“There was huge frustration at our National Council meeting yesterday. Farmers need fertiliser and they feel they are being held over a barrel by the fertiliser industry. If we don’t see immediate and substantial price reductions, we have a clear mandate to take whatever action is required.”

Rose Mary McDonagh Farm Business Chair said IFA analysis shows that a huge gap has opened in price of the same fertiliser between the North and here. There is no justification for this price differential as all the fertiliser used on the island is coming from the same sources.

• Price of fertiliser has dropped by over 40% to farmers in markets such as the UK and Germany by the end of January, but there has been very little movement in price in Ireland.
• Recent report shows that profit per ton of fertiliser for suppliers rose from c.€50 a ton in 2021 to up to €250 in 2022.
• Price of EU Gas has fallen from a high of c.€340 per Mega Watt hour (MWh) in late August 2022 to under €50 MWh at end of February 2023.
• Production returning to normal levels after curtailments in 2022, so price in International Markets looks set to remain at significantly reduced levels to inflated 2022 prices.
• Merchants and Co-op must pass on these price decreases to farmers immediately and not attempt to have another windfall profit year in 2023 similar to what they had in 2022.

• Up to €200 a ton difference in some products between Republic and North at end of last week.
• Large differential opening between the North of Ireland and the Republic, with a difference of 50% between the dearest quote for Urea in the Republic versus what is being quoted for the same product in Northern Ireland.
• Reports of further softening of prices north of the border this week.

• Large variance by region, further North the lower the price.
• Large variance in quotes for fertiliser in the Republic, the above is the average of quotes received, difference of up to 30% between highest and lowest quote for some products.
• In general, independent merchants are more keenly priced in comparison to large Co-ops.
• But some smaller merchants unable to quote as waiting for price from their suppliers.

“We have seen a sustained significant drop in the price of natural gas of up on 85% since September 2022. The spike in natural gas prices was referenced as the main driver of increased fertiliser prices last year. Therefore, we should now be seeing a significant reduction in fertiliser prices in line with what is happening with gas. But that’s not happening,” Tim Cullinan said. 

“If we look at our neighbours in the UK the price of granulated urea to farmers has decreased by over 40% since last September. Similar decreases are been seen in most other markets, with the exception of here in Ireland. With production of fertiliser now returning to normal levels in the Europe after widespread curtailments last year these price decreases look like continuing,” he said.

“It is time to stop the profiteering and reduce prices to farmers. Fertiliser companies made huge profits due to rising markets in 2022, they need to lead the price down in 2023 instead of looking for another windfall,” Tim Cullinan added. 

“Many sectors of Irish Agriculture struggled in 2022 with the cost of inputs, we cannot let this happen again in 2023, especially seeing as internationally the price of these inputs has fallen significantly. A large cost on many farms is fertiliser, with much of this is bought in the spring, Therefore, I am calling on all co-ops and merchants to step up and pass on these price reductions immediately,” the IFA President concluded.

Data published by the CSO shows aggregate input prices in September rose 36.9% year-on-year, with aggregate output prices rising 29.2% over the corresponding period.

“Relatively strong output prices have helped somewhat in mitigating against the input price rise, but worryingly aggregate prices in our most vulnerable sectors are under pressure and below what the market might be expected to deliver. Cattle prices are back 1.9% on August levels, and sheep back 2.7%. These are traditionally low-income sectors and need support. Many simply won’t have the capacity to continue operations at existing input/output prices,” he said.

“The Government has provided some targeted interventions in Budget 2023, which are to be acknowledged.  But more will be needed in the months ahead to support farm families through this challenging period,” he said.

“It amplifies the need to ensure farmers in these vulnerable sectors get a 2023 agri-environment scheme payment. The two-week extension to the ACRES deadline isn’t sufficient to meet farmer demand. A further extension and/or simplification of the application process is needed to maximise farmer uptake. Greater flexibility is also required around the tranche-based design of ACRES to prevent thousands of farm families currently in GLAS/REAP missing out on a key income support in 2023,” he said.

