Written answers

Wednesday, 27 January 2010

Department of Agriculture and Food

Tillage Sector

6:00 am

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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Question 105: To ask the Minister for Agriculture, Fisheries and Food his forecast for tillage farmers in 2010, in particular the grain sector in light of losses incurred over previous years; and if he will make a statement on the matter. [3782/10]

Photo of Brendan SmithBrendan Smith (Cavan-Monaghan, Fianna Fail)
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Since Ireland is a deficit market for cereals, prices here are greatly affected by world prices and supplies. In 2007, increased demands for grain from the biofuels sector and the growing needs of new emerging markets like China and India drove up world grain market prices. In line with this rise in world prices, grain prices in Ireland increased to record levels during 2007 and growers here reacted by increasing the acreage sown. This resulted in a bumper harvest in 2008 with total grain production of almost 2.4 million tonnes, the second highest on record.

However, the bad weather in the autumn of 2008 affected sowing of winter crops and this, coupled with poor returns for growers, led to the area planted being reduced again and consequently a decreased 2009 harvest output of about 1.86 million tonnes, somewhat short of the long-term average of 2 million tonnes. Despite the significant drop in production, grain prices were also down - on average 30% lower than the 2008 level. This illustrates the fact that the grain price in Ireland is a function of developments on EU and world markets rather than a function of domestic supply and demand developments.

While it is too early to predict the level of plantings for 2010, preliminary indications from Teagasc are that the acreage of autumn sown crops in 2009 may be back a little on the previous year with a slight shift in favour of winter barley. In any event I am confident that this year will see some recovery in returns for growers due to very significant reductions in the main input costs and some increase in harvest prices, although clearly this still leaves the tillage sector some way to go to achieving acceptable margins.

Despite the current economic down turn across the world, the ever-increasing demand for grain within the biofuel industry and growing consumption patterns in developing countries is likely to continue over the coming years. While the various price spikes experienced in recent times are unlikely to be repeated in the short term, it is certainly possible that average world grain prices will grow over the next decade at a faster rate than over the previous one. In the wider sense at least there is cause for cautious optimism in the grain producing sector.

I'm sure that these issues will be the subject of informed debate at tomorrow's National Tillage Conference organised by Teagasc on the theme 'Maximising market opportunities in tillage'.

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