REVIEW OF THE IRISH AGRI-FOOD INDUSTRY

Transcription

1 REVIEW OF THE IRISH AGRI-FOOD INDUSTRY DIGITAL PRODUCT OF THE YEAR 2017 PUBLISHING COMPANY OF THE YEAR

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3 The Irish Farmers Monthly is a direct mail targeted publication aimed at top commercial farmers. Established in 1975, IFP Media published Irish Farmers Monthly as one of its flagship titles. A target market is a group of customers towards which a business has decided to aim its marketing efforts and ultimately, its merchandise. A well-defined target market is the first element to a marketing strategy. The Pareto principle (also known as the rule) is a common rule of thumb in business, eg. Eighty per cent of your sales come from 20 per cent of your clients. The Italian economist Vilfredo Pareto, observed in 1906 that 80% of the land in Italy was owned by 20% of the population. The United Nations Development Programme Report (2006), demonstrated that this was still the case as the distribution of global income showed the richest 20% of the population controlled 82.7% of the world s income. So, for success in agribusiness, if you are supplying farm inputs and services, then your advertising and communications should target the relevant farmer audience. As can be seen from the circulation of the Irish Farmers Monthly, this is the case when you analyse the following data. Targeting top commercial livestock and arable farmers are paramount to the Irish Farmers Monthly database. Introduction The land area of the Republic of Ireland (RoI) is 6.9 million (m) hectares (ha), of which 4.4m ha are used for agriculture and a further 0.73m ha are used for forestry. Approximately 81% of agricultural area is devoted to pasture, hay and grass silage (3.6m ha), 11% to rough grazing (0.5m ha) and 8% to crops (including cereals), fruit and horticulture production (0.36m ha). The average land price in Ireland in 2015 was estimated to be 8,194 per acre (p/ac). According to the Department of Agriculture, Food and the Marine (DAFM), the agri-food and drink sector accounted for 10.7% of Ireland s exports and 8.4% of total employment (2015 data). In 2016, Irish agri-food and drink exports increased by an estimated 2% to approximately billion (bn), according to Bord Bia, the Irish Food Board (2017 data). In 2016, the Gross Agricultural Output (GAO) was valued at 6.92 bn (DAFM, 2016 data).the beef and dairy categories are the largest and account for 38.8% and 29.5% of GAO, respectively. Other sectors to have a share in GAO include pig (7.8%), sheep (4%), cereals (3.9%), and other (16%). The UK was the main destination for Irish agri-food and drink exports in 2016, accounting for 37% of all exports; 32% went to EU markets; and 31% went to international markets. The distribution of Ireland s agri-food and drink exports in 2016, by sector, was as follows: dairy products and ingredients 30%; beef 21%; prepared consumer foods 17%; beverages 13%; pigmeat 6%; seafood 5%; poultry 3%; sheepmeat 2%; edible horticulture and cereals 2%; and live animals 1%. 3

4 Irish food exports still growing The Irish food and drink industry recorded its seventh year of consecutive growth in exports during Since 2010, the industry, as a whole, has seen a 41% or 3.27bn increase in the value of exports, according to Bord Bia. Figures from January to July, 2017, show an increase of 12% in the value of food and drink exports. The abolition of quotas and overall dairy expansion, combined with the recovery in the market over the past year, have led to an increase in dairy exports of 22%. The meat and livestock industry experienced growth of 5%, while seafood exports were up 18% in the first six months of A 13% rise in the prepared foods sector was also noted, with the edible horticulture and cereals industry recording a small increase of 1%. So far this year, Africa has seen a 23% increase in Irish exports. North America has seen a 20% rise, while the Middle East recorded a 15% hike. There was also a 15% increase in exports destined for Asia. Other EU destinations recorded a 14% increase in Irish exports. Ireland experienced an increase of 6% in the value of exports to Britain in the first six months of this year which was encouraging given all the pressures with sterling. Overall, 45% of the growth has come from international markets; EU markets have expanded by 35%; and there has been 20% growth in Britain. Germany is our sixthlargest export market for food and drink with a value of 600m during Irish dairy, beef and prepared foods are Ireland s top three food exports to Germany. Export performance to date for 2017 has been up 24%, driven by significant increases in dairy and prepared foods. Irish food and drink products are sold in 180 markets worldwide worth 11.15bn, to date. When the first six months of 2017 are compared to the corresponding period in 2016, every sector has seen some growth in exported product. Reduced farm machinery sales According to Ireland s Farm Tractor and Machinery Trade Association (FTMTA), tractor sales fell by 12% in the first six months of There were 1,168 tractors sold between January and June, 2017, compared with 1,335 in the same period last year. However, the increasing horsepower (hp) of the tractors sold is a consideration here. One in five tractors sold was in the over-150hp bracket, and, typically, bought by contractors and large tillage growers. Some 53% of the tractors sold were between 100hp and 120hp. Sales of backhoes increased by 40% during the first half of 2016, while sales of self-propelled forage harvesters were also strong Tractor prices have increased again with the latest emissions regulations adding to cost. The average price for a standard 100hp tractor is now approximately 55,000, with higher-specification models costing up to 80,000. The latest registration figures from Ireland s Central Statistics Office (CSO) show high numbers of imported tractors, but also a recovery in new tractor sales. 4

