Agri-food sector in fine fettle but perils lie ahead
The hills are alive with the sound of recovery, thanks to our food and drink industry, according to Ulster Bank's chief economist.
But Richard Ramsey, addressing an agri-food reception at the bank's headquarters ahead of next month's Balmoral Show, said that events in Ukraine following Russia's annexation of Crimea may end up impacting on the price of our Weetabix.
Other challenges include changes to the Single Farm Payment and the Common Agricultural Policy.
Ulster Bank has also reported a slow take-up of an agri-food loans policy launched last year, saying that many applicants do not have the land security or additional income to match their funding.
Mr Ramsey said that "the hills are alive with the sound of recovery," but added: "Which flag you wave may impact on the price of your Weetabix" – as Ukraine is the fifth biggest exporter of wheat to the world.
"There are concerns in the commodity markets about the situation with Russia, Ukraine and the Crimea," he said.
"Especially as the UK has the second highest level of food price inflation in the EU."
The economist said that food, drink and tobacco sales in Northern Ireland are up 6.6% from the boom year of 2007 and are boosting our export market, with all other sectors reporting much lower output.
Three-quarters of sales to Great Britain from Northern Ireland were made up of food, drink and tobacco in the 2012/2013 period.
Cormac McKervey, the senior agricultural manager for Ulster Bank in Northern Ireland, reported that commodity prices, feed prices, output and weather are combining to present an improved picture compared to last year.
Mr McKervey added that strong sales in beef following the horse meat scandal have now levelled out but that there were fears about the impact that reform to the Common Agricultural Policy and Single Farm Payments could have.
The current Single Farm Payment scheme will end in December 2014 and will be replaced by a new system that will move in the direction of a flat rate payment, with 30% of the new payment relating to complying with three new greening criteria on land categorised as "arable land".
New CAP reforms decree that only "active" farmers will be eligible to receive future support payments – however, up to a third of land farmed in Northern Ireland is rented, as conacre, on an annual basis.
Mr McKervey said that many applicants to the agri-food loan scheme did not have the land security or additional match income to support a loan.
The initiative, which was opened for applications on November 1, is aimed at helping local food producers, who form part of an integrated supply chain, access finance to invest in buildings to help increase products, processing and supply.
The first phase of the scheme was open to broiler producers in Northern Ireland but so far only two poultry houses have been approved.
Difficulty in accessing finance was one of the issues identified in 'Going for Growth', an action plan published last year by the Agri-Food Strategy Board.