Minister for Agriculture Simon Coveney has said that 2011 was a very positive year for the Irish agrifood sector, surpassing the results of 2010.
However, Mr Coveney said recent trends show that 2012 could be very challenging for agriculture as world prices decline and some of Ireland's trading partners enter recession.
He said the future of the sector is also heavily dependent on the outcome of negotiations both within Europe and between the EU and other global economies.
Ireland is a small open economy, he said, and volatility in world commodity prices can have serious adverse consequences in terms of lower prices for its produce or higher prices for its inputs.
Following the publication of the annual review and outlook for his department, Mr Coveney said export figures show that the sector exported produce worth €8.8bn, an increase of about 12% on 2010.
Exports in 2011 were 25% ahead of the levels recorded in 2009.
The dairy and beverages sub-sectors performed particularly well, with exports from the dairy sector up by 17%.
Some of this growth was in new markets and dairy exports outside Europe are estimated to have reached more than €930m in 2011.
Meanwhile, the Irish Farmers' Association has estimated that bad weather is going to cost grain growers €100m.
The IFA said that yields are down by 25%, only one-third of the crops have been cut, and 500,000 tonnes in potential cereal production has been lost at this stage.
The chairman of the IFA's National Grain Committee, Noel Delaney, said after a downbeat meeting in Portlaoise this afternoon that every day the weather fails to pick up more damage is done to crops and the yield potential is slipping.
Mr Delaney said that because there has been no let-up in the rainfall, ground conditions remain challenging and many fields cannot take heavy machinery.
However, he noted that the weather forecast suggests an improvement in the middle of this week, which may give growers the chance to get working. They remain hopeful, he said, that the rest of the harvest can be saved.
Mr Delaney said ground conditions are deteriorating rapidly with water tables at unusually high levels for the time of year.
Even if the weather improves he said parts of, if not all, of some fields may be left un-harvested at this stage as some parts of the country are receiving in excess of 200% of normal rainfall for the time of year.
ICSA seeks carbon tax deferment
Separately, the Irish Cattle and Sheep Farmers' Association has called on the Government to suspend the carbon tax to alleviate pressure on businesses, particularly farm business, as Irish farming attempts to deal with one of the toughest years in recent times.
ICSA president Gabriel Gilmartin said with fuel prices set to rise to shocking levels in the coming weeks, he “dreads to think” of the bills that the farming sector, particularly agricultural contractors, will face when they fill their tanks with diesel.
He said the carbon tax is making a significant impact on farmers' ability to produce at competitive prices.
Mr Gilmartin said the current rate of €20 per tonne is costing farmers in the region of €32m a year.
The fact that there is a double offset for carbon tax against income tax for farmers, he said, is not particularly helpful.