Bank of Ireland Agri Pulse shows cautious optimism among farmers

Nearly one-third of farmers are planning on increasing investment in the next year

The Bank of Ireland Agri Pulse points to broadly positive sentiment among farmers in April 2017. Production expectations were up on August 2016 when the survey was last carried out, with the outlook for market prices also brighter.

While the majority of farmers expect Brexit to have a negative impact on their business – reflecting the importance of the UK market for agricultural produce – some 29% are planning on increasing investment in the farm in the next 12 months and 45% have ambitions to expand over the next one to three years. The results also show that younger farmers tend to be more positive, with dairy generally the most optimistic of the sectors.

Discussing the Bank of Ireland Agri Pulse, Dr. Loretta O’Sullivan, Group Chief Economist, Bank of Ireland said: “A sense of cautious optimism comes through in the latest Agri Pulse survey findings, though Brexit is clearly a worry for farmers. We’re seeing almost one in three planning to increase investment in their farms over the next year, and almost half have ambitions to expand over the next one to three years. While there’s an increase in those expecting market prices to rise, half reported a pickup in input costs over the past 12 months.

“The results also highlight the difference in sentiment between younger and older farmers with the younger generations’ greater optimism contrasting with the cautiousness of those who are closer to retirement age.”

Input costs and market prices
On the cost front, one in two farmers reported an increase in input costs (excluding labour) over the past 12 months. More positively, the share of respondents expecting market prices to increase in the coming year rose in April, while the share anticipating a decline in prices fell.

Investment
The results also show that 29% expect to increase investment in the farm in the next 12 months, with dairy farmers leading the charge. Plans are centred on replacing and maintaining worn-out buildings, equipment & vehicles and purchasing livestock, with investment in new farm buildings, land and equipment & vehicles also in scope. The majority expect to spend up to €50,000.

Business ambitions
Looking further ahead, the results show that 45% of farming businesses are on a growth track, with younger farmers in particular looking to expand over the next one to three years. One in three plan on remaining the same size, while one in five (mainly older farmers) intend to scale down. The latter is up from 13% in August 2016 suggesting that Brexit may be concentrating minds..

Farm output
In the April survey, most farmers indicated that output was either up or unchanged over the past 12 months. Land and labour shortages were highlighted by dairy farmers as key factors impacting their production, while cash flow was called out by other sectors.

Over the coming 12 months, the majority expect to increase or keep production the same, with dairy and younger farmers particularly positive about the outlook.

About the Bank of Ireland Agri Pulse:
The Bank of Ireland Agri Pulse provides an insight into what is happening in the sector, the issues and the trends. 250 farmers in Ireland are asked for their views on a wide range of topics including farm output, input costs, market prices, their investment plans and business ambitions. Dairy, cattle (suckler cow and other), tillage, sheep and other farming activities are covered, with the fieldwork for the surveys undertaken by Ipsos MRBI on behalf of Bank of Ireland.