Reducing risk on tillage farms
Tillage specialist Shay Phelan spoke to many tillage farmers during the recent Teagasc spring crops walks. Here he discusses the many options that these farmers are considering to lower costs and reduce the risks associated with current cost of inputs, grain prices, energy costs etc
Farmers are concerned with all the external issues that are affecting farming. They have rarely, if ever, been as exposed financially as they are at the moment.
Some have taken steps to reduce this risk by forward selling grain at various different prices. Many of which look poor now, however at the time that the decisions were made they looked like prudent ones. As the old saying goes “sell at a profit and you won’t make a loss”. Some have said that they are going to forward sell some but are waiting for grain to hit a certain price before they sell. This can be a dangerous game as it may never hit that price. Many, to my surprise, have done nothing at all and are waiting until harvest to see what price they will receive for their crops. Again to me this seems very risky indeed, although I can understand that where farmers were burned before then they are reluctant to forward sell again. That said we are in very uncertain times with multiple factors affecting prices and there is no guarantee that prices will remain at the levels they are at currently.
Thinking ahead to 2023?
Quite a few farmers also commented that they are not worried about this harvest, meaning they expect prices will remain high for 2022, but that they are very worried about next year. The possible scenario of even higher input prices than 2022 and the risk of a grain price collapse has many people rightly nervous about the impact that it would have on their businesses. In this case I wonder what those who currently have opted against forward selling for this harvest will do, my guess is that they will continue as they always did and hope for the best. Most are talking of taking advantage of the forward prices that will be available at drilling and selling a portion of the crop to at least cover the fertiliser and seed cost. Oilseed rape in particular where forward prices are in excess of €700 per tonne for harvest 2023 looks particularly attractive.
What are the options?
However there are other options that farmers can take to lower costs and reduce the risk starting with crop choice. Crops like beans, oats and spring barley are cheaper to grow than winter wheat and winter barley, while winter oilseed rape can be relatively cheap to grow if you can achieve good green area indices before next spring and avoid pigeon grazing. Also remember crops grown after break crops usually have less disease pressure and require less nitrogen.
Organic manures can also help to reduce the amount of artificial fertilisers which need to be purchased and we are seeing a growing number of farmers who are now equipped to apply slurries to winter crops in the spring to maximise their effect.
Variety choice also plays a role in reducing costs, crops that have good straw characteristics and disease profile will be cheaper to grow than ones that have poor characteristics. The winter wheat variety Bennington, for example, is very prone to yellow rust which can increase fungicide costs by €40-50 per hectare. Cover cropping is a good way to trap nutrients in the soil that remain after harvest as well as helping to improve soil structure these should help to reduce the costs in next year’s spring crops. The straw chopping scheme has been a welcome addition to many tillage farms as it can recycle phosphorous and potassium to the soil and again help to reduce the amount of chemical fertiliser needed. Remember once you sow a crop there is only so much that you can do after that to reduce inputs before yield starts to be affected, so plan early.
Another issue that raised its head at the meetings was the new regulations around the new Nitrates Directive - SI 113 of 2022, which was signed into law in March of this year. For tillage farmers there are two new rules, see pages 20 & 23 of the document, that are raising quite a bit of concern, firstly there is the requirement to stubble cultivate all land after harvest this year. Farmers are required to shallow cultivate the soil or sow a crop within 7 days of baling of straw, where straw is chopped again shallow cultivation or sowing must take place within 7 days of harvest. In all cases cultivation or sowing must take place within 14 days of harvest. The idea of this measure is to prevent nitrates leaching into ground water or surface runoff of phosphorous into watercourses.
The second issue that is written in the document is in relation to late harvested crops e.g. beet, potatoes, maize etc. or late harvested spring cereal crops, a minimum buffer of 6m shall be in place to protect any intersecting watercourses. Again the aim of this measure is to prevent pollution of watercourses.
While these new regulations will add considerable pressure to growers at what is already a very busy time we need to be aware that they are now the law and failure to adhere to them could put your single farm payment at risk.