It’s becoming increasingly clear that the Irish agricultural sector is facing into one of the most uncertain periods in its history.
Worryingly for Irish farmers, the UK electorate’s decision to leave the European Union will undoubtedly have an impact on the returns generated on Irish farms.
Already, we know that the UK’s departure will have a knock-on impact on the EU’s CAP budget; early indications suggest that payments to Irish farmers could drop by approximately 10%.
This is a cause for concern as most sectors, with the exception of dairy, are dependent on ‘envelopes in the post’ to clear their bills at the end of the year.
The dependence on payments from Europe can not be underestimated; especially as a large proportion of beef, sheep and tillage enterprises are pushing into the red without these payments.
Furthermore, many farmers fail to attribute a charge for their own labour. And, if such a charge was applied, many producers would quickly realise that it’s actually costing them money to farm before CAP payments are brought into the equation.
If we were to take a 30ha suckler farm generating a gross margin of €432/ha (Teagasc National Farm Survey average) in 2016 and apply a labour charge of €10/hour or €20,280/annum – it doesn’t make for pretty reading.
In fact it means that, before CAP payments are considered, it’s after costing the farmer €12,960 or €432/ha – the same amount of gross margin generated from his/her business – to farm in 2016.
Likewise, similar results can be seen for beef finishers, sheep farmers and spring barley growers.
Increasingly, we are being told that farmers need to focus on efficiency to improve the profitability of their businesses. However, some degree of financial investment is necessary to make such improvements.
But, when it’s costing farmers money to work the land, is it even possible for them to invest in their businesses?
The simple answer is yes – but not at any cost!
The Minister for Agriculture, Michael Creed, introduced a low-cost loan scheme for farmers last year. This scheme was met with huge demand from those working the coal face of Irish farming.
However, the scheme was only introduced for a single period; and once all the funds were exhausted, it was to be closed for applications.
Now, it’s time for Minister Creed and his officials to take a long, hard look at reintroducing such a measure on a yearly basis.
And, this will only be possible if farmers, farming organisations and members of the opposition make the Cork-based TD fully aware that farmers are not happy to be losing money and they need a low-cost method of investing in their businesses for the benefit of present and future generations.
If such a measure is not introduced, I fear that Irish farmers will face into a downward spiral on profitability until the current generation and future generations of farmers realise that it’s not actually worth their while farming with the revenues achievable.Discover More