Strong balance sheets offer resilience notes Bank of Ireland’s head of Agri Sector Eoin Lowry in his latest Development & Insights report, but 2026 outlook darkens amid input inflation and global uncertainty.
Irish agriculture is heading into the summer on a solid financial footing, though the outlook for the year ahead is becoming more uncertain as cost pressures build and global volatility filters into farm economics.
New analysis from Bank of Ireland’s Sectors Team shows that while the sector has benefited from several strong years, including a 33% increase in farm incomes in 2025, conditions are shifting.
“There is a period of heightened uncertainty ahead”
Lower farmgate prices, rising input costs and unpredictable weather are expected to squeeze profitability across farming systems in 2026.
Geopolitics make an impact
“There is a period of heightened uncertainty ahead,” notes report author Eoin Lowry, head of Agri Sector at the Bank, pointing to a combination of external pressures that are increasingly outside the control of farmers.
At the start of the year, average farm incomes were already projected to fall by 19% in 2026. That outlook has since come under further pressure as the impact of global events, particularly the conflict in the Middle East, feeds into energy and fertiliser costs.
Energy has emerged as a key transmission channel for risk. Oil prices have climbed above $125 per barrel in recent weeks, raising the cost base for farming activity where fuel, fertiliser and feed are closely linked to energy markets.
While global commodity indices have reacted to these developments, increases in prices for grain, meat and dairy have so far been limited, reflecting underlying supply and demand conditions. This imbalance between rising input costs and slower output price gains is expected to compress margins and increase earnings volatility.
Despite these pressures, the sector enters this period from a position of financial strength. Farm balance sheets remain robust, supported by disciplined borrowing and rising land values. Total outstanding farm debt stands at €2.8bn, a 25-year low, while deposit levels reached record highs in 2025 after increasing by 10% year on year.
Irish farmers show resilience
Farmers have also shown an ability to adapt. Many have tightened cost control, invested selectively in efficiency and maintained prudent leverage levels, positioning their businesses to absorb shocks. Overdraft usage has fallen to its lowest level in more than three years, further indicating improved cashflow resilience.
Even with that resilience, sentiment has softened. Investment appetite is moderating as farmers weigh higher costs alongside policy uncertainty, including questions around the future of CAP supports and nitrates derogation rules.
There are, however, areas of continued activity. Demand for agricultural land remains strong, with prices reaching a record average of €12,876 per acre in 2025. Sustainability-focused investment is also gaining traction, with more than €100m in applications for Bank of Ireland’s Enviroflex loan product, largely from dairy farmers funding solar installations and slurry storage improvements.
Looking further ahead, global fertiliser supply is emerging as a critical risk. While Ireland has some short-term protection due to existing stocks, prolonged disruption could influence planting decisions worldwide. Farmers may shift toward less fertiliser-intensive crops, which could tighten grain supply and eventually support prices, with knock-on effects for feed, meat and dairy markets.
The global picture remains complex. Higher production costs tend to push commodity prices upward over time, but weaker economic growth could dampen demand, especially for premium products such as beef and dairy. Supply chain disruption and rising freight costs are also expected to influence market dynamics in the months ahead.
The World Bank has already warned that mounting fertiliser shortages and rising agricultural costs pose a broader risk to global food security, raising the prospect of government intervention if pressures persist.
In her foreword to the report, Paula Feehan, Head of Sectors at Bank of Ireland Corporate and Commercial, emphasised the importance of adaptability in the current environment.
“Our Sector Specialists work closely with key industry stakeholders along with Irish businesses and their advisors every day and have a deep understanding of the challenges and opportunities that you face,” she said.
She added that businesses are navigating “an ever-changing economic and trading environment,” shaped by global events, supply chain disruption and rising costs.
Feehan said the bank continues to support customers through these shifts, highlighting the need for tailored approaches as conditions evolve.
As Irish agriculture moves through 2026, that balance between resilience and rising risk is set to define performance across the sector.
Read the full report on the various sectors including Retail, Agriculture, Manufacturing, Healthcare, Technology & Telecoms and Food & Drink:
Top image: Photo by runnyrem on Unsplash
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