Let’s be honest, despite all the headlines, it’s not all bad news where agriculture is concerned at the present time.
A recent press briefing, hosted by Ulster Bank in the run-up to Balmoral Show 2022, provided representatives of the aforementioned organization with an opportunity to reflect on the current state of agriculture in Northern Ireland.
And to be very honest, I thought that the story related could have been a lot darker.
Bank borrowing levels for agriculture in Northern Ireland remain at around the £1 billion mark.
However, farm account deposits currently total around £500 million. So, for an industry that can turnover in the region of £4 billion annually, this is a highly acceptable level of ‘indebtedness’.
And the banks know this. Despite the current pressure on input costs, our financial institutions have no intention of walking way from agriculture. As it turns out, they probably view agriculture as a very good sector at the present time.
Importance of agriculture
Take all of the current challenges facing the world -climate change and food security to name but two. In all cases, agriculture is seen as a fundamental part of the solution.
And, in turn, this makes farmers pretty important people in the grand scheme of things.
There is also a growing recognition that as 2022 progresses, energy-driven inflation within the economy converts to a food-related scenario. There is also an expectation that the rising cost of food in the shops will not be a ‘here today, gone tomorrow’ phenomenon.
There is now a real prospect that consumers, not just here, but around the world will be confronted with the challenge of fast rising food prices for a considerable period of time into the future.
Driving all of this is the fact that Russia and Ukraine combined, account for one in every eight food calories exported around the world.
In such circumstances farmers throughout Ireland can look forward to fast increasing prices for their milk, beef, lamb and grain.
The downside, obviously, will be the management of input costs in ways that allow primary producers to balance their books.
However, challenges are always accompanied by opportunities. And I would strongly suggest that for those local farmers who can drive efficiency within their businesses, the prospect of actually improving profitability is a very realistic target to aim for.
The industry that has been most exposed to the spiraling hikes in feed costs that have impacted the market is the pig sector.
I am fully aware of the losses that farmers have accumulated since the beginning of the year – through no fault of their own.
However, it is to be hoped that the market for pigs will start to turn in the right direction in the very near future. And there are some signs this is already happening.