2016 will test Agri-Food Sector says Bank of Ireland
On the eve of its Enterprise Week, the Bank of Ireland (BOI) UK hosted a breakfast seminar at its regional head office in Belfast for PR and media members of the Guild of Agricultural Journalists. The financial challenges for primary producers were top of the agenda.
Ian Sheppard, Regional Director Business & Corporate Banking Northern Ireland reaffirmed the Bank's commitment to the agri food sector in Northern Ireland. Alan Bridle, BOI UK Economist provided his analysis on the economic outlook for the year ahead and William Thompson, Head of Agri NI outlined the importance of financial planning in a volatile market place. Alan said the resilience of farming and agri-food in general will again be tested in 2016 as the sector continues to be buffeted by a combination of international market pressures and intense price competition at home. “The balance of purchasing power has tilted firmly in the direction of the consumer at the expense of the producer, reinforcing the relentless drive for greater efficiency and productivity.”
But he predicted some recovery in real incomes, “the regional economy should continue to post modest growth next year of between 1.0 and 1.5%, despite global headwinds for a number of our manufacturing exporters and the constraints on public spending. With the ECB contemplating additional monetary stimulus, there seems little prospect of significant relief on the euro exchange rate in the near term."
William Thompson (far left) added: “A combination of increased global supply, a weak euro, a reduction in exports to China, an extended Russian import ban and the abolition of EU milk quotas have all resulted in significant downward pressure on farm gate returns for many farmers. To mitigate against these volatile market trends, the importance of business planning, tax planning and re-investment of farm profits over a 3 to 5-year period is vital to ensuring the long term viability of all farm businesses."
"Whilst the ongoing challenge for farmers or small food processors is to focus their efforts on aspects of their business within their control and strive to increase margins through technical efficiency, the long term sustainability of many businesses, particularly dairy enterprises, will be reliant on an uplift in farm gate returns."
Looking ahead the Bank said it remained optimistic about the sector's medium to long term prospects.