Cereal growers should know their projected costs in full before renting land for spring cereals this year, according to Teagasc tillage specialist Tim O’Donovan.
“Cereal prices are continuing to fall and there is little prospect of this trend being reversed over the coming year,” he said.
“Our current projections point to 3t/ac being the breakeven yield for feed grain crops sown out on rented land over the coming weeks.
“And it’s important that farmers know this before entering into rental arrangements this year. Obviously, it is a different scenario entirely for those growers getting a premium price for their output.”
O’Donovan confirmed that the world is looking at a third record year in succession, where grain output is concerned.
“Production is outstripping demand. And this, in turn, is putting pressure on producer prices and margins.”
The Teagasc representative aid that it was not his job to tell farmers if they should, or should not, rent land.
“But we have a responsibility to let growers know what they might be letting themselves in for, if they decide to take a specific course of action.
“Given current circumstance, the prospects of cereal growers covering their costs on marginal land they rent for feed grain production this year are extremely remote.
“And if farmers can’t make profit from an enterprise, they end up eating into their single payment.
“I can’t predict with total accuracy how grain prices will pan out over the coming months. But supply and demand projections are, normally, a good barometer of future trends.
“I would also recommend that tillage farmers work out their costs in full before committing to buying new machinery this year.
“And, again, this reflects the lack of profitability that will impact across the tillage sector as a whole in 2016,” he said.