Teagasc’s Tillage Advisor Ciaran Hickey has warned farmers to be more sensible about the prices they lease land for.
In addition, he said the fear of tillage farmers losing their EU entitlements is probably as large a threat to the sector as the competition it faces from the dairy sector.
“I would urge caution. If you enter a land lease it needs to be on a very measured approach, because it’s a five-year commitment.”
Hickey cited the example of a 3t crop of spring barley, which costs about €400 an acre to grow, thereby requiring three tonne per acre just to for a farmer to break even.
He added that any profit margins are further tightened if a tillage farmer has to rent expensive land in order secure land so as to draw down a Single Farm Payment.
“When you are in a business where the return is very small but the risk is very high, then you’ve got to be very careful about what risks you take on,” said Hickey.
“This year is slightly different to the last couple of years in that we know well in advance that we are potentially looking down a year of poor returns. Across the tillage sector last year we had fantastic yields and good quality, but it made no money.
“But. what if you then have poor yields and poor quality [this year], and you’d rented land on top of that? You’d really be in trouble.”
Hickey stressed that if farmers are leasing a farm they must do their sums in advance to ensure there is a sufficient profit margin to stay in business, while also paying the landowner a fair payment.
Con Acre Proving a Con Job for Industry
Hickey also said that the use of the con acres is “unfortunately” still quite prevalent in the tillage sector.
“Where a farmer who has entitlements is renting land he subsequently loses, the pressure is then on to replace that land with alternative con acre land.
“What happens then is you have two or three farmers in an area looking for the one [con acre lease]. What’s driving this is farmers need for land in order to draw down the Single Farm Payment. At the moment farmers are eating into the Single Farm Payment rather than lose entitlements, which is a sad state of affairs for our industry.”
Hickey stressed that leasing or share-farming is a more sustainable, long-term approach than the con acre.
“It’s unbelievable when you think about it: the margin is so tight but there are so many farmers out there who are so enthusiastic about farming and the demand to get land is so high, for such a small return per acre. It’s a phenomenal business in that way.”