Tim Cullinan said IFA has offered workable solutions to the Department on ways around this. They could either offer a bridging payment to farmers who are not successful in Tranche 1 of ACRES that matches their previous agri-environmental scheme payment, or alternatively pay an upfront payment in 2023 for Tranche 2 ACRES participants, similar to the way REPS payments were in the past.

“It needs Government action and support, because there appears to be limited direct interventions against the rising input cost crisis coming from the EU in the short-term,” he said. 

The EU Commission issued a very underwhelming ‘Communication on Fertiliser’ earlier this week, which appears more interested in protecting the EU fertiliser industry than the farmer.

It offered nothing to alleviate current price pressures, even rejecting proposals to suspend anti-dumping tariffs on fertiliser imported from the USA and Trinidad and Tobago which IFA and colleagues in Copa-Cogeca have lobbied hard for.

It puts farmers at a competitive disadvantage now because the US have removed antidumping and anti-subsidy tariffs on fertiliser to help assist its farmers in procuring fertiliser.

In effect, the EU strategy puts greater emphasis on individual Member States to support primary agricultural producers for fertiliser purchases via the Temporary Crisis Framework, which was extended to end December 2023 and the state-aid threshold increased to €250,000 in recent weeks. 

“EU natural gas prices, while still well above past ‘normal’ levels, have fallen significantly from their summer peak, now hovering around €105/MWh. This has seen the resumption and an increase in production capacity across many EU fertiliser plants which will help ensure increased supplies at lower costs into the future. Given the phenomenal inflationary input price endured by farmers, this reduction in production costs must be passed onto farmers immediately so they can secure supplies for the coming Spring and help preserve soil fertility and crop growth,” he said.         

Even though prices paid to farmers are up nearly 30%, the hike in input costs is running at 40%.

IFA Farm Business Chair Rose Mary McDonagh said ‘It’s simply just not sustainable at current levels, and the fear is where costs will go in the months ahead with all the volatility on international markets, from multiple perspectives”.

“Farmers cannot be expected to carry on regardless. Many operations will simply go out of business if targeted measures aren’t introduced. Unlike others, farmers haven’t the luxury of being able to pass on the added cost of production to others, and so cannot be left to carry all the risk,” she said.  

Aggregate agricultural output prices rose 1.7% in June vs. May levels, with a welcome uplift in pig prices (+8.1%) the main driver. On an annual basis, aggregate output prices were up +29.8% in June ’22 vs. June ’21, with positive gains reported across all sectors: cereals (+34%); beef (+27%); pigs (+8.2%); sheep (+12%); poultry (+7%) and milk (+44.7%).  

However, the benefit of increased output prices has been superseded by the phenomenal rise in agricultural input prices – up 40.2% year-on-year. This means any farm gate price increases are completely eroded, and more with it. Although they are showing some signs of easing, they are a long-way off ‘normal levels’.

The largest annual prices increases were in select fertilisers (+181.6%) and feedstuffs (+45.6%); with motor fuel (+10.2%) recording the largest monthly increase.

“Budget ‘23 will show how much the Government truly understands the on-farm challenges arising from the inputs price hike. A series of tangible measures will be required, plus the retention of key existing agri-taxation relief/measures to minimise on-farm costs of production (e.g. rebate for carbon tax) and support for sustainable growth; agricultural activity asset transfer (e.g. Agricultural Relief), and balanced rural development,” she said.

“These lands should never have been excluded. The Minister must move immediately to publish the revised Terms and Conditions,” he said. 

“This is the right thing to do. Excluding Category 1 ANC lands from the terms and conditions was a spectacular own goal by the Minister,” he said.

IFA National Hill Farming Committee Chairman Cailín Conneely said we have yet to see the full details on how the scheme will be amended but IFA’s understanding is all Category 1 land under ANC will now be eligible to be applied on if the farmer meets the other terms and conditions,” he said. 

However, he said more will be needed to cover the massive increase in costs of production.

“The war in Ukraine has fuelled hikes in input costs, which are putting huge pressure on farmers. This week’s CSO figures show that the price of fertiliser has increased by 180% to the end of April, while green diesel prices have increased 25% in the last month,” he said.

“The Minister must move quickly to announce the full details of the scheme and ensure that every farmer who applies for funding will be covered. The way input costs are going, more support will be needed,” he said.