5 Some 194 used tractors were imported in October, 48 more than the same month last year. This brings the total so far this year to 2,114, a 35% increase on the first 10 months of Meanwhile, there were 93 new tractors registered in RoI last month. This is a major jump on the 69 registered in October 2016, but still significantly behind 2015 figures. There were 1,661 new tractors registered between January and October, a 6.5% drop on the same period last year. The top-five selling counties are Cork, followed by Tipperary, Galway, Wexford and Kilkenny. John Deere is the market-leader closely followed by New Holland with Massey Ferguson in third place. This year, 2017, has been unusual, as the number of imported used tractors is significantly higher than new tractor sales. This has been the case since mid-2016, when the Brexit referendum in the UK caused the value of sterling to fall, making used tractors from the UK cheaper to buy for Irish farmers. According to the National Ploughing Association (NPA), the value of all equipment at the National Ploughing Championship (NPC) last September was in excess of 45m. In a positive development for tillage farmers, TAMS II will offer the opportunity to invest in global positioning system (GPS) equipment and other sustainable farming machinery. According to the Agricultural Engineers Association (AEA) in the United Kingdom (UK), new tractor sales in Northern Ireland (NI) during 2016 increased by 3.4% to 454 units. Across the UK, as a whole, tractor sales fell by 2.2% to 10,602 units in NI was one of the few regions to experience an increase in sales; however, this was from a low base. Other than in 2015, the 454 tractors registered last year in NI is the lowest number in AEA records, which cover the past 14 years. The highest number of registrations in NI in recent years was in 2007, when 1,020 tractors were registered. The FTMTA s Grass & Muck event takes place every second year at Gurteen College, Roscrea, Co. Tipperary. This event alternates with the FTMTA s Farm Machinery Show which takes place in Punchestown, Co. Kildare. Last year, Grass & Muck attracted 11,000 visitors. While it has numerous static exhibits, the event s real attraction comprises the working demos during which mowers, tedders, rakes, harvesters, wagons, balers and wrappers are put through their paces. Grass & Muck will return to the Gurteen College site on May 17, The first-ever FTMTA Farm Machinery Trade Auction was held at Punchestown on Saturday, September 30, It attracted more than 2,500 people and 1.2m worth of machinery was sold on the day. In total, there was over 250 lots on offer including tractors, wrappers, balers, bale lifters, combines, seed drills, trailers and teleporters. There were more than 500 registered bidders on the day and a further 100 online. In 2016, the market for self-propelled silage harvesters on the island of Ireland was around 45 machines, representing a drop of about 14% on This is an overall investment of over 13m. The relatively strong market is driven by attractive finance deals at a time when many agricultural contractors have serious cashflow issues. The Claas brand is number one, John Deere is in second place followed by New Holland. Claas has the widest range of self-propelled forage harvesters and accounts for half of all forage harvesters sold worldwide. Baled silage market still growing Baled silage has never been as popular on Irish farms and with increasing livestock numbers, the market for silage is growing. Preliminary CSO estimates for June 2017 show that the total number of cattle was 7,363,500, an increase of 142,300 (+2.0%) on June The number of cattle aged two years and over (excluding cows and bulls) increased by 72,600 (+10.1%). Cattle aged one to two years increased by 60,700 (+3.3%) and dairy cows increased by 34,800 (+2.5%). The need for low-height, high-protein grass has forced many farmers into taking out more mature paddocks for baled silage. The weather also has a big bearing on the amount of bales wrapped in any year. 5

