Farmers likely to see fall in profits this year

FOLLOWING two years of impressive growth in the Irish agriculture sector, farmers are likely to see their profits drop slightly this year, according to the Teagasc’s Outlook 2012 report, which was released last week.

The report found that while the prospects for Irish agriculture are still broadly positive, they are not as good as they were this time 12 months ago. The main reason for this, according to the report, is because Irish agriculture is highly dependent on circumstances in the wider EU and in the developing world.

In the same way that Irish farmers benefited from higher agricultural commodity prices over the last two years, they are now set to suffer because, with the EU likely to enter recession for a period in 2012 and the US economy also struggling, demand for agricultural commodities in advanced economies may weaken this year.

Teagasc economist Trevor Donnellan said that, overall, most Irish farmers are likely to experience a decline in profitability in 2012, but the sector will remain in a much better position than it was at the onset of the recession.

An added complication for prices in 2012 could come in the form of exchange rate fluctuations. A weaker euro would make Irish exports more competitive, but would also generate inflation in the price of imported farm inputs such as fertilizer and fuel.