2021 was a good year overall for the tillage sector with prices being up and favourable weather, according to the Ifac Irish Farm Report 2022.
While price inflation in fertiliser occurred in late 2021. it did not affect the 2021 crops’ profit margins, Ifac noted, but added that the real effect of the cost of producing a crop will be felt in the 2022 season.
There was a mixed reaction to Ifac’s survey of the sector with about half of tillage farmers reporting a positive outlook for the tillage sector.
37% of those surveyed told Ifac that saving for a pension is a key concern, yet one in five has no private pension, and one in four has no life cover.
Another key finding of the report is that 44% of tillage farmers see the biggest benefit of technology in driving efficiencies and one in four people said technology improves profitability,
Challenges for the tillage sector
According to the Ifac report, 62% of those surveyed said input costs are the biggest challenge for their business.
As a result of Russia’s invasion of Ukraine, Ifac stated that there is huge uncertainty over whether European demand for animal feed can be met, with more than 20% of maize globally coming directly from Russia and Ukraine.
The report states: “The current war is estimated to create an eight million tonne maize shortage, and six million hectares of wheat in Ukraine will not be able to be harvested.”
In response, Ireland is now actively promoting the planting of tillage crops in 2022.
“Regardless of what measures Ireland or the EU put in place, tillage crop prices are expected to rise further over the next few months. This increase will have a knock-on effect across all parts of the food economy,” the report continued.
“We already see the impact in the pig sector, with the cost of feed per pig higher than the price paid for the pig.”
The Ifac reports adds that a ‘good’ Common Agricultural Policy (CAP) is a crucial driver of profitability in tillage.
The Department of Agriculture, Food and the Marine (DAFM) has instigated measures to increase the amount of land used for tillage in this country – by 25,000ha in 2022.
Future for tillage
Looking to the future, the area sown for winter crops has returned to normal levels, according to the report.
Forward green prices for harvest 2022 are in excess of €300 for barley and wheat. For 2022, the issue is not going to be how much will you get paid per tonne, as there is every indication it will be very strong.
The main concern for 2022 will be the cost to produce a crop. The rapidly increasing cost of fertiliser through the end of 2021 and into 2022 has hit tillage farmers hard.
At the time of report’s publication, urea quotes reached over €1,100/t. Fuel is another concern as green diesel, like fertiliser, hits record prices, leaving contractors struggling to quote due to fuel price uncertainty.
Ifac said: “Time will tell over 2022 how raising costs and weather/price will affect profits margins by year-end.”