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Input costs for horticulture farmers have increased by between 13% and 49% over the past year, depending on the enterprise, according to Teagasc.
The Teagasc Horticulture Development Department has analysed the full extent of input price inflation for the sector for the 12 months up to 31 March 2022 and developed a report which indicates that price increases continue to “squeeze growers’ margins”.
Across all enterprises within Ireland’s €477m horticulture sector, there has been a sharp increase in the cost of energy, labour, packaging materials, fertiliser and a range of other inputs that are key components of production, according to the Teagasc report.
The analysis finds that high wire glasshouse tomato, cucumber and pepper production input prices are up 49% in 12 months. This has been driven primarily by direct and indirect energy price inflation.
Field vegetable producers, who Teagasc says are already operating under extremely tight margins, have seen input cost increases in the order of 26% since March 2021.
The report suggests that a 18.5% increase in costs for the mushroom sector can be attributed to the rising cost of energy needed for mushroom growing rooms.
Teagasc says that while horticulture crop input prices have risen significantly in the past 12 months since March 2021, this was initially due to external macroeconomic factors. However, it says that more recently, the increases are due to the invasion of Ukraine.
Retail price
Teagasc noted that while primary producers have received some retail price increases in the last 12 months, the recent rapid pace of inflation means that achieving a margin over costs for many horticultural enterprises in 2022 is becoming more challenging.
It warned that a market response will be required to ensure the "viability of an industry that puts local, fresh, top-quality produce on the supermarket shelf."
Horticulture food includes mushrooms, potatoes, field vegetables, soft fruit, protected crops and outdoor fruit. Amenity horticulture includes nursery stock, protected crops, cut foliage, and outdoor flowers and bulbs.
Market response
Head of Teagasc horticulture development department Dermot Callaghan said: “Growers have seen unparalleled increases in key input prices, particularly those inputs linked to energy. Over the winter, producers have been negotiating with their customers for price increases based on the first wave of inflation reported in the fourth quarter of 2021.
“As these were concluding, a second significant wave of input price inflation, linked to energy inflation and the Ukrainian invasion, started to manifest itself. Without a timely market response, margins will, in some cases, be completely eroded by this latest wave of input price inflation.”
The complete report from the Teagasc Horticulture Development Department is available here.
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