Horticulture production input costs have risen significantly in 2021 and in many cases will exceed grower margins, according to Teagasc.
Considerable cost volatility for inputs remains as primary producers try to plan business for 2022 and manage cash flows.
The findings were highlighted in a report titled, Horticulture Input Costs 2021 – Impact Assessment, launched by Teagasc on Wednesday.
Teagasc reports that the sharp increase in input costs for horticulture enterprises is mostly due to external macro-economic factors, including a shortage of and increase in the cost of labour and rising fertiliser, packaging, crop protective product costs.
Based on information collated and referenced by the Teagasc horticulture development department, input cost increases will in many cases exceed grower margins.
The report stated that producers will be “unable to absorb increased costs, without an increase in what they are paid for their produce”.
Total input costs have increased by between 10.5% and 17.7% depending on enterprise type.
Teagasc reports that the mushroom sector has seen total input costs rise by 10.5%, with a particularly high (41%) increase in the cost of crop protective products.
The soft fruit sector has seen costs rise by 13.6% this year, with increases of 30% and 20% seen in the cost of fertiliser and packaging respectively.
Vegetable production has also seen a major input cost hike of 12.4%, with fertiliser costs alone rising by 39% this year.
The report assessed the key input costs that have seen the biggest increases, gathered and validated data, sourced from a range of businesses and trade suppliers.
Teagasc stated that the report “speaks to the current and potential impacts of very high input costs for primary producers now and for the 2022 season”.
Head of the Teagasc horticulture development department Dermot Callaghan said: “Given that growers’ costs have increased substantially during 2021, producers are potentially facing significant decreases in margins.
“Some growers are considering cutting back on production for 2022 in order to manage their cashflow, or to minimise their exposure to high costs.”