The recent upsurge in fertiliser costs are well documented with current prices running two to 2.5 times the level witnessed at the start of 2021.

Feed costs have also increased significantly with quoted prices running €50/t to €80/t, on average, higher than the corresponding period in 2021.

The scale of these increases and other price hikes across energy, fuel and other inputs has the potential to quickly erode the 21% gains achieved in family farm income in 2021.

This stark prospect was delivered by Michael Gottstein, head of the sheep programme at Teagasc, at its recent national lowland sheep conference.

Michael Gotttein advises farmers to split heavy covers into blocks or sections to improve utilisation.

Michael’s presentation focused primarily on fertiliser and feed and discussed options that can be taken at farm level to try to mitigate production systems from rising costs without negatively affecting productivity.

Fertiliser costs

The challenge facing farmers in terms of higher fertiliser costs was outlined at the start of the presentation. Urea prices are currently in the region of €1.96/kg of N compared to spring 2021 prices of €0.85/kg.

This translates to an increase of €1.11/kg or 2.31 times higher, while protected urea prices quoted at €2.07/kg are €1.10/kg or 2.13 times higher.

The extent of this price increase at farm level was demonstrated on a 30ha farm using Teagasc recommended fertiliser applications for a farm stocked from six to 12 ewes per hectare. This is detailed in Table 2.

As can be readily seen, all systems of production within such a production system are greatly exposed with the increase in fertiliser costs alone capable of adding €10 to €15 to the cost of keeping a ewe in 2022.

Finance challenges

As well as significantly affecting a farm’s net margin, Michael highlighted that higher fertiliser costs can also have major consequences on a farm’s finances.

The farmers most exposed are those who would normally avail of merchant credit to finance fertiliser purchases.

Merchants have also moved to insulate their businesses from rising fertiliser costs and most are now looking for all or the majority of costs to be covered up front.

Michael advised farmers to speak with their merchant well in advance of purchasing fertiliser to allow alternative measures to be put in place, if required.

A reduction in the stocking rate should be considered. \ Claire Nash

Where credit terms are being offered by merchants, farmers are advised to explore all options and compare and contrast these terms with that of financial institutes such as banks or credit unions.

No magic bullet

Michael said that there is unfortunately no magic bullet to overcome these challenges but highlighted that there are several key actions farmers should consider to reduce their exposure to higher costs. He stressed that the objective in 2022 should be to grow enough grass to feed stock and ensure that sufficient silage is made for next winter.

Soil testing

The starting point, irrespective of the stocking rate on the farm or production system in place, was to get an accurate assessment of the farm’s soil fertility status if this is not already present. Identifying soil pH levels, in particular, was highlighted as offering huge potential in offsetting costs.

Soils which have a low pH should be targeted for lime application with this delivering on two fronts.

Michael said that correcting soil pH will release significant quantities of nitrogen, phosphorus (P) and potassium (K) that have been locked up in the soil for the last few years.

Furthermore, having soils at the correct pH will greatly enhance the efficiency of applied nutrients.

P and K holiday

The concept of fertiliser programmes taking a “P and K holiday” was highlighted for some areas of the farm.

Michael said that 2022 is not a year for addressing a soil fertility deficit and advised farmers that fertiliser costs can be greatly reduced by steering clear of compound fertilisers and focusing, where possible, on straight nitrogen fertilisers.

Silage ground should be located on the more productive or high fertility areas. An assessment of how much forage will be left over in 2022 is central to calculating how much ground needs to be closed to save sufficient winter fodder.

Organic nutrients in slurry and farmyard manure should be earmarked for low P and K index areas or silage areas.

The only areas receiving chemical P and K in 2022, according to Michael, should be silage ground which has been identified with low fertility and which will struggle to produce a satisfactory yield and recently reseeded swards that require such fertiliser to ensure the sward establishes.

There has been much discussion of late regarding the use of pig slurry or other organic materials to supply part of the crop requirements.

This is an area Michael believes farmers should be cautious about as when the cost of getting the material applied and the actual nutrient content is assessed, it has in some cases worked out to be a more expensive option than applying chemical fertiliser.