6 Given the break in weather after this period, most late firstcuts deteriorated in quality and there was little opportunity to take second or third cuts of silage on many farms. So, the lack of forage stocks and lower feed quality will make for a difficult winter on some farms. Straw is also scarcer and more expensive this year so that makes the problem worse as a tonne of straw incorporated in a mixer wagon diet can normally replace one tonne of silage. Tough times for Irish cereal growers So, due to the prolonged periods of wet weather this has been a good year for making baled silage. The expected shortage of forage next spring is also pushing bales up to record price levels. Over the last five years, the use of a wide polythene film to bind bales before wrapping has grown significantly. The McHale Fusion is the market leader in this area. As it stands, at least 10 combi-wrappers have been launched over the last five years, which are capable of wrapping using this film & film method, with other manufacturers currently in development. Forage in short supply for spring 2018 A deepening income crisis for tillage farmers, low prices for a fifth consecutive year and poor weather, require a Government-backed plan, an Oireachtas committee has been told. In fact, there has been a 20% decline in Irish cereal acreage over the past 10 years. The acreage of cereals was down again this year and, of course, the wet weather conditions during the harvest made baling straw even more difficult. However, despite a lower acreage planted the cereal production was up on 2016 at 2.3m tonnes (t), as spring barley reached record yields. According to Teagasc, spring barley yields were a record high at 7.8t/ha, while yield (t/ha) for wheat, barley and oats both spring and winter were all higher than the previous year. It looks like it could be a very long winter for livestock producers in the west of Ireland and in parts of Ulster. The spells of very poor weather in July, August and September have severely hampered forage-making operations in the region. The poor weather has also left farmers with no option but to start feeding from whatever fodder they already have in store. This is, of course, good news for the compound feed millers as they will be expected to make up the forage gap with appropriately formulated concentrates. First-cut silages made in late April and in early May are of exceptional quality but quantity is obviously an issue. 6

7 Preliminary CSO estimates for June 2017 show that the area under cereals fell by 8,900ha (-3.2%) to 272,200ha. This was mainly due to a decrease of 9,700ha (-12.9%) under winter barley and a decrease of 900ha (-1.3%) in the area under wheat. Teagasc estimates large decreases in the area of land planted to the 2017 winter crops. It estimates that 123,000ha of winter cereals have been sown a drop of 14.5%. Delayed harvest, straw lying on fields and poor sowing conditions have contributed to the decline in sowings and, maybe in some cases, a poor price outlook for However, there are some positives as lower conacre prices have significantly reduced costs while higher yields have compensated, to some extent, for lower cereal prices. There was also a much higher price for straw this autumn even if it was not all saved due to poor weather conditions. Tillage farmers growing malting barley and oats are getting a contract price so they are not depending on world commodity prices. Longer term, overstocked dairy farmers short of grass and silage will need to purchase barley and straw, etc. from tillage farmers, as renting or buying extra land is not an option for them. Already, many livestock farmers who use mixer wagons have made arrangements with tillage farmers to supply them with barley, straw, forage maize, brassicas and fodder beet, etc. Boortmalt currently has over 600 suppliers growing malt barley from 60,000ha of land in Ireland, with plans for this to increase next year. Not surprisingly, combine harvester sales fell this year, following several years of low grain prices. Some 25 new combines were sold in 2017, down from 31 last year. It is only a fraction of the 80 combines sold in Claas is the top seller this year. Bigger farm machines and higher-horsepower tractors With bigger dairy herds and less labour available, the trend is to purchase bigger mixer wagons and bigger slurry tankers. Of course, much of the slurry is spread by farm contractors. Recent research carried out by the Association of Farm & Forestry Contractors in Ireland (FCI) indicates that land-based contractors provide slurry spreading services for up to 10bn litres (L) of slurry every year on Irish farms. The FCI believes that the schemes currently in place to promote low emissions-spreading technology are unlikely to be sufficient to meet future ammonia targets. These schemes should be extended to include landbased contractors in order to achieve the levels of ammonia emissions reductions being sought by the Government, the national chair of the FCI, Richard White, said. Irish farm contractors in Ireland employ close to 10,000 people, offering a range of services to the wider agricultural community. According to the FCI, contractors use more than 500m L of diesel annually and operate more than 20,000 tractors about one third of the national fleet. FCI has confirmed that its next biennial conference and exhibition, Confex, will take place at the National Show Centre, Cloghran, Swords, Co. Dublin, on January 10, FBD Insurance is the lead sponsor of this one-day event. FCI says that it maintains a database of more than 1,000 farm and forestry contractors across the island of Ireland all of whom will be invited to participate in the event. Education & Teagasc update Teagasc income in 2016 was 187m, which is 12m more than its 2015 income. There was an increase of 5.6m in grant aid compared to Knowledge transfer (KT) income increased by 6.6m (32%) and research income was similar to the previous year. Over 400 A1 scientific papers were published In KT, there was an increase in advisory services income, which was achieved by delivering new schemes through a partner, Farm Relief Services (FRS) Networks. 7

