€1,057/ha difference in net margin between top and bottom tillage farms in 2018

In 2018, the top one-third of growers achieved a net margin of €950/ha compared to the bottom third, who recorded a loss of €107/ha.

Despite this significant variation in farm performance, the results from Teagasc’s e-Profit Monitor (e-PM) 2018 tell an overall positive story for tillage farmers.

Despite the drought, and the effect it had on spring crops in particular, most farms returned good overall financial returns.

Return

Higher grain and straw prices in 2018 were sufficient to make up for lower yields. The average return for farms was €286/ha, 83% higher in 2018 compared to 2017.

For 2019, preliminary figures suggest a lower financial return (on average approximately 17% lower), despite higher yield in 2019. This reflects the major effect of reduced grain and straw price can have on the returns for farmers.

Winter v spring

The ePM average tillage net margin of farmers analysed is €629/ha, which compares to €343/ha in 2017. However, farms categorised as predominately spring cereals gave the lowest returns at €358/ha, with farms categorised as winter and spring cereals returning an income of €646/ha.

The winter and spring cereal category of farms tended to give the highest returns (of the predominantly cereal farms) reflecting a more diverse rotation on their farms.

These rotations allow increased scope for higher yields following a break crop and are more resilient during unusual weather years.

Size doesn’t matter

The 2018 report tracked the incomes of a matched sample of 187 farms in 2016, 2017 and 2018. Size of that farm does not appear to be a major driver, with a similar average area farmed by both the top and bottom groups of farmers, close to 71ha.

However, the bottom-performing group incurred over 90% more fixed costs (depreciation, interest, light, heat, etc) compared to the top group.

Significantly, the bottom-performing group had a much higher proportion of land rented, at 63% of the entire area, compared to 26% of the area by the top-performing group.

Michal Hennessy, head of Crops KT, who analysed the figures, said: “The 2018 average financial returns disguise the top-performing and the bottom-performing farms. Farmers who were more dependent on spring crops, especially in the southeast, were worst affected by the drought and consequently had lower financial returns compared to farms with a good mix of winter and spring cereals.”

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