Fertiliser budget

The next component is carrying out a fertiliser budget outlining the type and quantity of fertiliser purchased in 2021 and a fertiliser budget for 2022. Michael says this is a useful exercise to outline where costs will be for the year ahead and put a focus on identifying where savings can be made.

In addition to moving away from using P and K fertiliser, another focus in reducing fertiliser costs is to try and reduce the level of nitrogen applied to in the region of 70% to 80% of the normal annual requirement.

There are a number of important factors that must be kept in mind in this regard to ensure productivity is not compromised.

Michael reiterates that there should be a tight focus on matching grass supply with grass demand. He says that there is no point in growing excess grass this year and adds that by maintaining a closer gauge on supply and demand, grass quality should also be closer aligned to sustaining high levels of animal performance.

The foundation for achieving comparable levels of output with less nitrogen is to prioritise or target nitrogen applications to the swards that will deliver the best response.

These are typically reseeded swards or swards with a high perennial ryegrass content growing on soils with an adequate pH and P/K index.

The farm’s grazing infrastructure is another key area that can deliver higher levels of grass utilisation and greater efficiency of applied nutrients.

Here, the key is highlighted as reducing the number of grazing groups and splitting grazing areas to deliver three-to-five-day residency periods. For this to work, there needs to be at least five similar sized divisions per grazing group.

Another important component of reducing the level of fertiliser applied is to maintain regular fertiliser applications and reduce the volume in each application rather than eliminating applications.

Table 3 details a monthly fertiliser plan based on flocks stocked between six and 12 ewes/ha. Table 3 outlines the cost of such fertiliser programmes and also divides the allocation of nitrogen applied to grazing and silage ground.

Reducing stocking rate

Farms which are stocked at a high stocking rate will find it more difficult to reduce the level of nitrogen applied with less scope in these systems which are already operating at peak capacity.

Michael advises that a reduction in the stocking rate should be seriously considered on these farms. He says that reducing the stocking rate by 10% could reduce fertiliser requirements by 15% to 20%.

Dry ewes at scanning are an obvious choice, while other categories include selling older and unproductive ewes in lamb, ewe lambs not in lamb and ewe lambs that lose lambs this spring rather than trying to cross foster.

A higher number of ewe lambs can be retained later in the year to build numbers back up.

Where there are cattle enterprises on the farm then the same assessment should take place with unproductive or surplus stock sold. For farms with a contract heifer-rearing enterprise the advice given was to talk to the dairy farmer(s) and see if the daily rate can be renegotiated in light of higher costs.

Concentrate costs

The second part of Michael’s presentation dealt with rising concentrate costs.

It was highlighted that concentrate costs increased by 40% in 2021 through a combination of a higher purchase price and increased usage.

Three areas were attributed as contributing to higher usage – flocks lambing too early and, as a result, not having sufficient grass, farmers not feeding ewes in late pregnancy, according to expected lambing date and litter size and farmers feeding meals to finish lambs earlier.

Expanding on the latter point, Michael said that finishing lambs earlier and chasing higher lamb prices was a false economy where it was based on concentrate feeding.

He said that lamb prices for a mid-season production system are remarkably stable and have followed the same trend for the last decade. The exception to this is in 2021 and while prices were higher the trend did not vary across the year.

He said that at current prices, meal costs 35c to 40c per kilo of feed and that even at a relatively poor response rate, fertiliser is two, three or four times better value than feeding concentrates with the cost comparison multiplying in favour of grass as the season progresses and there is a greater response to applied nitrogen.

Take-home messages

The concluding comments from Michael’s presentation stressed the importance of putting a plan in place.

This plan can be tailored as the year progresses, with the advice also to purchase what fertiliser is required for the first and second rotations now and to monitor fertiliser prices thereafter and purchase in advance of when it is required.

This was highlighted as the best option to ensure that you do not leave yourself short on supply, while also not having higher-priced fertiliser in the yard if prices fall.

Michael said that the challenges encountered this year should also be reason for farmers to put a plan in place to build some reliance in their system in regard to incorporating clover in to swards, ensuring soil fertility is adequate, investing in grazing infrastructure, reviewing aspects such as the most appropriate lambing date and investing in high-performing genetics.