What is the mood among farmers after the weather in 2018?

With the summer drought coming on top of the bad weather and the fodder crisis earlier in the year, the farming mood was muted in August. Compared with April – when Bank of Ireland last carried out its Agri Pulse survey – sentiment was softer on a number of fronts, including current production, input costs, farm profitability and the outlook for market prices. Renewed uncertainty about the Brexit process and increased speculation about the possibility of a ‘no deal’ outcome to the negotiations also dampened spirits. Pricing and UK market access are key worries for Irish farmers, with three in four expecting Brexit to negatively affect their business.

Have input costs risen for farmers this year?

The August data points to ongoing cost pressures. Excluding labour, but taking account of inputs like feed, fertiliser, fuel, veterinary and land rental, 71% of farmers indicated that costs were higher than a year ago. This is similar to the figure from April but is well up on the 2016 and 2017 survey findings of one in two, with a knock-on impact on farm profitability.

How has the weather affected cashflow and profitability?

With storms, arctic-type conditions and a drought, it has been a year of extremes. Unsurprisingly, weather conditions topped the list of factors limiting production in both the August and April surveys. Farmers have incurred additional costs and bottom lines are feeling the pinch, with almost two in five (38%) reporting a deterioration in farm profitability over the past 12 months.

What is the outlook for farmgate prices?

The latest survey results point to a relatively muted outlook for market prices on the whole, though the picture is more mixed when looking across the sectors. For example, a large number of cattle and sheep farmers expect the prices they receive to fall in the next 12 months, whereas the bulk of tillage farmers are anticipating an increase and half of dairy farmers expect prices to hold steady.

Are farmers still investing in their businesses?

Notwithstanding a difficult year in 2018 and Brexit to come, investment intentions were little changed in August. Around a quarter of farmers are planning on increasing investment in their farms in the next 12 months, with dairy farmers leading the way.

Two in five also see themselves as being on a growth track and have ambitions to scale up the business over the next one to three years. This suggests an element of looking through current difficulties and an eye to potential opportunities.

Are banks lending to farmers?

Bank of Ireland is supporting its customers through the current and expected fodder difficulties. Bank of Ireland recently launched a €100m fodder support loan package which is now available to finance the cost of additional fodder, animal feed and fertiliser already purchased and planned for winter 2018/spring 2019.

The fund is also available to repay (or extend) existing stocking loan shortfalls, especially for arable farmers and to finance residual merchant credit.