Longford Leader Farming: Crop returns increase for many tillage farmers

Upturn in climate provides welcome respite for farmers

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Longford Leader Farming: Crop returns increase for many tillage farmers

The weather in 2018 had a significant impact on crop returns on tillage farmers in 2018. Preliminary results from the Teagasc e-Profit Monitor suggest higher returns from crops compared to 2017. These results from a small number of farms suggest both winter wheat and spring barley yields decreased by an average of 22%, but a combination of higher gross output (higher grain and straw prices) and lower costs, increased the average profitability of these crops by over 50% in 2018 compared to 2017.

Michael Hennessy, Head of Crops Knowledge Transfer in Teagasc, who is analysing these figures said: ”We must be careful when looking at the 2018 figures as the results will be very different depending on where a farmer was located in 2018. We know farms with a mix of winter and spring crops in the north east returned reasonable yields and fared far better than farmers dependent on spring crops in the south east.” “Farmers will continue to collate their figures in the coming months and we will have a clearer picture of the situation towards the middle of 2019,” he added.

Teagasc 2017 e-Profit Monitor (ePM) results are arguably from a relatively “normal weather” year and farmers can use these to compare their ongoing farm performance. The 2017 figures cover some 340 farms with over 25,000 hectares (ha) of land included in the analysis.

The overall trend in 2017 is a marked increase in income compared to 2016. The ePM average Net Margin for tillage farmers analysed is €343/ha, which compares to €106/ha in 2016. Farms categorised as predominately spring cereals gave the lowest returns at €261/ha, with farms categorised as winter and spring cereals returning an income of €332/ha. It’s expected this trend may continue in 2018 as growers with a mix of crops returned higher yields and output than those with spring cereals only.

The 2017 report tracked the incomes of over 120 of these farms over 2016 and 2017 which showed a marked improvement in Net Margin of €157/ha year on year. These farms were also categorised by Net Margin into three income brackets; top, middle and bottom groups. In 2017 the top 1/3 of growers achieved an income of €486/ha compared to the bottom 1/3 who achieved only €53/ha. The figures point to a number of reasons for the differences. Size does not appear to be a major driver with both groups farming a similar area of close to 78 hectares. However the bottom preforming group did incur over 50% more fixed costs (depreciation, interest, light, heat, etc.) compared to the top group. Significantly the bottom preforming group had a much higher proportion of land rented at 62% of the entire area compared to 26% of the area by the top preforming group.

There was a wide variation in crop performance across the analysed farms in 2017. Looking at all the cereal crops, winter wheat produced the highest margin at €433/ha compared to €263 in 2016. A similar trend is evident across all other cereal crops with the exception of Winter Oats which did not perform as well as 2016. One of the non-cereal star performers in 2017 was Winter Oilseed Rape with an increased yield of 1.3 t/ha, which increased average margins to €511/ha.

The full eProfit Analysis of Tillage Farms 2017 is available on the Teagasc website at https://www.teagasc.ie/media/website/publications/2018/E-Profit-Monitor-Analysis-2017.pdf