It feels like another wet afternoon in Rush’s greenhouse-filled countryside, but Kilbush Nurseries co-director Matt Foley is reluctantly in his office perusing the latest energy prices. As one of the leading tomato growers in the country along with his brother John, he talks about the difficult situation currently facing the horticulture sector.
“Gasoline prices are different every day, but every day is a horror story. I haven’t even opened today’s because it almost scares me. In 2020 we were paying around £0.31 per unit and we certainly paid more than £4 in March this year,” Foley told The Irish Times.
Total input costs for natural gas rose 49 percent in March compared to 2021, according to a Teagasc inflation report in April. The brothers’ vine tomato operation in 3 hectares (7.4 acres) of greenhouses relies on power to create a controlled temperature and supply shortages have been very difficult for them.
A Teagasc input cost report in April indicated that the average cost of electricity has increased by 131 percent. Commenting on the importance of energy as a contribution to his business, Foley said, “Energy is a great contribution to us. The energy is everywhere. Energy for the heat, to run the lighting, for the pumps, for the fertilizer.”
Fertilizer is another important input for Kilbush Nurseries and is also linked to energy inflation. The input cost report said that average costs in March have tripled since last year and that specialty fertilizers are selling for €1,100 a tonne.
“There is nothing with fertilizer that hasn’t been doubled, and you can take that for granted. Some of them have even tripled their price. On some lines I was paying €20 a bag for, now I’m paying €60, Foley said.
“Much of our fertilizer is very specialized and very hard to come by. We had Brexit where it was hard to get fertilizer and now, we have this war that makes it even harder.”
On June 3, the Government introduced the Horticultural Exceptional Payment Scheme, created as temporary support for the sector. There will be a total of €2.8 million available and the Department of Agriculture has stated that it has received 149 applications, of which 11 have come from greenhouse growers.
“It will be of great help, but there will still be a deficit. We are looking at a situation where prices are going to be even higher next year and at the moment there is no solution in sight.”
Foley remembered winter, when his tomatoes are grown and ready for harvest in March. Gas prices rose as much as 170 percent in the final months of 2021, according to Teagasc, and this was felt in full force in Kilbush.
“The winter was horrible and at the beginning of the new year we didn’t buy gasoline and then the war made things more difficult. The Germans gave Gazprom rights to their gas stocks, but the Russians didn’t fill the stocks, so now there is very little chance of gas being stored in Germany and that’s one of the biggest markets,” Foley said.
“Last winter, I stopped looking at energy prices because it was scary,” he said. “There’s a lot of talk about power rationing this winter, but I think in our industry it doesn’t even matter because people won’t be able to afford to use power anyway.”
In 2022, Foley has had to look at things differently and has highlighted that the most difficult thing has been the uncertainty of prices: “The problem is that you never know where the price is going to be.
“We could buy for July today at £1.85 and then it could go down to £0.50, and we’d be fried. In the end, it might work for us to buy that, but it’s so expensive we can’t take the risk.”
Teagasc Horticulture Research Advisor Michael Gaffney supported this, saying there is now an additional risk for growers, who need to consider what market prices might be in 2023 as they prepare to order their plants in the coming months. “They have to process a lot due to rising prices and it will be harder for them to make decisions. These are family businesses, it’s very different from other industries,” Gaffney said.
Taking over the farm from their father, Matthew snr, Matt and John have gone on to run a successful tomato farming operation and have won numerous Bord Bia protected crop awards. However, the challenges of 2022 have required some restrained measures in the operation of the farm, particularly in relation to energy.
“We’ve tried to save heat wherever we can, but it’s having a ripple effect on production. Using less energy means less growth and that means less production, which means our season is getting shorter.”
Many growers are expected to adopt the shoulder-of-the-year method of cutting production and Foley is already considering it, but noted that this means a narrower window for production and risks oversupply.
“We are already thinking about reducing production on the shoulders. Normally we would grow our crop until September, but we are thinking about August this year.”
Gaffney noted that while growers will continue to face the possibility of reducing production in the future, imports may not be reliable to make up the difference. “I’m not sure imports can be trusted because growers in other countries face similar challenges and similar decisions. Rising input costs are not a problem specific to Ireland.”
Labor has been the source of another increase in input costs for the sector and Teagasc’s input cost report for 2021 found that labor accounted for almost 40 percent of input costs for most of the sectors.
Foley spoke about the problem he has with work this year saying most of his staff are students and this could leave him with tight shoulders. Although various staff members from different cultures filtered into his office to sign him out, he firmly pronounced, “I wouldn’t be anywhere without the staff I have.”
While looking to the future, the co-director addressed the need for a change of perspective from the country. He noted that supermarkets’ below-cost policies have created a false perception that food can be grown so cheaply.
“Supermarkets have a policy of selling below cost, for example 49 pence a kilo for carrots, but nobody can grow for that. We have to realize that food is what we put in our mouths and it is very important. It’s their input, what drives it, and it costs money to produce,” Foley said.
In March, the Irish Farmers Association published a report commissioned by economist Jim Power, Compression in retail prices threatens viability of Irish horticulture. which calls on the Government to act quickly to reinstate the ban on the sale of food below cost. Gaffney said retailers will need to raise produce prices if input costs stay where they are, warning “you can’t farm at a loss.”
Foley was adamant about the importance of food safety in Ireland, saying that with war and supply lines cut, it is “crucial” that we can trust Irish produce. In addition, he emphasized the need for reliable power and was concerned about the current dependency on the UK.
“We get about half of our gas supply from the UK, so we rely on Boris Johnson to supply us.” He turned quickly and asked rhetorically, “Do you think for a second that we’re going to get some kind of priority if there’s a gas shortage?”
Despite bringing to light many grim realities of the horticultural sector, this did not take away from Foley’s air of contradictory calm. When asked if he cared about the future of the industry, he chuckled and replied, “I’ve seen this all before, the only thing I care about these days is my putt.”