“There are real food security concerns and it’s important that farmers are helped and supported to produce food,” he said.

He said it doesn’t propose any new additional funding from the EU, which is badly needed.

“Farmers have been told there is over €15m from the EU Crisis Reserve Fund and it can be topped up with national exchequer funding by up to 200%, which would bring it close to €50m.  There’s no indication if this co-financing will happen or what kind of supports are potentially going to be made available from the co-financed funds,” he said.

The extraordinary rise in input costs is making production unsustainable. Already low margins for most farmers are being further eroded as a consequence of these increased input prices.

Michael Biggins said there are three actions the Minister for Agriculture Charlie McConalogue can address:

1. Provide the allowed rate of 200% national co-financing to top up the Crisis Reserve
2. Urgently make arrangements to pay the Crisis Reserve funding in the form of a one-off lump sum in direct support to cattle and sheep farmers.
3. Commit additional national exchequer funding to the Pillar II budgets for 2024/25 to fund any potential deficit in those years which could arise from this exceptional measure.

Michael Biggins said if food security is to be guaranteed, then farmers need adequate support from the Commission to ensure they survive this crisis.  The EU should come forward with a significant package for farm families.

He said the Commission is merely allowing Member States to divert funding from their existing Rural Development Plan (RDP), rather than providing new funding.

Tim Cullinan said farmers who are struggling with savage cost hikes will not view this as anyway helpful.

“If the Commission is serious about supporting farmers, then it should come forward with a significant package for farm families,” he said.

Aggregate agricultural output prices rose 19.2% in February vs. 2021 levels, but aggregate input prices rose by over 28%, with increases in certain fertilisers (+180%); fuel (+38.5%); feed (+20%) and electricity (+22%). 

“It’s simply just not sustainable at current levels. Farmers cannot be left in limbo and expected to carry on regardless, to simply suck up the uncertainty and take the losses to ensure food security for Irish consumers. Many operations will simply go out of business if nothing changes soon,” she said.

“We need more forward-thinking and swift strategic action from Government and across the value chain. Unlike others, farmers haven’t the luxury of being able to pass on the added cost of production to others, and we cannot be left to carry all the risk and cost of the energy crisis,” she said.

“There’s no point investing in crops now if there’s no fertiliser to support its growth along the way, or even fuel for the agri-contractors to harvest it. Detailed inventories on fertiliser/fuel/feed stocks must be completed as a matter of urgency and priority given to farmers and contractors to preserve food & feed security,” she said.

“We’ve been told we’re getting over €15m from the EU Crisis Reserve Fund and that Government can top-up to close to €50m, but we’ve no clarity if this will happen, or what kind of supports are potentially going to be made available.”

“The Government established the National Fodder & Food Security Group; increased TAMS investment ceilings for pig and poultry farms; brought in two initial pig support packages; and set up the Tillage Support package to help boost national grain and feed supplies for the coming winter. While important first steps, supports are needed to grow additional grass silage/fodder for the coming winter.  It’s now that farmers need to be saving up the ground for first cut silage,” she said.

“Farmers had to pay up-front to secure necessary inputs this Spring.  Before, they may have purchased on credit and paid during peak milk; when stock were sold; or the harvest complete. Financial institutions need to take a flexible and understanding approach and support those most impacted, ensuring a swift turnaround in the provision of low-cost working capital,” she said.

Traders and processors must also offer electronic funds transfer as an option to speed up the transfer of funds into accounts, rather than rely on inefficient cheque payment processes with associated delays in postage, lodgement, and clearance.  

The phased exit of Ulster Bank from the market is also creating another layer of complexity for many. Existing financial providers, in addition to Ulster Bank, need to ensure that adequate resources and supports are devoted to ensuring the smooth transition of its customers and any associated banking facilities/services.

“We must avoid any situation where farmers have no functional business current account/overdraft to maintain on-farm operations. Farmers themselves will need to act and do what is right for themselves, but they need clear direction and support to make the transition/switching process as seamless as possible,” she said.        

“If the Government is serious about encouraging farmers to grow more grass and crops and produce more food, they should suspend all excise duty and carbon tax on agri diesel (Marked Gas Oil) for farmers and farm contractors,” he said. 

