Growers could face an estimated “22-25% increase in fertiliser costs”, according to Teagasc tillage specialists.
Ciaran Collins and Shay Phelan, the authors of The Teagasc Crops Costs and Returns booklet for 2023, have warned that farmers are likely to experience a sharp rise in certain key costs this year.
Collins and Phelan launched the 2023 booklet at the 2023 National Tillage Conference in Co. Kilkenny today (Wednesday, January 25).
The document is intended as an “indicative guide to crop margins; however land suitability, rotation, risk avoidance and husbandry skills must also be considered”, according to Collins and Phelan.
It was highlighted today at the conference that not only could growers see a hike in fertiliser costs but they could also be facing a 17% increase in machinery costs.
Phelan detailed what could lie ahead for growers.
“We have an estimated a 22-25% increase in fertiliser costs, year on year. This figure might change, given possible changes in the fertiliser market over the coming weeks,” he said.
But he also warned farmers to be aware that “bank interest charges are on the rise; we are estimating a 20% plus rise in these costs over the past 12 months”.
However, the authors of Teagasc Crops Costs and Returns booklet for 2023 have also projected where there could be gains for growers, particularly in relation to the projected profitability of beans and other protein crops.
“The increase in protein scheme payments is driving this,” Phelan said.
“The 2023 payments will cover all the variable costs incurred by farmers growing protein crops over the coming months.
“This leaves growers in a position where growing crops will, essentially, be expected to cover their machinery costs in order to breakeven.”
Teagasc has also indicated that if average yields are secured by the likes of beans this year it could leave a “gross margin” that matches the very best crops of winter wheat.
The latest publication features total variable costs per hectare for the following cereal crops:
- Winter wheat (€2,199/ha);
- Spring wheat (€1,798/ha);
- Winter barley (€1,974/ha);
- Spring barley (€1,589/ha);
- Malting barley (€1,569/ha);
- Winter oats (€1,671/ha)
- Spring oats (€1,568/ha).
It also details that the projected maximum gross margin that can be achieved in 2023 for the various crops which are: Winter wheat (€930/ha); spring wheat (€851/ha); winter barley (€626/ha); spring barley (€501/ha); malting barley (€706/ha); winter oats (€558/ha); and spring oats (€442/ha).
A range of non-cereal crops are also referenced in the 2023 Costs and Returns projections. Total variable costs include:
- Fodder beet (€3,114);
- Main crop potatoes (€11,833);
- Open maize (€2,246);
- Feed peas (€1,095);
- Beans (€1,162);
- Winter oilseed rape (€1,887);
- Spring oilseed rape (€1,387).
The Teagasc Crops Costs and Returns booklet for 2023, also details maximum gross margins that can be achieved in 2023 for certain crops including: Fodder beet (€886), main crop potatoes (€1,667), open maize (€779), feed peas (€755), beans (€768), winter oilseed rape (€828), and spring oilseed rape (€473).
According to the authors of the booklet, the selling price of grain is the principal driver of profitability on tillage farms, but they pointed out today at the National Tillage Conference that often prices at harvest are at their lowest.
They said that most merchants now offer farmers the opportunity to sell grain at different times of the year in order to reduce the risk of selling below cost.
The Teagasc specialists advise that in order to forward sell, growers need to know the cost of producing the grain on the farm.
“As a general rule of thumb, the higher the yield the lower the cost per tonne,” they outlined.