8 Key digital developments: Online nutrient management planning tool (NMP) rolled out by Teagasc to produce detailed nutrient management plans for farms; Merger of Pasture Base Ireland and Agrinet grass growth databases; and Public website powered by a new content management system. Key knowledge transfer & research outputs: 42,115 farmer clients serviced and 12,359 farmers in Teagasc facilitated discussion groups; Teagasc trained over 170 tutors to deliver the Beef Data Genomics Programme (BDGP) training courses. Over 24,000 participants, in total, were trained; 4,400 people took part in the adult Green Cert education programme between autumn 2014 and the end of 2016; New pig research facility opened in Teagasc Moorepark, Co. Cork; and Research, education and conference centre opened at Teagasc Ashtown, Dublin. Key national and international events: Beef 2016 National beef open day at the Teagasc Animal and Grassland Research and Innovation Centre, Grange, Co. Meath; Over 1,800 food scientists attended the International Union of Food Science and Technology Congress in Dublin organised by Teagasc; First Energy in Agriculture event held in Gurteen College, Co. Tipperary; and Farming and Country Life event in Teagasc Mellows campus, Athenry, Co. Galway. Key collaborations: New joint dairy programmes established with Arrabawn and Aurivo co-ops; and Memorandum of Understanding signed between Teagasc and Sanyuan Foods, China. The DAFM s new KT scheme was opened to 5,000 dairy and 7,000 beef farmers in Funding of 100m under the Rural Development Programme has been allocated for 27,000 farmers to participate, for three years, in KT groups. The Agricultural Consultants Association (ACA) currently has 144 professional members with a further 271 professional, technical and administration staff employed throughout Ireland. An independent survey conducted by Irish Small and Medium Enterprises (ISME) of the entire membership in 2010, estimated that its members now advise in the region of 44,500 farmers. Teagasc is the main provider of further education (Level 5/6) in agriculture, food, horticulture, forestry and equine studies. Higher level courses are delivered in partnership with third level colleges. The Teagascowned agricultural colleges are in Ballyhaise, Co. Cavan; Clonakilty, Co. Cork; Kildalton, Co. Kilkenny; and at the Botanic Gardens in Dublin. The education department of Teagasc partners with Gurteen College, Co. Tipperary; Pallaskenry, Co. Limerick; and Mountbellew, Co. Galway (private agriculture colleges) in the delivery of agricultural education. These colleges offer a range of Level 5 and Level 6 courses in agriculture, machinery and equine. There are 15 institutions in the RoI offering a range of agricultural and related third level courses. These include four universities: National University of Ireland Galway (NUI Galway); National University of Ireland Maynooth (NUI Maynooth); University College Cork (UCC) and University College Dublin (UCD) and 10 Institutes of Technology (Athlone, Blanchardstown, Carlow, Cork, Dundalk, [Galway Mayo Institute of Technology GMIT], Letterkenny, Sligo, Tralee and Waterford). In NI, agricultural-related courses are available at the College of Agriculture, Food and Rural Enterprise (CAFRE) in Co. Antrim, with campuses in Greenmount and Loughry, as well as at Queens University, in Belfast. Good prospects for poultry industry post Brexit The biennial Northern Ireland Poultry Industry 8

9 Conference, which took place at CAFRE Loughry Campus, last November, highlighted a bullish outlook for poultry meat, with consumers increasingly choosing it over other proteins. Export opportunities to Asia and elsewhere also look positive. Delegates heard how the sector had remained resilient over the past year with total value sales in Ireland estimated at 742m ( 832m). In NI, total value sales increased by 2%, from 253m in 2015 to 258m in Total value sales in the poultry industry have also increased in the RoI, by 3.15% to 465m ( 521m) in Rising volume sales in the UK are likely to have a stronger role than price inflation in driving value growth within poultry, with 15.9% growth to 3.4bn by 2021 forecast, according to Professor Geoff Simons from Queens University. However, it is likely that the Irish and UK poultry market will face some hurdles during the two-year Brexit negotiations regarding trade agreements and tariffs, he added. As regards global poultry production, Japan is the world s number-one poultry importer and Poland is Europe s number-one producer, followed by France and Germany. Declan Billington, CEO of John Thompson & Sons Ltd, the largest feed compounder on the island of Ireland cited Asia as a major potential export market for NI poultry. He said: We need to target Asia as a huge potential market after Brexit, rather than Europe. In the RoI, the poultry sector supports around 6,000 jobs and there are some 370 producers involved in poultry production. The RoI exports 129,000t, with the UK market accounting for 70% of shipments, which mainly consists of processed product, while other key markets include France and the Netherlands. Rivalled only by pigmeat, poultry is the single largest category of meat consumed in Ireland, accounting for some 37% of meat consumption. There are almost 240 producers involved in egg production in the RoI and over 3.3m laying hens. The retail sales of eggs in Ireland are valued at 100m with the average consumer eating 169 eggs a year. Most of the recent growth in egg consumption is in the younger demographic where the frequency of purchase continues to increase. There are 14 feed millers and premix suppliers approved by Bord Bia, the Irish Food Board. Last June, the Swedish chicken processing company, Scandi Standard, announced that it has entered into an agreement to acquire Manor Farm, the largest chicken processor in Ireland in a 70m deal. The Manor Farm processing plant is in Shercock, Co. Cavan. It has approximatley 130 farmers contracted as growers and 43 contracted as breeders. It employs 850 people and operates a feed mill, which has sales of 80m and produces solely for its contracted growers. Pig producers doing well The first half of 2017 was a relatively positive period for Irish and EU pig producers. As of March 2017, the EU is the world s largest exporter of pigmeat, followed by the US and Canada. The biggest global importer of pig meat is China followed by Japan and Mexico. The rate of pigmeat consumption in most countries is relatively stable from year to year. However, rising Chinese income levels and resultant increased buying power has generated a rapid increase 9

