Crops costs and returns projections for 2022
Teagasc has just published its Crops Costs and Returns projections for 2022, which are of significant interest to every Irish tillage farmer.
The publication provides an overview of the possible margins that can be generated by cereal growers and other crop producers this year, taking account of the estimated costs that may well be incurred across the various enterprises.
Background
The figures contained within the publication are intended as an indicative guide to crop margins. However, land suitability, rotation, risk avoidance and husbandry skills must also be considered.
As well as completing crop margins, all growers are strongly advised to complete a full financial appraisal of their business.
According to Teagasc, non-cereal break crops offer benefits in terms of rotation, workload and risk-spreading, but the sale of inter-farm produce needs careful planning to ensure profitable crops.
In the case of malting barley, food-grade oats and milling wheat, the availability of contracts and fulfilment of specific contract requirements such as specified varieties, quality parameters and input purchases, need to be appraised in conjunction with the guideline margins here.
Under the Basic Payment Scheme (BPS), payments are decoupled from the crop being grown. Crop changes as a result of crop diversification (2 or 3-crop rule) need to be considered over at least a five-year timeframe, to avoid future rotational issues i.e. pest, weed or disease build-up.
Land for crops
The land on which growers claim entitlements must be maintained in “good agricultural and environmental condition”.
Where a farmer doesn’t have enough land to claim their entitlements, these surplus entitlements can be leased out without land to a farmer who has surplus land – otherwise known as ‘leasing entitlements’.
The margins shown in the new publication do not include the Basic or Greening payments.
However, straw prices are based on the Straw Incorporation Scheme for 2022 at €250/ha; it also includes oilseed rape at €150/ha.
For protein crops such as beans/peas the protein crop subsidy (€3 million over 12,000ha = €250/ha) is included. However, this payment will be reduced if the national threshold of 12,000ha is breached.
Fixed costs for tillage farmers
Where fixed costs are concerned, matters such as repairs and maintenance, insurance, car electricity and phone (not including interest, machinery or land rental) are unique to each farm.
The average fixed costs recorded in 2016 and 2018, according to Teagasc, is approximately €195/ha. However, the data from the both years’ results also show that there can be a large variation in fixed costs (€147-230/ha) depending on each individual situation.
Projected margins in tillage
Where cereals are concerned, projected margins are provided for the following crops: Winter wheat (WW); winter barley (WB); winter oats (WO); spring wheat (SW); spring barley (SB); spring oats (SO); and malting barley (MB).
The projected margins for the various enterprises are as follows:
- WW: €276-879/ha;
- SW: €63-798/ha;
- WB: €92-1,008/ha;
- SB: €180-880/ha;
- MB: €390-1,195/ha;
- WO: €97-779/ha;
- SO: €172-659ha.
Teagasc estimates a selection of the most important crop inputs are: Seed €99-105/ha; fertiliser €543-839; fungicides€96 -223/ha.
Specifically, where fertiliser is concerned, the following cost breakdown is also given:
- Calcium ammonium nitrate (CAN) + sulfur (S) is valued at €700/t;
- For spring cereals, 13-6-20 is valued at €765/t;
- For winter cereals, 10-10-20 is valued at €770/t;
- 50% potassium (K) is valued at €730/t.
With regard to phosphate (P) and K build-up, at soil Index 1 and 2, additional P and K will cost approximately €154 and €77/ha respectively.
In all cases, crop input costs are highest with winter wheat. Estimated breakeven grain yields (excluding straw values) range from 5.9t/ha in the case of MO, up to 9t/ha in the case of WW.
Non cereal crops
Teagasc is projecting the following margins for non-cereal crops:
- Maincrop potatoes: €2,107 to €3,393/ha;
- Maize: €201 to €1,299/ha;
- Peas: €339 to €859/ha;
- Beans: €8 to €742/ha;
- Winter oilseed rape: €11 to €989/ha;
- Spring oilseed rape: €42 to €958/ha.
Forward selling
The publication makes specific reference to the potential for growers to forward sell a proportion of their crop. However, the following specific advice is also given.
The selling price of the grain is the principal driver of profitability on tillage farms. However, often prices at harvest are at their lowest.
Most merchants now offer farmers the opportunity to sell grain at different times of the year in order to reduce the risk of selling below cost. In order to forward sell, growers need to know the cost of producing the grain on the farm.
Farmers should calculate the costs per tonne over the three most recent harvests before making any decision to forward sell.
This will give a more realistic figure to base the calculations on. The calculation is based on the total variable costs, including machinery costs, divided by the average yield.
