Average spring cereal grower made a net margin of -€102/ha in 2016

Spring cereal growers generated the lowest net margins of all tillage farmers in 2016. This was revealed in the latest Teagasc eProfit Monitor data, which was published in recent days.

At a net margin of -€102/ha, many growers were forced to delve into their Basic Payment Scheme monies to cover their costs of production. This compares miserably to the average net margin for all specialist tillage farmers, which stood closer to €106/ha.

For the 2016 season, 339 specialist tillage farmers filled out an eProfit Monitor. These farmers were divided into seven production types, including: winter cereals; spring cereals; winter and spring cereals; cereals; and beet.

Winter cereal farms were the most profitable with a net margin of €246/ha. This is compared to a net margin of -€102/ha on spring cereal farms. Teagasc stated that this is due to the reduced output from spring crops, which have similar machinery, fixed and land lease costs to winter crops.

Highest-performing crops

Beet had the largest net margin of all the tillage crops listed. Average-performing beet growers had a net margin of €642/ha; winter wheat followed at €263/ha; and winter oats had a net margin of €235/ha.

Beans had a net margin of just €41/ha. However, this figure jumped to €225/ha when the protein payment was included.

Barley returns

However, the most commonly grown crop was not the most profitable. Malting barley was the fifth most profitable crop for average-performing tillage farms, followed by winter barley and spring feed barley. A breakdown of all crop returns is available in the full Teagasc report.

A short summary of the barley returns is outlined below. The first table shows a summary of the eProfit Monitor results for the average-performing winter, spring and malting barley farms. The second table displays a summary of the top 33% of performing farms.

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Barley returns – average growers’ summary. Source: Teagasc

Yields were higher across all three crops in the top 33% of farms. Variable and fixed costs were also lower on these holdings. Material and machinery costs were lower for spring and malting crops in both categories.

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Barley returns – top one-third growers’ summary. Source: Teagasc

Fixed costs decrease

The Teagasc report stated that as farm size increased, fixed costs decreased. When farms were categorised by size, there was a slightly positive trend to higher profitability on larger farms.

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*Fixed costs exclude land lease and machinery. Source: Teagasc

Rented land

Of the 339 farms in the eProfit Monitor data, 157 (46%) had leased land. The average cost of leased land varied between the different categories of tillage farms. Cereal and potato farms paid the highest amount for rented land at an average of €775/ha. Over 70% of farmers with potatoes had leased land.

About the eProfit Monitor

Teagasc stated that the publication of the eProfit Monitor analysis is used as a benchmark for farmers. The information in this report is related to the 2016-production year. The results used are compared between the average and the top 33% of farms. These farms were ranked on the basis of gross margin per hectare.

Basic farm payments are excluded from this analysis. However, direct payments (protein payments) are included.