Shane Whelan, IFA Inputs Policy Executive

1. Input price challenges
Impact & Strategies to mitigate
Meeting for IFA members
20th January 2022

2. Inputs are one side of the equation
– what about 2022 output prices?
• Hit by high input prices
• Some softening in
commodity prices from
Q4 ‘21 uplift as 2022
progresses
• Tighter global / EU /Irish
supplies & firm demand
• Output prices to remain
firm
• Hit by high input prices
• Some drop in recent weeks
but output prices to remain
firm
• Tight EU supplies, coupled
with UK trade issues &
NZ/Aust focus on China
• Reopening economies &
foodservice
• Nationally: + carryover &
breeding stock
• Hit by high input prices
• Some uplift EU
production forecast
• Prices to remain
relatively strong –
strong global demand
• Hit by high input prices – MoF 7c/kg
• Some recovery in pig prices (H2)
• Lower EU/US output higher Chinese
import demand (+5%)
• ASF developments key
• Poultry margins at historic low
• 2020 Price -8.4% (EU+13%);
• CoP +60%: Feed +36%; gas +40%
• Tighter supplies & reopening
economies to support global trade
• Feed costs & Avian influenza risk
40.7c/litre (Actual)
36.4c/litre
R3 Steer: €4.29/kg
R3 Steer: €3.97/kg
€7.01/kg
€5.95/kg
Feed Barley: €205/tonne
Feed Wheat: €215/tonne
Feed Barley: €165/tonne
Feed Wheat: €170/tonne
Pigs: €1.64/kg
Eggs: €1.44/kg
Broiler/Chicken: €2.14/kg
Pigs: €1.81/kg
Eggs: €1.45/kg
Broiler / Chicken: €2.14/kg
2021
3yr Av.
2022
Outlook
(Source: Bord Bia / Central Statistics Office. Note all prices quoted are Incl VAT)
• Hit by high input prices
• Output prices to remain
firm
• Tight EU supplies (-1.4%)
& steady consumption
• UK supplies up from Q2
• Nationally +4% (70k) -
timing: feed on vs. push
at grass

3. Financial On-Farm Impact
(Source: Teagasc)
Feed Cost – c/kg Margin Over Feed – c/kg Profit / Loss per Av 600 cow pig unit

4. Financial On-Farm Impact
(Note: For illustrative purposes only)
Winter wheat: total fertiliser costs will be c.€900/ha vs. €345/ha in 2021 (Teagasc Crops,
Costs and Returns) if no fertiliser reductions are implemented by a tillage farmer.
Assumptions: [(10-10-20 @ 370kg/ha and €900/t) + 212kg/N ha ((785kg 27.5% N CAN @ 750/t)]
Spring feed barley: likely to see €420/ha increase in cost over 2021 assuming 370kg/ha
10-10-20 and 460kg/ha of a CAN product.
+ €400 to €550/ha
Tillage
farmer
Livestock
farmer
A beef/sheep farmer who purchased CAN in this time last year at €230/t
would have paid €2,400 to spread 70kg N/ha on 40ha of land. At present, the
cost of that fertiliser is around €7,260 (an additional €120/ha).
For a mid-sized dairy farmer feeding 120 tons of ration and using 40
tons of fertiliser per year, the rise in input costs will add €24,920 of
additional costs (c.4.5c/litre) into the system on top of other
additional costs incurred.

5. Strategies to mitigate
Key: Act early. Review possible impact on your farm. Put a plan in place. Don’t just hope for the best!!
 Cash reserves available
 Solid Output prices expected
 Stable Direct Payment receipts
 Higher Feed costs
 Higher Fertiliser costs
 Higher Fuel costs
 Higher Electricity costs
 Bigger tax bill to pay??
Impact will be individual & farm specific
A mix of on-farm and off-farm strategies required?
 Engage with your Agricultural
Advisor to identify most
suitable strategy for you
 Engage with your financial
provider to ensure you have
adequate working capital
when you need it
Recommendations:
Changed Working Capital cycle -
Cashflow impact from earlier than
normal payments?

6. Financial Management
 Be proactive. Quantify potential financial need & engage early with your finance provider – don’t wait
until you have to / are under cashflow pressure
 Solutions will be identified on a case-by-case basis. Possible solutions include:
 Retrospective funding of capital expenditure/increased breeding stock from cashflow over the previous 18
months
 Credit Guarantee Scheme – Extended to end H1 2022. €10k to €1m (unsecured up to €250k) for terms 1-5.5yrs
2.75% per annum up to €250k. I/O option at start of loan. Applications direct to the Bank.
 SBCI Brexit Impact Loan Scheme - €25k to €1.5m (unsecured up to €600k) for terms 1-6yrs; Variable rates of
3.5% sub €250k; 2.75% over €250k. Online application to SBCI to get eligibility code.
 Short term loan / Increased working capital
 Credit Union Cultivate Loans: 6.5% for 12-18mth term; €50k unsecured
 BOI Dairy Flex (3.73%) & Stocking Loans: 5.31% (secured); 6.31% (unsecured)
 AIB Farmer Credit Line: 3.575% variable for seasonal farm inputs
Engage with your Finance Provider to identify the most suitable solution for you
 Repayment capacity will remain No. 1 consideration – have your supporting documentation in order

7. Concluding Remarks
 Escalating input costs will erode into any marginal gains from relatively strong output prices. Need
collective action:
 Farmers: Examine your own personal situation, engage early with Agri Advisor / Finance Provider, & put
a plan in place (i.e. feed / fertiliser / finance etc.)
 Keep under review and act accordingly – better to be proactive than reactive
 Range of supports / options available – the earlier you engage the more options are available
 Farm Input Suppliers: Understand existing stocks secured at high prices but essential any reductions are
quickly passed on to farmers
 Finance Providers: Need to take flexible & understanding approach, and ensure swift turnaround in
provision of low-cost working capital
 Commission: do all within their remit to support, including the removal anti-dumping duties
 Government: Be proactive in the provision of innovative support packages and quickly introduce the
required Regulation to establish Office of Food Ombudsman to better ensure Retailer Governance that
gives farmers get their fair share.

8. Thank You
Questions & Answers

9. On-farm management
strategies to mitigate
 Strategies:
o Chemical fertiliser - price/tonne isn’t best comparison measure. Consider €/kg N and effective N.
 Value vs. Availability – try secure enough for Spring and first-cut silage
 Do not skip applications - maximise first cut silage and avoid making second silage if possible
 Prioritise as per soil test results - reduce applications on pastures that received good dressings last year
o Maximise use/value of available slurry – know quality of what you have (slurry test / hydrometer – cost c.€50-€80)
 Maximise Spring applications (+3 units N/1,000gals) & LESS technologies (+c.3 units/1,000gal; wider window of applications)
 Target low P/K Index soils (as per soil results but generally silage ground)
 Focus on growth response & buffer zones (soil temp >5.5%; good field conditions (positive soil moisture deficit); good weather
forecast; grass growth >10kg DM/ha)
 Calibrate slurry spreader (see Teagasc Machinery Calculator – tank size; working width; time to empty; target application rate)
o Measure grass - if covers are above target, lower the amount applied - or increase the interval between applications.
o Consider over-sowing clover to reduce N use during Summer
o Reduce demand – sell any surplus stock
o Test silage quality and minimise concentrate supplementation
Engage with your Agricultural Advisor to identify the most suitable strategies for you