Teagasc is predicting a significant rise across all farm input costs in 2022.
This follows a 12-month period of upward trends which have already been recorded in all costs incurred by Irish farmers.
Undoubtedly, 2021 has been a very positive year for Irish tillage.
However, a combination of a relatively small predicted increase in cereal prices at Harvest 2022, and the expected doubling of nitrogen prices will result in a significant fall in both gross and net margins within the sector next year.
Teagasc’s Fiona Thorne addressed Teagasc’s 2022 Outlook conference. She said that, where 2021 input costs are concerned, price changes have outstripped volume changes across the board.
“Fertiliser prices are up 10% in 2021 relative to the previous 12 months. In addition, fertiliser volumes increased by 5% in aggregate terms,” she explained.
“Fuel prices are also up very significantly this year with green diesel at farm gate up by 29% year-on-year and white diesel up 13%.”
Thorne confirmed that electricity prices rose by 10% in 2021.
“Feed prices are up 16% in 2021 compared with the previous year,” she said.
“Feed volumes also increased by 8%, leaving us to conclude that total costs at the farm level were well up year-on-year. However, this is very sector significant.”
Input costs to increase
Looking towards 2022, Thorne predicted that it may well be a tale of two halves, where feed prices are concerned.
The first six months of the year will continue to see prices increase, a hangover effect from the harvest of 2021.
However, feed costs may well decline in the second half of the year, albeit this is very much dependent on the outcome of the European and global harvest.
Overall, Teagasc is predicting a 6% year-on-year increase in feed costs on Irish farms across the entire 12-month period of 2022. Feed volumes will also change in 2022.
Depending on the sector, Teagasc is predicting a change from 0% to 7% per head. Fertiliser cost increases will have an impact here.
Where fertiliser is concerned, Teagasc is predicting a 100%+ increase in nitrogen prices.
Thorne commented: “We are predicting previously unseen increases in fertiliser prices across the full 12 months of 2022.
“These are reflecting the gas price increases that are already in the system. Nitrogen-based products are predicted to increase by 120%.
“Smaller, yet still considerable, increases are predicted for P [phosphate] and K [potash]. There is also significant fertiliser supply uncertainty within the Irish market at the present time.”
Teagasc is also forecasting that fertiliser usage could fall by up to 20% next year.
Turning to other inputs, Thorne indicated that fuel prices will increase by 12-20% at the farm gate in 2022, while there will be no changes in electricity prices next year.
Tillage
Tillage will be extremely exposed to the changes in input costs that will take effect in 2022. Teagasc is predicting a major reduction in both net and gross margin for all crop-based enterprises next year.
Driving this will be a major hike in production costs across all inputs.
Thorne commented: “We are forecasting a 35% increase in cereal production costs on a per/ha basis in 2022.
“It is envisaged that cereal prices will increase by 2% year-on-year by the time we get around to the 2022 harvest.”