“If farmers are to sow more crops and grow more grass, it will require increased use of farm machinery in the coming days and weeks. The Government must do more immediately,” he said. 

He said farm families are under huge pressure because of the savage increases in their costs. The Government has to get to grips with the issue and provide meaningful support to farmers.

At the meeting with the Minister for Agriculture Charlie McConalogue last night, Tim Cullinan said IFA put forward measures to support the growing of more grass for silage as well as more crops. The key issue here is to tackle input costs particularly fuel, fertiliser and feed.

Tim Cullinan said the lack of urgency at Government level is very worrying.

“At our AGM in January, I called on the Minister to pull the sector together to set up a task force on inputs. While the Minister has belatedly done this, he needs to come forward with concrete funded proposals,” he said. 

“Minister McConalogue must take charge of the situation” he said.

For tillage farmers, fertiliser costs have nearly tripled. The average drystock farmer will be paying three times the price for their fertiliser this Spring and the average dairy farmer will see 4.5c per litre added to their costs. That’s before increases in other areas such as fuel and electricity are factored in.

“We already have four farm sectors – horticulture, potatoes, pigs and poultry – which are in serious and immediate danger and others are facing huge uncertainty.  Most farms just don’t have the capacity to absorb these phenomenal input costs, and as weakest link in the supply chain, it can’t be left to the farmer to absorb them either. All links in the supply chain need to share the burden and risk,” he said.

“The sector will need to work with the Government in the weeks and months ahead to deal with the situation as it develops,” he said.

The meeting was chaired by Jer O’Mahony, IFA Wexford County Chairman.

Guest speakers in order of appearance were:

• Liam McHale, IFA Director of European Affairs
• John Petit, Teagasc Business & Technology Advisor – Tillage
• James Doran, Teagasc Business and Technology Advisor – Beef
• Pat O’Toole, Irish Farmers Journal Political Correspondent
• John Murphy, Wexford IFA Grain Chairman.

A questions and answer session from the floor followed the presentations. View the recording from the night below.

‘Input suppliers need to quickly pass any reductions back to farmers; banks must be flexible and take an understanding approach; 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,’ she said.

She encouraged farmers to be proactive, to engage early with their agricultural adviser and financial providers, and to put a plan in place for the months ahead.

“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 cashflow problems down the road,” she said.  

Over 300 farmers and industry stakeholders tuned into the IFA ‘Feed/Fertiliser’ webinar on Thursday evening to see if there will be any turn in fortunes to the escalating feed/fertiliser prices and what can be done in the short-term to get through the coming months.

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 that will erode 2022 margins and need to be planned for. The pig and poultry sectors are already heavily impacted by the input price rises and returning historic low margins.

Liam Woulfe, Managing Director with Grassland Agro, said they would certainly be learning from past difficult experiences of 2008/09 and that it could be well into Q2 before there is any likely shift in prices.

StoneX Risk Consultant Rory Deverell suggested we 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.

Finally, Liam MacHale, IFA European Director gave an update on the potential removal of anti-dumping measures which are penalising farmers.

‘Input price challenges – Impact, Outlook & Strategies to mitigate’ will have a range of experts who will assess the year ahead and provide strategies to offset rising costs.

IFA President Tim Cullinan has said Irish farming is facing a very challenging year as the cost of doing business threatens to wipe out some modest gains in 2021.

“Family farms could be overwhelmed by the steep increases in costs such as feed, energy and fertiliser. We need the EU Commission, Government and industry to respond quickly and offer tangible financial supports such as the removal of EU anti-dumping duties and low-cost finance options, to minimise cashflow pressure on-farm,” he said.

Guest speakers include Liam Woulfe, CEO Grassland Agro; Rory Deverell, Risk Consultant with StoneX; David Wall, Teagasc Research Officer; and Liam MacHale, IFA European Office Director. The speakers will provide an outlook for fertiliser markets/feed inputs, strategies to mitigate the increased cost of fertiliser, and possible EU interventions.

With an end to the closed period for spreading slurry, artificial fertiliser, farmyard manure and other organic fertilisers upon us, farmers throughout the country will be planning how best to negotiate record fertiliser prices, limited supplies and elevated feed prices in the weeks ahead.

