as we approach the start of April 2026, the polar opposite is the case.

“Ground conditions remain extremely poor while very little fertiliser and slurry has been spread up to this point.

“It all adds up to more costs impacting on farm businesses.

“But the mental stress that hold-ups of this nature create for farmers is also significant.

“And this is an issue that should never be overlooked.”

Where the the economics of farming are concerned, it is very much a ‘steady-as-she goes’ scenario for most of the sectors that make production agriculture in Northern Ireland.

Cormac McKervey again: “Milk prices seemed to have bottomed out despite increased global supplies and at a higher level than was thought last Autumn.

“Current price is below the cost of production but thankfully the market downturns predicted for the milk sector last autumn were not fully realised.

“What’s more strong calf, weanling and cull cow prices also combined to help compensate for the fall in milk prices that did occur over the past number of months.”

But the Ulster Bank representative is also pointing to other positive trends that now define the milk industry.

“The quality of the milk produced on our dairy farms continues to increase.

“And this is worth real money across the sector,” he said.

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“Securing an additional two to three pence per litre of milk on the back of improved butterfat and protein works out at an additional £20,000 to £30,000 of additional income per one million litres of milk produced.

“Quality bonuses are also more significant during those periods when pressure comes on base milk prices.”

McKervey added: “The use of sexed semen has significantly enhanced the rate at which genetic progress has been secured within the dairy sector. And there is little doubt that the Sustainable Ruminant Genetics Programme will act to further accelerate this rate of positive change.”

Meanwhile, the New Year has seen beef margins coming under pressure. This is a result of recent reductions in beef price impacting at a time when stores bought for high prices last back end are now coming through to market. These cattle will struggle to leave a margin.

“UK consumers continue to demonstrate their willingness to buy locally produced beef,” McKervey explained.

“But above a certain price point the actual volumes of meat purchased starts to fall back.”

Turning to the intensive livestock sectors, Ulster Bank’s head of agriculture confirmed that sustainability levels within the poultry sector – broilers and eggs - remain at very high values.

He added: “The only challenge of note is the potential threat that continues to be posed by Avian Influenza.

“Pig margins, on the other hand, have come under a degree of pressure over recent months. In part this is a result of the African Swine Fever outbreak that has hit countries such as Spain very badly.

“Subsequent export restrictions have meant that the European pigmeat market is now in an oversupply situation with prices impacted accordingly.”

Meanwhile, agricultural land prices continue to strengthen. However, a clear trend is now apparent in terms of the way in which the market is defined.

“Traditionally, there was very littledifference in the overall price paid for bare land and acquisitions that also included farm buildings,” McKervey commented. “However, this scenario is fast changing. Investors are now prepared to pay a premium prices for land parcels that also include buildings that are in a strong state of repair.

“And this is particularly so, where poultry units are concerned. This reality reflects the fact that it is very difficult to secure planning permission to develop a new poultry enterprise in Northern Ireland at the present time. So acquiring a facility that has housing is one way of getting around this issue.”

According to Cormac McKervey agriculture in Northern Ireland enters the spring of 2026 underpinned byhigh levels of financial performance.

He concluded: “According to the most recent official figures, total bank borrowings for agriculture in Northern Ireland amount to £947M: the lowest this figure has stood at in the past ten years.

“However, monies on deposit total £741M, the highest this figure has been at since 2016. It all adds up to a good news story for farming in Northern Ireland.”

As ever events can impact farming and the turmoil in the Middle East has already hit fuel and fertiliser prices. Feed prices are steady but longer term could rise and it seems finance costs are unlikely to fall given the Bank of England help base rate rather than risk adding to inflationary pressures.