Outlook 2023 from a tillage farm point of view
The recent Teagasc Outlook Webinar 2023 makes for some interesting reading from a tillage farm point of view. Shay Phelan, Teagasc Crops specialist, tells us; Dr. Fiona Thorne presented the figures relating to tillage crops and there are a few standout comments that she provided on the day.
As we all know input prices have increased dramatically in 2022 with fertiliser prices increasing by 195% however the volumes used were down, green diesel cost on average was up by 80% while white diesel was up by 40%, electricity +44% and feed for livestock +28 % all contributed to a significant increase in overall costs to the sector. However, these were more than offset by grain price achieved on average in 2022, which resulted in an increase of 34% in gross margin over 2021. Winter wheat gross margin were up by €500/ha, spring barley was up by €450/ha while winter barley was up by €235/ha, these all led to a positive news story that 90% of farmers earned a positive margin.
However the figures also showed some significant variation between farmers with high margin farmers achieving €1,350/ha but low margin farms only achieving €95/ha with the average at €745/ha.
When looking at the outlook for 2023 Fiona commented that prices overall will be slightly increased over 2022 with the main drivers being electricity and feed, fertiliser prices will be similar to 2022 but fuel is predicted to be down by 14-18%. However she also pointed out the uncertainty of grain prices in 2023 with many predicting a decrease due to many factors including a “hangover” effect form the prices of 2022. This therefore points to a much more turbulent year for tillage farms in 2023 than 2022. More details from the Outlook conference 2023.
The figures highlight how vulnerable we are to price fluctuations of both inputs and commodities, neither of which we have a lot of control over. It also highlights the need for analysing our own farm performance to see how different crop, fields or farms performed in 2022. A key tool to carrying out this task is a recording system, more details on the new partnership between Teagasc and FarmPlan.
I recently attended the Farm Contactors Association conference to hear about the challenges facing the industry. Similar to tillage farms the cost of machinery, energy and labour are significant challenges to the sector, as is cash flow, so the importance of prompt payment of the contractors was a live issue highlighted at the conference. The contracting industry in Ireland is estimated to be worth approximately €800m annual to the industry so supporting the local contractor is very important, especially when resources are expensive and scarce.
Between 2016 and 2018 Teagasc carried out a survey on machinery costs on tillage farms with the average cost of machinery being €343/ha excluding labour costs. There was massive variation between the farms with almost €500/ha of a difference between the highest and lowest cost. What the survey also highlighted at the time, was that 14% of the farms surveyed had higher costs than the cost of hiring a contractor to do the work form stubble to stubble. This was before labour costs were included, never mind the machinery price inflation since 2018.
Get more information and advice from the Teagasc Crops team here
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