As input costs spiral, farmers need to engage early with their agricultural adviser and financial providers, and put a plan in place, according to the chair of the IFA farm business committee Rose Mary McDonagh.
“It’s not only the added amount of money that’s important.
“It’s the change in the working capital cycle that needs to be planned for to avoid potential cash flow problems down the road,” she said.
McDonagh said that a whole of industry approach would be needed, calling on all stakeholders to do their part to ensure that farmers aren’t the ones left carrying all the risk and full cost of these “phenomenal input prices”.
With no short-term reduction in the price of fertiliser on the way, according to Liam Woulfe, managing director of Grassland Agro, he also has his concerns with regards to availability of fertiliser, shipping and working capital.
Speaking at the IFA inputs webinar on Thursday 20 January he said that Grassland Agro has about 35% less fertiliser imported compared to the same time last year.
“Input suppliers need to quickly pass any reductions back to farmers, banks must be flexible and take an understanding approach,” McDonagh added.
She said that the EU Commission needs to remove anti-dumping duties, and the Government has to be proactive with innovative support packages and quickly introduce the food regulator to give farmers a fair share.
While global markets suggest relatively strong output prices for milk, beef, sheep and tillage again this year, all sectors will be hit with significant increases in input expenditure. The pig and poultry sectors are already heavily impacted by the input price rises and returning historic low margins, the IFA has said.
Liam Woulfe added at the webinar that they would certainly be learning from past difficult experiences of 2008 and 2009 and that it could be well into the second quarter of the year before there is any likely shift in prices.
StoneX risk consultant Rory Deverell said that they are in the perfect storm at the minute but that the necessary instruments are there to prevent this type of market imbalance, shock and risk for farmers in the future.
“We can hedge natural gas, we can hedge fertiliser and we can hedge grain, so it’s certainly something to consider down the line,” he said.
David Wall, Teagasc researcher encouraged farmers to focus on the importance of soil fertility, value per unit N, and realising/maximising the true value of organic manures this spring.