The prevailing weather conditions in 2013 are again exerting a significant influence on Irish farms. Last year was a difficult and challenging year for Irish farmers, with the adverse weather conditions being the major contributing factor. At AIB, we recognise that this has been a most difficult Spring coming on the back of a very difficult year in 2012. Fodder shortages are being further compounded by poor grass growth rates and challenging weather conditions, while cereal plantings are much slower than usual.
A return to normal weather and grass growing conditions should alleviate some of the operational and financial pressures being experienced on-farms presently. However in the interim, as existing fodder supplies tighten some farmers will have increased feed and forage expenditure placing increasing demand on farm cash flow.
AIB is aware of the cash flow pressure being experienced on some farms. We are encouraging our customers who may be experiencing or expect to experience, short term cash flow pressure to make early contact with their local AIB branch. Early contact should facilitate the bank and customer, working together to arrive at the most appropriate solution. When meeting with your bank it is advisable to check beforehand the information they require, and arrive prepared.
While some input costs, in particular feed prices, continue to remain high, output price in most sectors also remain high, with some at or close to historic highs. The international dairy market has further strengthened since the beginning of the year and cattle prices remain at historically high levels. We are predicting that with a return to normal weather conditions and lower feed usage this year, the 10% drop in farm income last year should be largely reversed.
AIB maintains a positive medium-to-long term view of the sector. We have always taken a strategic long term view of the sector and we recognise that the cash flow difficulties currently being experienced on farms are in the main weather related and short-term in nature. Our advice to those experiencing difficulty is to contact their bank as early as possible.
Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland.