Eoin Lowry, head of agriculture at Bank of Ireland, is positive about the outlook for tillage farming, despite rising input prices.
He said that high grain prices may help to absorb high input prices, but noted the difficulties farmers face, as volatility is never far away.
It only takes a limited oversupply to push prices in the opposite direction.
He explained that commodities are all about logistics.
“The places where the world’s grain is grown are not those where it is used. The places where fertiliser is produced are not generally where it is used either.
“Agri-commodities and inputs can end up moving half way around the world and often pass each other along the way,” Lowry said.
Noting that we are in a price bull run in agri-commodities – reaching near decade highs – and that freight rates have increased by 150% over the past year, he said that grain accounts for approximately 12% of dry bulk shipping globally each year and this is rising.
The supply of ships, longer journeys on these ships and COVID-19 outbreaks at ports are all impacting on the supply chain.
Looking deeper at that chain, Lowry outlined the three Cs which have been affecting the agricultural supply chain in recent times – COVID-19, commodities and China. He added that two more “C” factors will play an important role in future supply chains – climate change and CAP.