Many arable farmers will go into the autumn and winter of 2015 nursing potential losses on their crops, according to Allan Chambers, Ulster Farmers’ Union Arable Chairman.
As the grain harvest moves into top gear summer remains elusive and just like livestock farmers, all arable and horticulture producers find themselves in a perfect storm, squeezed between high costs and poor returns, he said.
“This has been a challenging year all round as we await the weather to settle, allowing farmers to get on with harvesting.
“Farmers are being squeezed by a number of factors, which were all having a negative impact on incomes in the arable sector.
“From the start this has been a difficult year for weather; crops have been expensive to grow and for some people crops are often on over-priced conacre ground,” he said.
On top of that he said that farmers face the fear of a wet harvest, with modest yields on many farms.
Compounded by potential high grain drying costs the outcome may be poor.
“Making this worse is the weakness of the euro, which is giving imported grain a competitive advantage – and all this is happening when the world market is over-supplied, keeping grain prices down,” he said.
Like all farmers, grain producers have a significant investment in their business, in land and machinery, and crops are increasingly expensive to grow, the UFU said.
The oil price may have fallen it said, but fertiliser and agro-chemicals for spraying crops to combat pests and disease are still expensive, and while the grain price is at best flat, after a bad year in 2014, costs have risen steadily.
Industry statistics show that it costs almost £1,300 to grow a hectare of a crop like winter oilseed rape, which goes to the livestock feed industry, it said.
Allowing for all the costs of growing and harvesting this crop means a break-even price of over £380 a tonne, and a big gap between that break-even price and the current market price.
The gap is approaching £100 a tonne, with the same problems reflected across all crops. This means arable producers, like all farmers, are selling what they produce well below what it cost to grow the crop.
“This is not sustainable, and cash flows on many farms are going to be difficult. That is a depressing prospect as we set up for harvest.
“That said farmers are optimists by nature, and never stop hoping a window will open to maximise harvest potential,” Chambers said.