‘Younger farmers are more ambitious, with three in five (61%) of those aged under 50 planning to grow the business over the coming years.’ – Dr Loretta O’Sullivan.
Four in ten (43%) Irish farmers plan to expand their farms over the next one to three years, with a similar number (44%) indicating that they would prefer the farm to remain the same size, and 13% intending to scale down.
New research, conducted for Bank of Ireland’s ‘Agri Pulse’, surveyed farmers on a range of topics including farm output, input costs, market prices, their investment plans and business ambitions.
One in four farmers (25%) expect to see an increase in output over the next 12 months, with 62% expecting no change. One in three (31%) saw an increase in farm output over the past 12 months, with half (52%) seeing the same output.
The Agri Pulse points to broadly positive sentiment among the farmers that participated in the study. One in four (24%) expect to increase investment in the farm in the next 12 months, with 59% keeping the same level. Replacing and upgrading buildings, equipment and vehicles and purchasing livestock are the main focus, with investment in new farm buildings, land and equipment and vehicles also cited (especially by dairy farmers). The majority plan on spending up to €50,000.
“The results show that a large number of farming businesses are on a growth track. While most of those planning on expanding over the next one to three years are likely to do so cautiously, the rest are set to actively pursue opportunities to grow. Younger farmers are more ambitious, with three in five (61%) of those aged under 50 planning to grow the business over the coming years,” says Dr Loretta O’Sullivan, group chief economist, Bank of Ireland.
The pressure points
The data points to some pressures on the input cost front. Excluding labour, but including inputs such as feed, fertiliser, fuel, veterinary and land rental, just under half (46%) reported that costs had risen over the past year.
The picture is more mixed when it comes to the prices farmers expect to receive on the market. Half of farmers (51%) expect to see a drop in prices over the next year, with one in five (18%) expecting an increase. Most dairy farmers (58%) anticipate an increase in the next 12 months, whereas most cattle farmers (68%) expect prices to fall.
A spike in cattle supply
“There is expected to be a spike in cattle supply towards the end of this year, which many fear will have a negative impact on prices,” says John Fitzgerald, head of agriculture, Bank of Ireland, Business Banking.
“Recent developments in dairy markets point to an improved milk price in 2017, helped by a likely reduction in supply from the EU, New Zealand and Australia, as well as increased dairy consumption in China and oil producing regions such as the Middle East and North Africa.
“With milk prices on the increase, we expect to see more investment by the dairy sector fuelled by further post quota expansion from 2017.”
Working outside farming
One in three (36%) of the main farmers within each household are involved in outside activities to supplement the family farm income, while two in three are aged 50 or over. 82% of farmers are sole traders.
“We still have a high level of farmers who need a second wage to supplement their earnings. However, we need more focus on encouraging younger farmers to enter the profession and see it as a sustainable career,” says Fitzgerald.
Article by Naomi Keating.
250 farmers were interviewed as part of the Agri Pulse, with the fieldwork for the surveys undertaken by Ipsos MRBI. Dairy, cattle (suckler cow and other), tillage, sheep and other farming activities are covered. The Agri Pulse is part of Bank of Ireland’s Economic Pulse research which surveys 2,000 businesses and 1,000 households each month.