10 securing planning permission and building out new facilities. The company makes all its own equipment, all its own feed, generates its own electricity, and transports the animals itself. It has 15 company-owned farms and 50 operated by contractors. This includes two breeding farms in counties Offaly and Monaghan with Louth coming on stream. It also has farms in Dorset and Cornwall in England. Sainsbury s is its biggest customer in the UK and it exports ribs to the US and feet and heads to China. in pigmeat consumption. It has grown from 12kg per head in 1980 to 40kg today in a market with 1.4bn people Currently, the pig industry employs about 7,000 people (on-farm, slaughtering/processing, feed manufacture, transport, services, supplies, buildings and equipment) mostly in rural areas and small towns. Commercial pig production is carried out in fewer than 350 pig units which produce about 98% of our production. Typically, units are large and specialised with skilled staff who utilise the latest technology. JMW Farms is Ireland s biggest pig producer with about 300,000 animals, selling 7,000 a week (5,000 in Ireland and the balance in the UK). Based in NI, JMW Farms is investing in a 2.5m finishing farm in Co. Louth after spending three years securing planning permission. The farm will handle 10,000 pigs at a time, where they will spend 12 weeks before being sent to slaughter. JMW Farms Jim Wright was a finalist in the Ernst & Young (EY) Entrepreneur of the Year. The company has annual turnover of 40m and was a bit better than breakeven last year. Mr Wright said, 2014 was its best year when it made profits of 3m but the market has turned since then. JMW s Farms business model involves buying old farms, Other large pig producers in the RoI include the Kiernan family based in Co. Cavan who have many units in the north midlands. At the Teagasc pig conference last October, a survey was published comparing 28 large pig units (c.800 sows) who manufactured their own feed with 71 who purchased their feed requirements (c.700 sows). The cost per kg dead weight was 1.02 for home milling versus 1.04 for those who purchased their feed. The feed cost per pig produced was for home milling versus for those who purchased their feed. The number of pigs produced per sow per annum was 26.1 for the home feed millers versus 25.2 for those who purchased their feed. Billy Costello, who has a large pig unit and an anaerobic digester in Nurney, Co. Kildare, also has large pig units and anaerobic digesters in Britain and Germany. Excellent prospects for renewable energy There are nearly 9,000 biogas or anaerobic digestion plants in Germany. They are, typically, operated by farmers, and turn renewable energy crops like maize or turnips, plus manure, into a gas constituting of roughly 50% methane and 50% CO 2. Anaerobic digestion can be used to generate electricity and heat, or can be processed into renewable natural gas and transportation fuels. This process could certainly help us to meet our EU targets for renewable energy and help us avoid a potential fine of 360m per annum. Ireland, along with Denmark and Luxembourg, has the 10

