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Relentless Rise in Input Costs Erodes Price Gains

by 5m Editor
9 September 2011, at 8:39am

IRELAND - IFA President John Bryan said the relentless upward spiral in the main input costs, such as fertiliser, energy and feed is eroding commodity price gains.

Mr Bryan said, "Fertiliser and energy/fuel costs are two of the big on farm expenditure items, accounting for over €450m and €344m respectively in 2010. Both items rose significantly over the last 12 months. Fertiliser prices on a year to date basis are up by over 30 per cent percent, with the prospect of further rises for the coming season. Fuel prices have also increased dramatically with current tractor diesel prices up by over 25 per cent on this time last year. Pig, poultry and horticulture producers have been hit hardest as product prices have not kept pace with rising costs. It is imperative that retailers and processors reflect these increased costs through higher prices to farmers."

He said that many livestock and grain farmers will be settling merchant accounts over the coming weeks. It is vital that farmers are armed with the most up-to-date price information possible, Mr Bryan said. Numerous price surveys were carried by IFA’s Inputs Project Team tracking price movements during the main fertiliser season and these are available on line at www.ifa.ie, or through local IFA offices.

According to Mr Bryan, a comprehensive agri-chemical price survey covering over 200 products is also available. In addition the fortnightly grain, feed ingredient and fuel price update is an invaluable information source. Farmers should use this information to ensure that they have not been overcharged when settling their accounts.

IFA National Grain Committee Chairman, Noel Delany said, "Despite the common perception that tillage farmers have done well this year significant increases in fuel, fertiliser and seed costs will have negated any price rise achieved this harvest. Growers should do their sums before ploughing ahead this back end as future wheat prices for the 2012 crop are €12/t to €14/t below current crop prices."

IFA National Livestock Chairman Michael Doran said, "Similarly for livestock farmers rising feed, fuel and fertiliser costs are eating into farm margins. Winter beef finishers face a difficult dilemma as their cost base has increased significantly. Finishers need a guaranteed margin over costs if finishing cattle this winter is to make any sense."

Mr Kiersey, IFA’s National Dairy Chairman, said, "Milk prices must also reflect this changing price environment. Winter milk production costs have increased substantially in recent years and the premium paid must reflect this."