Cash crop farming: Why it doesn’t always pay to produce more
Growing more doesn’t always mean making more; farmers in Finland explain how they believe EU subsidies hold back productive agriculture.
AgriLand journalist Rachel Martin visited the Nordic country as part of a group of international agricultural journalists.
Finnish farmers told the group they find it “frustrating” and “demoralising” that they are not paid based on what they produce; instead having to rely on subsidies.
Grain prices in the country have become among the lowest in Europe since Finland joined the EU, as buyers deduct the cost of shipping it across the Baltic Sea. Growers can expect around €150/t for spring wheat at the mill and €354/t for rapeseed.
Brothers Jouko and Esa Riola run two farms in southern Finland.
Two-thirds of the 250ha they farm is their own, with the rest rented in agreements ranging from just a few years up to 50 years.
Their fields are well-drained with good mineral levels. This year the ground is being used to grow rye, spring wheat, rapeseed and peas.
On average the brothers are able to harvest 4-5t of spring wheat per hectare but they say they could produce more.
The cost of EU subsidies
Farming profitably in the region is tricky with the added challenge of the short growing season due to the cold climate, snow and the short daylight hours so they have to weigh up business decisions carefully to remain profitable.
This year the pressure is on – a late growing season means the brothers will not be able to plant any winter crops.
Jouko Riolo explains his average yield for spring wheat is around 5t/h. He says his fields have the potential for more, but to produce more is not financially viable.
To up the yield to 7t he would need to add €100 of fertiliser, €100 of chemicals as well as a further €100 worth of labour and then there’s the extra drying and handling costs. However, regardless of his yield he receives €600/ha for paperwork. As a result, around half of their farming income comes from EU subsidies.
Both brothers also work other jobs to subsidise the farm – Jouko also runs a land construction company and Esa is also a building engineer and consultant.
He explained that revenue from snow ploughing in the month of December is bigger than the sales revenue of the crops produced on the 250ha of ground.
“It does not make any sense to try for better yields,” he said.
“Subsidies are demoralising – it would be better to have a better price for our crop so we can make better farming decisions.
“Financially, the best thing to do would be plant some grass seed, let the buildings deteriorate and just collect the subsidy and to use that time to be a bus driver – but we farm because we feel it is the right thing to do.
“We have one of the lowest prices for grain in the EU now, but before [it joined in 1995] Finnish farmers were able to negotiate their prices with the government. Now the grain industry is dictating the price to us and deducting the cost of transport to Hamburg leaving us with very little for our produce.”
The moisture in the region means they must dry all their grain. On difficult years moisture can be as high as 30%.
They expect to find out soon if this year’s harvest will be suitable for human consumption or animal feed – another factor in how profitable this year’s work will be.