NI farm incomes plough into trough

NI farm incomes nose-dived by almost 18 per cent last year, according to new data from the Ulster Bank.

Richard Ramsey, the bank’s chief economist, said that an extended exports-powered “sweet spot” for the sector between 2008 and 2014 is now over, triggering dramatic falls in profitability.

According to the economist, the closure of the Russian market following Western sanctions over its annexation of Crimea has been a severe blow to local agri-food exporters.

“There was a time when most sectors of the Northern Ireland economy looked on with envy at the environment in which the local agri-food sector was operating,” Mr Ramsey said. “Whilst all of the key indicators for the economy in general were pointing downwards, the key indicators for the agri-food sector were very much on the up.

“That was then; this is now.”

NI’s glut of milk producers are also facing a torrid time as prices remain at a curdling low. But the sector faces further uncertainty as March’s end to the EU milk quota, which limited its production, threatens to add further pressure to prices.

In primary agriculture during 2014, total income from farming in Northern Ireland fell by 17.4 per cent in real terms, while gross output from agriculture was down 3.1 per cent.

Meanwhile, Farm Business Income (FBI) saw a decline of 27 per cent in 2014/15.

According to Mr Ramsey, the performance trough is likely to lead to a period of restructuring in the industry.

He said: “The sector currently has an issue with price competitiveness and profitability, which could be alleviated by scaling up through mergers and/or acquisitions.

“Larger, all-island groups, for instance, would be much better placed to manage exchange-rate volatility, benefit from economies of scale, and compete internationally against larger competitors.

“They would perhaps also be better placed to deal with the changing landscape regarding the large supermarkets.”