11 establishing digesters and purification plants to capture gas from slurry and pump it directly into the national gas network. The potential is that 20% of the gas demand in Ireland could be met by renewable gas by 2030 so this could be a great boost to farm incomes post Brexit. This could be easily ramped up from feedstocks that are already close to the gas network. Dairy industry in Ireland is booming most challenging target for greenhouse gas (GHG) emissions reductions in the EU; a 20% reduction on 2005 emissions levels by Emissions targets also include emissions from agriculture and waste disposal which currently account for 34% of Ireland s total GHG emissions. At present, the RoI is only halfway towards meeting its EU targets, with just 8.6% of energy consumption derived from renewables. Today, more than 250 windfarms power Irish businesses and communities across the all-ireland energy market. Their total capacity now exceeds 3 gigawatts (GW), which is enough to power almost 2m homes. Just over 20% of our electricity is now generated by wind energy. Ireland is still heavily reliant on fossil fuels, the bulk of it imported. Ireland imports 85% of our energy, at a cost of 5.7bn, or about 15m every day. About 97% of imports are fossil fuels; oil (56%), natural gas (31%), and coal (10%), according to the Sustainable Energy Authority of Ireland. The remainder is electricity (2%), and biofuels (1%). More than 20,000 acres of land owned by Irish farmers are now under solar energy contracts as solar energy development companies are chasing the lucrative rural renewables market. Gas Networks Ireland is in talks with 12 separate farming entities, including one potential co-op, with a view to The dairy industry in the RoI is on track to increase milk production from 5bn L of milk per year in 2015 to more than 7bn L in There has been more than 600 new entrants to dairy farming in the last three years. Milk price in the RoI has risen from a base price close to 22c/L up to 32c/L in the last two years. Over half of the milk in the country is produced from herds with over 150 cows. The proportion of dairy cows in herds of 100 cows or greater increased from 13% in 2005 to 47% in Average herd size in the ROI is now approximately 90 cows, the production per dairy farm is 370,000L and the average yield per cow is quite low at only 5,000L. The dairy industry is facing a severe shortage of new recruits. The average dairy farmer is currently 58 years of age, so we will need approximately 6,000 new entrants over the next decade to replace retirees and meet the requirements of expanding herds. However, Irish dairy farms have the potential to double the average milk solids produced by their dairy cows within the next 20 years, according to Donagh Berry of Teagasc. According to Irish Cattle Breeding Federation (ICBF) data, Cork has 367,556 dairy cows, Tipperary has 161,921, Limerick has 118,461, and Kerry has 107,050. So, these four counties account for 52% of all the cows in the country, which has around 17,000 active dairy farmers. In September 2017, the volume of raw milk produced was m L. This was 5.5% higher than the corresponding month in Eurostat data for May and 11

12 June 2017 show a 2.5% rise in the number of Irish dairy cows, compared with This is in contrast to a 1% fall in the EU as a whole. There are only 2,684 dairy farms in NI and 315,800 cows. The average herd size is almost 120 cows. Average yield is around 7,000L and cows in NI receive at least twice as much compound feed as those in the RoI. The dairy industry in NI employs more than 2,000 people From its all-time high in 2016, the number of dairy cows decreased slightly to 315,800 head. The number of beef cows decreased by 1% to 267,100 head. Sheep: There was a 2% rise in the number of breeding ewes compared with Numbers have fluctuated in recent years, falling to a 20-year-low of 876,000 in 2010 before increasing to 972,000 this year, which is the highest level since Overall, the total number of sheep recorded was almost 2.1m, a level not seen since Pigs: In comparison with 2016, sow numbers increased by 3% to 41,400, whereas, the overall pig herd was 8% larger. Most pig categories are showing an upward trend. Poultry: Laying birds recorded for June 1, 2017, increased by 10% to 3.9m birds, while broiler poultry numbers increased by 9% at that date. The laying bird population has shown strong growth since 2013 and this is partly due to new producers who have entered the industry. NI Agricultural Census Preliminary results of the June 2017 Agricultural Census in Northern Ireland have been released by the Deptartment of Agriculture, Environment and Rural Affairs for Northern Ireland. The area of cereals grown decreased by 2% to 32,600ha with winter wheat, winter barley and oats all decreasing in The area of spring barley grown is similar to the previous year and remains the most popular cereal crop with 14,700ha planted across NI. The area of potatoes increased by 9% to 4,100ha, building on last year s recovery from the record low of 3,800ha grown in The area of arable crop silage increased by 4% to 3,500ha whereas, the area of forage maize increased by 12% to 1,400ha. For forage maize, this ends the downward trend since the peak of 3,500ha grown in Cattle: Total cattle numbers were unchanged from June The size of the agri-labour force is relatively unchanged from the previous year with 47,800 workers. There has been a small decrease in the number of full-time farmers but this was offset by an increase in the number of other regular workers both paid and unpaid. Impact of Brexit on agri-business Our dairy products and pigmeat exports are well diversified and world markets are growing in line with higher income and an increased world population, so Brexit will have little impact longer term. With modern IT technology, the increased bureaucracy necessary, post Brexit, for cross-border trading should be minimised. A huge volume of milk from NI is processed in the RoI, so some problems may arise for food quality assurance schemes where, for example, the same manufacturing facility is processing milk from the RoI and NI. However, Brexit will have a severe impact on the beef industry. Just under 50% of all beef exported from 12

