Tillage Farmers Facing Crucial Decisions
4 October 2004
Tillage farmers are facing crucial decisions on the amount of land they should crop under the new tillage policy, a national Teagasc conference has been told.
Jim O’Mahony, Teagasc Chief Tillage Adviser, told a gathering of over 700 tillage farmers in Carlow that under the new EU policy, which comes into operation in January 2005, tillage farmers need use only 50% of the area farmed in the 2000-2002 period and still receive their full single payment.
“This major concession applies to land rented on an annual basis or leased over a number of years. For example a farmer with 100 hectares (250 acres) of grain, of which 50 hectares is rented, can discontinue production on all or part of the rented area but will be eligible for the single payment on the entire 100 hectares”, said Jim O’Mahony.
He told the conference that 41% of the national tillage area is leased on an annual basis and a further 10% is leased for periods of three years or more. This amounts to a total of 170,000 hectares (425,000 acres).
“The critical decision facing farmers is what proportion of this 170,000 hectares should be planted in 2005. The clear advice is that if the value of the grain and straw does not exceed the rental price and the cost of producing the crop, serious questions must be asked about continuing to grow grain on rented land”, he said.
He said farmers should make a decision over the coming months on the amount of land they should ‘stack’or consolidate entitlements.
“Farmers should think twice before growing a crop on poor quality land or on land that is too costly to rent. Remember this land will deliver a payment of around €375/hectare (€150/acre) with no crop. What must be avoided is that the single payment is used to finance the cost of growing a crop on unsuitable land,” he warned.
“The bottom line is if land which is rented is not capable of yielding up to 10 tonnes/hectare ( 4 tonnes/acre) of winter wheat or up to 7.5 tonnes/hectare (3 tonnes/acre) of spring barley, the economics of continuing to grow crops is doubtful.”
“Where rental prices are too high to give a reasonable profit, there should be a re-negotiation between the land owner and the grower. Another alternative is for the owner and grower to examine a profit sharing arrangement”, he said.
Jim O’Mahony said many land owners who are renting land are also facing a problem as a result of this ‘stacking’ concession. In addition to profit sharing, they should also consider options such as farming the land themselves and joining the Rural Environmental Scheme (REPS) or, where appropriate, planting the land with trees and availing of a generous tax-free annual premium.
