Four in ten (43%) farmers plan to expand their farms over the next one to three years, according to a new survey.
A similar number (44%) indicated that they would prefer the farm to remain the same size, and 13% intending to scale down. The research was conducted for Bank of Ireland’s ‘Agri Pulse’, a new addition to the Bank of Ireland Economic Pulse series, which surveyed farmers on a range of topics including farm output, input costs, market prices, their investment plans and business ambitions.
One in four farmers (25%) expect to see an increase in output over the next 12 months, with 62% expecting no change. One in three (31%) saw an increase in farm output over the past 12 months, with half (52%) seeing the same output.
The Agri Pulse points to broadly positive sentiment among the farmers that participated in the study. One in four (24%) expect to increase investment in the farm in the next 12 months, with 59% keeping the same level. Replacing and upgrading buildings, equipment and vehicles and purchasing livestock are the main focus, with investment in new farm buildings, land and equipment and vehicles also cited (especially by dairy farmers). The majority plan on spending up to €50,000.
“The results show that a large number of farming businesses are on a growth track. While most of those planning on expanding over the next 1 to 3 years are likely to do so cautiously, the rest are set to actively pursue opportunities to grow. Younger farmers are more ambitious, with three in five (61%) of those aged under 50 planning to grow the business over the coming years,” according to Dr Loretta O’Sullivan, Group Chief Economist, Bank of Ireland.
The data points to some pressures on the input cost front. Excluding labour, but including inputs such as feed, fertiliser, fuel, veterinary and land rental, just under half (46%) reported that costs had risen over the past year. The picture is more mixed when it comes to the prices farmers expect to receive on the market. Half of farmers (51%) expect to see a drop in prices over the next year, with one in five (18%) expecting an increase. Most dairy farmers (58%) anticipate an increase in the next 12 months, whereas most cattle farmers (68%) expect prices to fall.
Discussing the pricing data, John Fitzgerald, Head of Agriculture, Bank of Ireland Business Banking said:
“There is expected to be a spike in cattle supply towards the end of this year, which many fear will have a negative impact on prices. Recent developments in dairy markets point to an improved milk price in 2017, helped by a likely reduction in supply from the EU, New Zealand and Australia, as well as increased dairy consumption in China and oil producing regions such as the Middle East and North Africa. With milk prices on the increase, we expect to see more investment by the dairy sector fuelled by further post quota expansion from 2017.”
One in three (36%) of the main farmers within each household are involved in outside activities to supplement the family farm income, while two in three are aged 50 or over. 82% of farmers are sole traders. “We still have a high level of farmers who need a second wage to supplement their earnings. However, we need more focus on encouraging younger farmers to enter the profession and see it as a sustainable career,” according to John Fitzgerald.
250 farmers were interviewed as part of the Agri Pulse, with the fieldwork for the surveys undertaken by Ipsos MRBI on behalf of Bank of Ireland. Dairy, cattle (suckler cow and other), tillage, sheep and other farming activities are covered. The Agri Pulse is part of Bank of Ireland’s Economic Pulse research which surveys 2,000 businesses and 1,000 households each month.
National Ploughing Championships
Bank of Ireland has a long association with the National Ploughing Championships and is an associate sponsor of this year’s event. The Bank of Ireland stand is located beside the National Ploughing Association marquee in the centre of the site – Block 2, Row 11, Stand 267. Bank of Ireland has a number of themed information areas at its stand this year which feature topics such as Managing Market Volatility, Maximising Farm Labour Efficiency, Business Planning with Think Business as well as the findings from the recent Agri Pulse Survey. In addition, one of the main features at the Bank of Ireland stand this year is a must see “virtual ploughing” experience on one of Ireland’s largest tillage farms.
Agriculture is the largest standalone sector within Bank of Ireland’s Business Banking portfolio, comprising over 50% of all new business lending through its nationwide branch network last year. The Bank has a €1bn investment fund in place to support development and expansion at farm level and is supporting farmers for the long term.