Happy new year, dear reader. And what does the new year hold for farming? It won’t be dull, but then is it ever?
Peering into the crystal ball, it’s hard to see the year being as good for farming as 2022. And farmers feel that too, as our survey shows. A majority of farmers expect their incomes to fall this year.
Farmer apprehension around incomes is easy to understand. Last year saw an unprecedented rise in costs, but they were matched by sharp rises in commodity prices, particularly for dairy and grain, but also sheep and cattle. It meant the four sectors that most farmers partake in will remember 2022 as one of the good years.
Add in a glorious summer, where the living was easy and it becomes a golden year. The weather brought some drought conditions, but there was no fodder crisis. However, the collapse in the weather in the back end meant we had no 2018-style late grazing bonanza in most parts of the country.
While most farmers began with decent stocks of winter feed, we really could do with an early spring.
The big danger is that we will have an expensive winter and spring, with feed and early fertiliser prices stretching farmers, followed by a sharp downward turn in prices. Milk price needs to hold until the peak months of April, May and June. Winter cattle finishers and store lamb producers need very strong prices until after Easter.
Grain farmers are looking at current forward prices and current input prices and can’t make the sums add up. And after two good harvests in terms of yield and quality, can lightning strike a third time?
History has shown that when prices spike on the back of input cost increases, commodity prices fall before input costs return toward more normal levels. And maybe there is no normal anymore. It may be that the Russian invasion of Ukraine has caused a permanent shift in farming and food prices. Either way, this is quite a dangerous time for a small business in a volatile world.
On the political front, the Government looks stable now, but with a tiny working majority, every issue has the potential to develop into a crisis.
If farmers are right and margins tighten or evaporate, expect plenty of protests. Remember, changes in CAP kick in this year. GLAS is gone and ACRES is massively oversubscribed. Add in the new fertiliser and animal remedies register, nitrates changes, banding and you have plenty of scope for discontent.
And we will see elections in both the IFA and the ICMSA as 2023 draws to a close. Expect to be canvassed at the National Ploughing Championships.