Steps taken on farms over the coming weeks will determine the level of forage available in farmyards when stock return to sheds next autumn. One of the key decisions to be made is the application of organic and chemical fertilisers to grassland in order to maximise growth rates during the key April to May period, during which approximately 30% of grass is grown in a typical year.

But with an almost trebling of fertiliser prices over the past 12 months, farmers are rightly assessing their options. There is no doubt that – even at the inflated prices – purchasing chemical fertiliser to grow grass or alternative forage crops remains one of the most cost-effective ways to meet the fodder demands.

Flawed strategy

A strategy of reducing fertiliser use and replacing any forage deficit with increased concentrates is flawed. At this point, global grain markets would indicate that ration prices next autumn will be in excess of €450/t and possibly higher.

While Minister for Agriculture Charlie McConalogue has been alert to the issue, the response at national and EU level has not reflected the scale of the challenge.

At EU level, we have seen the crisis reserve fund activated to counter the impact of the ongoing war in Ukraine on key farm inputs – triggering €500m supports but which are funded by farmers themselves.

This minimalist response should be measured against the fact that when Russia invaded and subsequently annexed the Crimean Peninsula in 2014, the EU provided €1.5bn in supports – three times as much additional funding outside of the CAP to offset the impact of the much more targeted economic sanctions that followed.

More support needed

The €500m in EU funding translates into an aid package for Irish farmers of €15.8m, which can be increased – using State aid – to an overall package of €47.4m. To date, the minister has committed just €12m in support to farmers, mostly channelled through the Tillage Incentive Scheme.

The scheme will pay farmers €400/ha to plough grassland to grow crops such as barley, oats and wheat, along with maize and fodder beet. While it is to be welcomed, the reality is that the scheme is designed in a way that effectively provides a reseeding subsidy to livestock farmers on better quality grassland – and is likely to be accessed primarily by dairy farmers.

Smaller farms

It does practically nothing in supporting smaller farmers on marginal land to cope with soaring input costs. Some will justify this on the basis that these lowly stocked farms are not as exposed to rising fertiliser prices. But the theory that it is the larger scale, more intensive farms that are most exposed to the spike in fertiliser prices is not supported by Teagasc National Farm Survey data. This shows that, as a percentage of income spent on fertiliser, low-stocked suckler farms are the most exposed livestock enterprise, spending 25% of income on fertiliser in 2020 compared to 17% on dairy farms.

Unlike within the dairy sector, where milk prices have given confidence for increased investment in inputs, suckler farmers have no security in relation to the weanling/beef trade. With silage and concentrate prices soaring, many are questioning if weanling and store buyers will be active in the market next autumn. If a sharp price increase does not materialise, suckler farmers that maintain fertiliser usage could be left carrying heavy losses, having spent almost 75% of their total income on fertiliser alone.

Therefore, in the absence of a targeted support scheme, expecting suckler farmers not to dramatically reduce fertiliser use in the face of a threefold increase in price is not credible. Also, advice to borrow money to fund the increased fertiliser cost should be considered carefully.

BEAM money

There is clearly a strong case for these farmers to demand that, at the very least, the €40m clawback/underspend within the BEAM scheme is ring-fenced and immediately targeted back into the sector – either through a scheme that quickly offsets the increased cost of fodder production or supports the adjustment in stock numbers that will be required to ensure on-farm demand next winter reflects reduced fodder supplies.

In the absence of such a scheme, it is not credible for suckler farmers to continue as normal. Without any financial safety net, the risk of trebling investment in fertiliser is not an option for most. Therefore, unless the minister quickly intervenes, these farmers will be forced to reduce stock numbers to match what forage they can produce on farm using much lower levels of fertiliser.

The suckler sector is not alone in these concerns. Forecast concentrate costs will derail store lamb finishing systems and long-term solutions are required to prevent significant losses and market distortion. Longer term, we should look at how the Brexit Adjustment Reserve fund could be used to reduce the exposure to a sustained period of higher fertiliser prices and the market impacts of Brexit.