13 According to the Irish Farmers Association (IFA), Turkey has an annual import requirement of 500,000 head of live cattle and the RoI could supply up to 100,000 head of this requirement each year. Cumulative throughputs for cattle to meat plants, as of late November 2017, are up 6% or over 86,000 at around 1.54m head. The largest increases were for steers and heifers, up by 9% and 7%, respectively, while cull cows are up 4%. As of late November 2017, the beef trade continues to be dominated by a strong factory appetite and high levels of throughput. At the top of the market, regular sellers are securing a base of 3.90/kg for steers and 4.00/kg for heifers, with most cattle are selling at around 3.85/kg for steers and 3.95/kg for heifers. Ireland in 2016 was destined for the UK, 40% went to the rest of Europe and the remainder, approximately 10%, was shipped to non-eu markets. Post Brexit, if Ireland is granted access to the UK market under a free-trade agreement, it would mean that Irish beef would have to compete with lower-priced product from South American countries. The Brazilian beef price, based on the year-to-date, is 33% beneath the Irish R3 steer price. In addition, the UK s departure from the EU could see the Common Agricultural Policy (CAP) budget decline by 10%. This, along with lower beef prices, would see the average Irish beef farm experience an income drop of over 35%. The cattle kill to date this year, is running 81,500 head ahead of the same time last year and the annual kill is on track to be the highest in more than 10 years. Demand at home is being bolstered by a thriving manufacturing trade and growth in exports outside of the Eurozone. Exports to Hong Kong have increased taking 2,935t of beef in September. Indeed, Hong Kong took more Irish beef than Italy, Germany or Sweden. The Philippines took 1,532t in September, bringing its total purchases of Irish beef to almost 16,000t for year to date. However, the wet weather this autumn and an early winter has forced many livestock farmers to house cattle early due to poor grazing conditions. This will increase winter feed costs and force some farmers to reduce stock levels and sell for a lower price. For cattle-rearing farms, this would be a drop of 4,000; income of other farms could decline by 5,000 per annum. Good year for cattle industry This year, 2017, has been a positive year for live exports. So far, 100,000 young calves have been exported to the Netherlands, Spain and Italy. To date, almost 17,000 Irish cattle have been exported to the Turkish market, and this follows shipments of almost 20,000 head in autumn

14 Teagasc estimates that only one in five of the 35,000 farms with suckler cows will be economically viable in the long term. In 2015, 45% of suckler farms were only sustainable due to off-farm employment. Ireland s Beef Data and Genomics Programme (BDGP) was launched in 2015 to inject up to 52m per annum, for six years, into the suckler beef sector, while accelerating genetic improvement and improving environmental sustainability. However, fewer than 24,000 of the original 30,000 applicants have been able to qualify for payments. Latest figures from the ICBF show that the suckler herd is continuing to decline as dairy cow and calf numbers grow. According to ICBF suckler cow numbers are at their lowest in a decade, as the dairy herd expands at a rapid rate. There are 1,004,334 beef-bred cows in the RoI currently, a drop of almost 80,000 on the 2009 peak, the latest figures from the ICBF show. This is the lowest number of suckler cows since 2007, when there were 993,889 beef-bred cows. So, the meat industry will be depending on beef-cross calves from the dairy herd for an increasing percentage of their future supplies. Indeed, ICBF statistics have shown a significant increase in the use of beef-breed bulls on the Friesian dairy herd in Ireland over the last four years. Beef-breed sires were used on 39.25% of the Friesian dairy herd of 1,205,941 cows in Angus sires were used on 235,502, or 19.5% of all Friesian cows, while Hereford sires were used on 157,688 Friesian cows, or 13.07% of the total. Limousin sires were used on 4.7% of all Friesian cows, being used as the sire for 57,756 cows. Belgian Blue bulls were chosen by farmers for 23,972 Friesian cows, accounting for 1.98% of the total. A beef-cross calf is worth over 100 more than a dairy bull calf from the same cow or the equivalent to 1.6c/L so we can expect to see more farmers using beef cross on dairy cows not being bred for replacement. Feed trade doing well With greatly increased milk prices, dairy farmers in particular have been feeding extra compound feed this year. In addition, with a shortage of forage the compound trade can expect extra sales this winter and next spring. The CSO data for feed, fertilisers and energy/lubricants purchased is as follows: Change Value +2.8% Compound feed 1,296.6m 1,317.4m 1,354.2m Volume +4.1 % Value -11% Fertilisers 565.6m 565.1m 503.2m Volume -0.8 % Value -7.7% Energy & lubricants 455m 400.3m 369.4m Volume +0.2 % As can be seen due to increasing livestock numbers, compound feed sales are increasing and are likely to increase further due to bigger dairy herds and improved milk prices. Fertiliser sales have not changed much in volume terms but have been impacted by the decline in the tillage sector. However, they are likely to increase due to a higher demand for forage from the dairy herd and improved milk prices. Sheep trade improving According to Bord Bia, cumulative figures for sales to meat plants as of late November for year to date have reached 2.57m head of lamb, up 10% or 234,000 head compared to The long-term prospects for Irish sheepmeat is for prices to, at least, hold steady and possibly strengthen, according to Kepak, which is a major exporter. There has been impressive growth in Germany, Belgium and Scandinavia where Irish sheepmeat has performed well. In Sweden, demand has increased by 30% in the year to date. The US market also has huge potential as it only produces 45% of what it consumes. Kepak has invested heavily in state-of-the-art facilities to provide cooked and ready-to-eat lamb options such as lamb burgers. The December 2016 DAFM census shows the ewe flock rising by 137,037 head to 2.64m ewes with total ewe numbers rising 450,000 head since The greatest increase occurred in counties Donegal, Mayo and 14

