The Irish Grain and Feed Association (IGFA) has called for fairer dealings between primary production and the processing and retailing sector.
IGFA has made the calls in the wake of major grain price hikes that have followed droughts in North and South America, coupled with bad weather here in Ireland. These price spikes have resulted in increased pressure being put on farmers and their suppliers across the country.
The representative body for the grain and feed merchants in Ireland has said that the adverse weather conditions have meant their members have had to extend credit to farmers to unsustainable levels. IGFA believes that the lack of forward contracts for farm products leaves primary producers carrying most of the risk in these volatile markets. A properly drafted a code of practise for the food chain could help ensure primary producers and farmers are protected while greater transparency could be mandated on retailers’ margins.
Michael Phelan, President of IGFA, said more needs to be done to protect the primary suppliers in the food chain: “We have suffered major price spikes in 2011 and 2012; this is incredibly serious for the sector. Compound feed manufacturers play a key role as a buffer for absorbing price shocks on raw materials to reduce pressure on livestock farmers.”
Mr Phelan continued: “This buffer function, however, has limitations and the only way forward for the livestock producer to maintain their economic viability is to transmit price rises upward along the chain. In layman’s terms, the brunt of these unpredictable price shocks can no longer be carried by those at the bottom of the chain. As an organisation we have been in intense negotiations with the banks to open up working capital for farmers to ease the burden but more is needed.
“Everyone knows the cost of production at the lower end of the chain now it’s time for the food industry and retailers to take some of the risk in ensuring there is a future for family farming and their suppliers in Ireland,” Mr Phelan concluded.