One in four farmers – mainly older farmers – are planning to scale down the size of their farm in the next one to three years, the Bank of Ireland Agri Pulse has found.
Representing 25% of the 250 farmers surveyed, the proportion of farmers who indicated that they were planning to downsize was up from 14% in August of 2017.
The results also showed that 38% have ambitions to expand their business in the next one to three years – down from 55% last August. A similar number indicated that they see the farm remaining the same size.
The Bank of Ireland Agri Pulse aims to provide an insight into what is happening in the sector, the issues and the trends.
Farmers were asked for their views on a wide range of topics, including: farm output; input costs; market prices; their investment plans; and business ambitions.
Dairy, cattle (suckler cow and other), tillage, sheep and other farming activities are covered, with the fieldwork for the surveys undertaken by Ipsos MRBI on behalf of Bank of Ireland.
‘A relatively sombre frame of mind’
The survey found farmers in a relatively sombre frame of mind in April. Compared with August 2017 – when the survey was last carried out – respondents were less positive about production, costs and farm profitability, according to Bank of Ireland.
Adverse weather conditions, the fodder crisis and the lack of progress in moving the Brexit talks on have all taken a toll on farming sentiment and also look to have tempered growth ambitions somewhat, it added.
Discussing the Bank of Ireland Agri Pulse, Dr. Loretta O’Sullivan – Group Chief Economist with Bank of Ireland – said: “The mood was subdued in April, with farmers downgrading their assessment of the current situation.
Sentiment has dropped across a number of fronts, which isn’t surprising given the recent environment. Brexit is clearly weighing heavily, with seven in 10 respondents feeling that it will negatively impact their business.
“The results also highlight that one in four expects to increase investment in their farm in the next 12 months, and almost two in five have ambitions to expand their business in the next one to three years, albeit this is down on August last year,” she said.
Production has been held back by the bad weather, with land shortages weighing on activity as well – especially in the dairy and tillage sectors, according to Bank of Ireland.
The survey also found that expectations for the next 12 months were softer. While most farmers still expect to increase or keep production the same, 25% expect to produce less, it added.
Input costs and market prices
Meanwhile, the most recent version of the Agri Pulse pointed towards significant cost pressures.
Excluding labour – but including inputs like feed, fuel, fertiliser, veterinary and land rental – 67% of farmers indicated that costs were higher than a year ago.
With input costs rising and bottom lines feeling the pinch, 25% reported deterioration in farm profitability over the past 12 months; this is double the August 2017 figure of 13%, Bank of Ireland explained.
Besides this, around half of the farmers surveyed expected to see no change to the prices they receive on the market. But, dairy farmers were more downbeat though and were mostly of the view that prices will fall over the coming year.
On a positive note, one in four farmers expect to increase investment in the farm in the next 12 months – a statistic led by dairy and tillage farmers.
Replacing and maintaining worn-out buildings, equipment and vehicles is a key focus – with purchasing livestock as well as investment in new farm buildings, land, equipment and vehicles on the cards as well, Bank of Ireland added.
The majority are factoring in an outlay of up to €50,000, the survey found.
Given the importance of the UK market for agricultural produce, Brexit remains a headwind for farming businesses, according to the financial institution.
However, the opening up of the Chinese market to Irish beef and the new EU-Japanese trade deal may provide a potential boost going forward, it concluded.
By: Conor Finnerty