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Horticultural input cost increases puts pressure on margins

Teagasc Horticulture Development Department recently assessed the key input costs that have seen the biggest increases, gathered and validated data, sourced from a range of businesses and trade suppliers. Input cost increases rose significantly in 2021 and will in many cases exceed grower margins.

Valued at €477 million (farm gate value), horticulture is the fourth largest sector after dairy, beef and pigs in terms of gross agricultural commodity output value.  The horticulture sector is diverse and covers plant and food horticulture.  Horticulture food includes mushrooms, potatoes, field vegetables, soft fruit, protected crops and outdoor fruit.  Amenity horticulture consists of nursery stock, protected crops, cut foliage, and outdoor flowers and bulbs.  In recent months, growers have seen unparalleled increases in costs of key inputs to the horticulture sector in Ireland.  Considerable volatility remains as primary producers try to forward plan business for 2022 and manage cash flows.  In an environment where cost planning is difficult, risk is increasing significantly for primary producers.

Horticulture Input Costs 2021 - Impact Assessment

The full report Horticulture Input Costs 2021 – Impact Assessment can be downloaded below

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The key objective of this report is to surface facts about specific inputs cost increases, to apportion the relative importance of input costs to the different sectors of horticulture production arriving at average increases in costs of production in each sector for 2021.  Finally, the report speaks to the current and potential impacts of very high input costs for primary producers now and for the 2022 season.

Across all enterprises, there has been a sharp increase in the cost of labour, packaging materials, fertiliser, energy, peat-based growing media, and a myriad of other inputs that are key components of production.  Total input costs have increased by between 10.5% and 17.7% depending on enterprise type.

Total input costs have increased by between 10.5% and 17.7% depending on enterprise type.

Dermot Callaghan, Head of the Teagasc Horticulture Development Department said, “Given that growers’ costs have increased substantially during 2021, producers are potentially facing significant decreases in margins.  In some cases, input cost increases will exceed grower margins.  Some growers are considering cutting back on production for 2022 in order to manage their cash flow, or to minimise their exposure to high costs.  Where energy is required for early and late season production in glasshouses, where a three-fold increase in energy costs persists for 2022, it is likely to lead to a significant reduction and/or cessation of both early and late production.” 

Andy Whelton, Teagasc Horticulture Advisor said; “The horticultural sector is exposed to several input price increases, chief among them labour, packaging and fertiliser.  The impact on overall costs of production are very significant, particularly for crops that need to be harvested and graded by hand.

Check out more about the Teagasc Horticulture Development Department here