“We have already seen several Member States introduce various financial support packages for their respective pig sectors. I’m calling on Minister McConalogue and his officials to look at similar measures, not only for the pig sector, but for all those hit by these phenomenal input price surges,” he said.

“As an industry, we celebrated the announcement of record agri-food exports last week. It can’t be forgotten that all this product originated from farms through the hard work of farm families. If they’re not supported in times of income downturn or financial pressures, the impact will be far wider than the farming community. In the interim, we hope that this virtual event will provide some practical insights and tips to help farm families overcome these challenges,” he said.

“Although fuel prices will differ day to day, there are still savings to be made from shopping around.”

IFA has completed a survey on the price of kerosene and green diesel in each county.

The average price quoted for a litre of kerosene was €0.44/ litre, while the average for green diesel was €0.51/ litre, with variations of over €0.10/ litre between the counties surveyed.

On 1,000 litres of green diesel, the saving could be as high as €180.

Rosemary McDonagh added that some suppliers indicated that purchases in larger volumes tend to work out cheaper, particularly if paying on the day.

“Commodity prices continue to come under pressure. Therefore, it’s important that all farmers ensure they get value when buying farm inputs.”

IFA has just completed a survey of the cost of silage wrap and found that the average cost per roll was €63. However, farmers in County Longford reported that they are paying €70 per roll, while farmers in County Cork were paying just under €59.

Paul O’Brien added, “The results of this survey should be used by all farmers to negotiate competitive prices for their bale wrap this year. Keener pay-on-the-day terms should also be provided by suppliers”.

He was speaking at a Copa Cogeca briefing session for Member State TDI members yesterday in Brussels.

Mr Coughlan said, “FE’s campaign for the renewal of the AD measure on imported ammonium nitrate (AN) and a new one on UAN (urea & ammonium nitrate mixtures) will cost farmers an estimated €7.5bn and Irish farmers €115m over the five-year term of the measure. The actions of FE are both irresponsible and reprehensible. It shows a complete disconnect between the EU fertiliser industry and the precarious income situation that exists on many farms. Despite repeated warnings from IFA and Copa, FE has demonstrated a complete inability to comprehend the enormity of the impact of these AD measures on family farm incomes”.

“FE has ignored the fact that farmers are price takers and don’t have the luxury of passing increased costs downstream in the agri-food chain. The effects of renewed AN and new UAN anti-dumping measures will be devastating, especially given current market conditions and the long-term outlook of low world grain prices. The additional costs arising from these proposed AD measures will further erode the EU’s export competitiveness and far outweigh any benefits that could be gained by a small handful of EU fertiliser producers.”

“FE’s assertion that ‘all fertilizers represent more of an investment to the farmer rather than a cost’ clearly demonstrates a frightening lack of understanding of farmers’ businesses. It is abundantly evident that any suggestion that mineral fertilisers and in particular UAN represents an insignificant cost for dedicated UAN users is a total misrepresentation of the facts. However, FE’s actions in perpetuating this mistruth in its recent submission to the EU’s DG Trade investigation team are deplorable.”

John Coughlan called on Member State TDI representatives at yesterday’s briefing to vote against the EU Commission’s proposal for the imposition of AD measurers on UAN at next Tuesday’s TDI committee meeting as it will decimate farmers’ incomes.

John Coughlan said, “Many compound feed mills are not reflecting the significant reduction in cereal prices, which unfortunately for tillage farmers are back by as much as €50/t. The failure by the mills to pass through the significant reduction in cereal costs Is indicative of a major swing by compound feed manufacturers, over recent years, away from the use of native cereals to imported maize and by products. Such a move is potentially undermining the provenance of Irish food production at a time when there is an increased focus on the carbon footprint.”

“The feed sector has a duty to maximise native cereals. It has been shown time after time that livestock rations that include a high level of quality native Irish cereals consistently outperform many compound feed rations based on least cost formulations, which invariably use high levels of imported by-products. Irish cereal production not only has an extremely low carbon footprint, but also enhances biodiversity when compared to imported feed ingredients.”