15 Galway. If Kerry and Wicklow are included, these five counties possess 50.6% of the national ewe population. There are around 45,000 registered flock-keepers on the DAFM database. On average, there were 108 sheep per flock with only 31% above the average flock size. According to the CSO, last June sheep numbers were up by 73,700 (+1.4%) to 5,252,900 while non-breeding sheep were up 2.5%. Excellent long-term prospects for forestry Due to the likely impact of Brexit on cattle prices, an ageing farming population and the attractive grants for forestry, we can expect to see more livestock farmers switching more of their land to forestry in the future. Recent economic analysis from Teagasc confirms that forestry is a better commercial land-use option than cattle and sheep farm systems on marginal land, even allowing for the long-term nature of forestry. For 2017, a target of planting a total of 7,140ha of forestry was outlined in the DAFM s Forestry Programme However, only 4,259ha had been planted as of October So this means that approximately 40% of the target has yet to be completed and planting is at a 60- year low. During 2016, 6,500ha were planted, which was 98% of the target. More than 13,000 Irish farmers received a forestry payment in 2016, and the most popular planting option attracts an annual guaranteed premium of 510/ha. Currently, only about 11% of land here is under forest compared to an EU average of 42%. a premium on all land they are obliged to set aside for environmental enhancement. There is significant potential for wood fuel to displace fossil fuel, particularly in the generation of heat in industrial, commercial, domestic and institutional markets. After wind energy, wood fuel is the largest contributor to renewable energy generation in Ireland. Timber supply in Ireland is set to increase significantly over the coming decade. The total harvest of commercial roundwood in Ireland in 2015 was 3.02 million m 3. This is forecast to increase to over 6m m 3 by the mid-2020s and increase further still to 7.8m m 3 by the mid-2030s Ireland exports 80% of its timber products sawn, timber and panel board. According to the Irish Forestry and Forest Products Association (IFFPA), the total value of forest product exports in 2015 was 355m. The total export figure can be further broken down as sawn softwood being 121m and panel board exports amounting to 190m. In 2015, IFFPA reports that Ireland was the second-largest exporter of oriented strand board and particle board to the UK behind Germany while it was the largest exporter of medium density fibreboard to the UK. All our major competitors in these product categories are other EU nations. In relation to sawn softwood, Ireland exported 67.13m to the UK in This ranked Ireland at number four in the exporters list, with Sweden, Finland and Latvia ahead in the list. The UK sourced just 37% of their sawn softwood needs from the domestic market so, post Brexit they will still need to import our timber products. In the most benign EU scenario, whereby Ireland is afforded a less stringent target of cutting emissions by 25% alongside a substantial carbon credit for forestry, the State faces a significant challenge, involving an annual reduction in carbon emissions of 11m tonnes, from the current level at 46m. According to the IFA, farmers are holding off on planting until the DAFM removes restrictions on planting productive marginal land and paying farmers 15

16 The De Paor Consultancy has the experience and contacts to help clients optimise the marketing of products and services, to enhance corporate communications, improve their corporate image or to recruit suitably qualified and experienced agribusiness personnel. To date we have done work for Irish and multinational clients in the following sectors: agri-food business, animal health, feed, equipment and machinery, charities, breed societies, construction and property, commercial publications and consultancy firms, IT, public service, professional and trade associations. Produced by De Paor Consultancy on behalf of Irish Farmers Monthly