Commenting after meeting the Northern Ireland Grain Trade Association. DUP MEP Diane Dodds has highlighted a range of issues faced by farmers this winter as a result of high input prices, lack of credit and a shortage of winter forage.
Diane Dodds said:
"The stark reality is that this winter will be one of the toughest in living memory for many farmers. As a result of low farm gate prices and one of the wettest summers on record many farmers are facing an unenviable situation. The wet summer impacted upon grass growth and the ability to make silage and indeed silage of good quality. This in turn has meant an increase in compound feed use, with many merchants experiencing winter demand in the month of August. Unfortunately this causes a number of problems; extra production costs, carrying extra credit into the winter all on the back of inadequate farm gate prices.
The price of meal has also spiralled over the last year driving input costs to all time highs. For example between September 2011 and 2012 the cost of hipro soya has increased by 60%, corn distiller 50% and wheat by some 15%. NIGTA equate these increases in feed material costs for a typical ration to have risen by some £60/t since January 2012, an increase of about 30% on most feeds. To put this in context for Northern Ireland on the two million tonnes of feed consumed in the province, that is some £120 million extra cost to Northern Ireland farmers and an extra £25 million extra credit to be carried by the grain trade.
In relation to production costs the effect is even more pronounced with an average increase of 26p/kg deadweight on production costs for pigs, increase of 40p/kg on an intensive beef animal, a 2.5p/litre increase for milk from the average dairy cow and for the poultry sector an increase of 25 - 30p/bird on a boiler chicken and 16p to a dozen of eggs. As we all know this price increase has not been reflected in the market and if the market does not respond quickly it is more than likely farmers will reduce or leave the sector. This is a real possibility; the pig sector has already taken steps to reduce or de-stock, a lot of other sectors will follow suit. The problem is the market will not experience shortage until next year which for many will be too late.
Why has grain prices increased? There are a number of reasons, none of which are new to the sector and have been present over the last number of years but this year the weather has been the main driver especially in the USA. Many speculators have also continued to invest in the safety of feed commodities; there has been extreme volatility in the markets while demand from developing countries continues to rise especially from China and India. The demand for fuel and especially bio fuels has put increased pressure on land use in both the USA and the UK. What is becoming clear is that we are unlikely to see barley and wheat back to prices experienced 10 years ago.
Europe and indeed the world have very little grain in storage and it really is hand to mouth. It is important to note that as consumption continues to grow pressure on the system will only increase. The Commission within their CAP proposals do not recognise this reality and continue to erode Europe's production capacity and intervention stocks."
