Welcome weather relief but lot of unknowns remain
With calving / lambing seasons in full flow in many parts, and not enough hours in the day, it’s important to remove whatever stressors possible to allow you focus efforts on tasks that deliver most for your bottom line.
While Winter 2018 / Spring 2019 certainly brought some welcome relief as many took advantage of strong grass covers and got livestock out earlier than anticipated (at least for a time), it’s important to take stock of the impact 2018 had on cash reserves and to ensure you have sufficient working capital in place for the months ahead.
The short-term outlook looks relatively positive for tillage and dairy as global demand outpace global supply.
For pigs, while the medium-long term outlook looks positive too, it will be a while yet, unfortunately, despite recent improvements, before pig and feed prices deliver more positive returns. With increased supply, there has been downward price pressure on calves in recent weeks, however strong grass buyer demand has put a floor on beef price, particularly for quality stock. Ultimately, the outlook for beef will depend largely on final Brexit negotiations.
Michael Murphy, AIB Agri Advisor in Cork, said that “Agri markets have been relatively static to date in 2019, with little material change likely in the short-term. Certainly, a return to more normal weather conditions will help alleviate input expenditure pressures.
“However, with relatively lower returns experienced last year and perhaps depleting cash reserves on some farms (particularly those where capital expenditure was funded from cashflow), it is likely some farmers will experience periods of cashflow deficit through 2019 that will need to be planned for. The important thing to remember is that there are a number of support options available, but early contact with your bank is key.”
“To date, however, farmer current accounts, on average, have remained fairly resilient. We have actually seen some increase in demand for credit, particularly among dairy farmers in recent weeks, many who postponed non-essential capital expenditure in 2018.
“To those considering farm investment, I would encourage them to take the necessary time to plan the investment carefully and ensure it fundamentally serves to enhance and strengthen existing operations. It’s important to use realistic projections and growth figures and to seek strong professional advice where required to do some sensitivity analysis on the potential implications of Brexit, CAP Reform etc. Again, there are a range of information and supports out there” Murphy added.