The Cabinet has been warned by the ESRI that inflation rates could rise to levels not seen since the 1980s.

Agriculture Minister Charlie McConalogue told his Cabinet colleagues that the war in Ukraine has had "a dramatic impact on Irish agriculture and supply chains," with "hyperinflation" putting farmers to the pin of their collar.

With farmers and food producers warning that soaring costs could drive them out of business, sanctions on Russia will lead to further implications.

And as costs soar, the Economic and Social Research Institute (ESRI) today warned that food prices would rise even higher.

Mr McConalogue informed Cabinet that almost 80% of animal feed used on Irish farms is imported and that the price of key ingredients used to manufacture the animal feed has "doubled". All of the chemical fertiliser used on Irish farms is imported and over 20% of these originate in Russia.

In Association with

As the EU summit meets again today to discuss further sanctions on Russia, Cabinet was also warned yesterday that further increases in the prices of energy and food staples, such as bread, are likely to continue to rise.

Price increases are also expected, a Government spokesman said, due to the fact that 14% of our grain comes from Ukraine.

The heightened concerns flagged with Government come as the ESRI warned the war could drive food prices to a rate of inflation not seen "since the 1980s".

The latest official figures show prices rose by 5.6% in the year to February 2022, the largest increase in almost 21 years, according to the Central Statistics Office.

But economic pressures sparked by the crisis in Ukraine are expected to send inflation even higher to an average of 6.7% this year, the ESRI is predicting.

Cabinet sources said Mr McConalogue said the "increased risk that the uncertainty around fertiliser availability will affect fodder supply in the coming winter and next spring and, in turn, potentially lead to animal welfare and food production issues'"

He has tasked a National Fodder and Food Security Committee to prepare an appropriate industry response to the emerging crisis in feed, fodder, fertiliser and other inputs, and to develop contingency plans and advice to assist farmers in managing their farm enterprises.

Chair of the Oireachtas Agriculture Committee and Fianna Fáil TD for Tipperary Jackie Cahill said pig and poultry farmers are 'under huge threat' due to the cost of feed and energy.

"Pig and poultry farmers are in a huge cost bind, cost of feed has gone up and the price they are getting for their product has gone down. Unless the market returns rise dramatically those farmers are going to find it hard to stay financially afloat," he said.

Mr Cahill said the issue wasn't as severe for cattle and sheep farmers as they could rely on a forage diet (grass and silage), although it would be a significant reduction on their yield.

At current prices, it will cost an extra €100 a hectare in diesel alone to produce grain, the Irish Farmers Association (IFA) said.

Farmers are to be incentivised with a €12million package to plant more tillage and protein crops in a bid to boost domestic food growth.

But IFA grain chairman Kieran McEvoy indicated it may not be sufficient, saying it is "not so big" when spread across the entire sector. He added: "Even before the intercrops, sion we saw the cost of shifting these grains moving upward because of the cost of shipping and oil. The perfect storm was coming and this is the final part of it.'

Cabinet sources said that Mr McConalogue stressed the "urgency" of the proposal during the meeting at Dublin Castle as the majority of the tillage such as barley, oats, wheat, "need to be sown in the next few weeks".

Under the scheme, farmers will be paid an extra €400 per hectare for sowing additional tillage crops, with a higher rate for certain crops such as maize and fodder beet as the cost of production is higher.

Payments of €300 per hectare will be paid to encourage farmers to grow protein crops such as beans and lupines.

Damian O'Reilly, a lecturer in retail management at TU Dublin, predicts pasta could double in price.

We will also see further increases in the price of bread - as much as 10%, he said.

He told Prime Time last night that we are also going to see the price of a pint of beer increase by 7% to 10%.