Tillage sector in crisis: cereal crops set to lose hundreds

This article is not a nice one to write or read. Tillage farmers are likely to lose money on their crops this year, some more significantly than others, and some will not be able to clear their bills with their produce.

The mood among farmers is understandably low. The weather has caused issues all year, from autumn and spring planting to the dry weather in May and June, to the wet July and unsettled August. The loss in income will not be a surprise.

However, we must focus on the positives and look forward to make changes. It is also important that we highlight these issues to the Government, who want to increase the area of tillage and make the powers that be realise that this does not happen by talking. It happens with changes.

Wanting to increase tillage area is all fine and grand, until the co-op or merchant bill cannot be cleared.

What are the causes?

Aside from the weather mentioned above, which hit crop yields badly, farmers faced high input costs and are now looking at grain prices over €100/t below last harvest’s finish. Although, it should be noted that harvest price is yet to be settled and remains a big question mark in these figures.

To investigate the possible outcomes of lower yields, high costs and lower prices on farmers, we have taken the Teagasc costs for 2023 (Table 1).

Using Irish Farmers Journal surveys with agronomists across the country and talking with the wider industry, we then placed an estimate on cereal yields and calculated grain income based on grain prices of €200/t for barley, €282/t for malting barley, €215/t for wheat and €195/t for oats.

It should be noted these prices will be adjusted with moisture bonuses or deductions. Many moisture levels were high this year, so money will come off the price in that case.

These prices are being used as a guide to help people make their own calculations.

Harvest prices most likely won’t be finalised until the end of September or early October. Some people will have forward sold grain as well, so they will need to alter their calculations to their own prices and percentages sold.

As you look at the figures, there will be many variables. Some may have purchased fertiliser at higher or lower costs than listed. Farmers will need to adjust yields to their own figures. Teagasc has used contractor charges as the machinery costs. Some will have significantly lower costs, although many will be similar to those listed.

Straw income was placed at €250/ha - the Straw Incorporation Measure (SIM) payment.

However, many people who sold straw are probably not receiving this income, as straw yields were low and prices did not cover costs for some. Four bales/ac at €20/bale leaves you short €20/ac, along with costs, that could have been gained from the SIM.

Profits based on owned land and on rented land are listed. Land rental costs were put at €250/ac. However, many will be paying much higher than this, so once again, you should adjust to your costs.

Profits

Looking at Table 2, the profits for each crop at the Irish Farmers Journal’s estimated yields are listed on owned land and rented land.

It should be noted spring barley has been divided into two sowing dates, as crops differed hugely in yields depending on the time they were planted at, and there is also spring feed and malting barley.

At the Teagasc costs, and using estimated grain prices, winter barley and late-sown spring feed barley are at a loss of €4/ha (€1.60/ac) and €299/ha (€121/ac) respectively on owned land.

Spring wheat is losing €86/ha (€35/ac). Early-sown malting barley, which passed standards, delivered the highest return at €908/ha (€368/ac).

However, when land rental costs are added in all crops apart from early-sown malting barley make significant losses.

It should also be noted that large numbers of farmers’ malting barley failed to meet standards, so the number of farmers who will significantly benefit from growing malting barley this season is small.

It really is something that needs to be looked at, as brewers and distillers talk about and advertise sustainability while farmers carry huge levels of financial risk.

Tillage farmers will be eating into their BISS (formerly BPS) payment to pay bills. That BISS payment is being hit by convergence and will go down significantly over the five years of this CAP.

For example, a farmer who had a BPS and greening payment of €317/ha on 61ha in 2022 will lose €2,055 off their total payment in 2023. From 2023 to 2027, they will be down a total of €12,571 due to convergence.

Positives

The crop figures are detailed for cereal crops. While some oilseed rape yields were low this season, many farmers faired okay from this crop.

Beans are currently being harvested and the Protein Aid Payment will bring in €420/ha to farmers.

However, this is lower than expected due to the massive rise in protein and mixed protein crop area. Strong minimum prices from co-ops are a huge help for beans as well.