Unprecedented Input Cost Increases Highlight Need For Ongoing High Output Prices. – ICMSA.
Commenting on the Agricultural Price Indices for May 2022 published by the CSO today, the President of ICMSA, Mr. Pat McCormack said, that the level of input cost inflation experienced by farmers since May 2021 is unprecedented in any sector with a 41.6% increase in input costs and the fertiliser price increase as high as 210%. This is the reality that has been facing farmers for the last year and despite some commentators highlighting only the record output prices, the reality for the agriculture sector is that our annual terms of trade are down 9.6% in May 2022 compared to May 2021, meaning that farmers are worse off despite record output prices.
It also highlights why food prices have increased and indeed, Mr. McCormack said, that further increases will be required so that farmers can effectively stand still in terms of income and in addition, high food prices will have to become permanent going forward to pay the mounting costs associated with environmental regulation. The contradiction in public commentary at present where people want low food prices and high environmental standards simply has to be called out and the reality is that the massive investments in environmental improvements made by farmers over the last number of years simply has to be paid for and if the Government decide to restrict farm output, food prices will and will have to rise further to compensate for the reduction in output.
Inflation is occurring across the economy and while everyone understands the circumstances that has led to this situation, one would have to question the increase in fertiliser prices in particular and it is a matter that the EU Commission needs to consider given the dominance of a small number of companies in the EU fertiliser market. Farmers are price takers and it is essential that they are protected from excessive profit taking in any link in the supply chain and the EU and the Government have a clear responsibility in this regard.
Concluding, Mr. McCormack said, that if farmers are to survive these unprecedented input cost increases, the food market will simply have to continue to return strong output prices which need to increase further to ensure our terms of trade move into positive territory. In addition, Budget 2023 will have to include measures to support farmers during this inflationary cycle.
Ends 14 July 2022
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