Teagasc have estimated that net margins for cereals are expected to increase by €370/ha in 2024 compared to 2023, due to a return to trend yields, a slight increase in harvest prices, and a decrease in whole farm direct costs.
Teagasc’s Outlook 2024 Economic Prospects for Agriculture, published today (Tuesday, November 28) details trends that can be expected next year in farm incomes, costs, and prices to farmers.
The overall picture for cereals in 2024 is that in general average net margins should be higher than those achieved in 2023, but remain significantly lower than the high margins received in 2022.
The movement in margins forecast for 2024 will mean that cereal based net margins will be positive on approximately 75% of specialist tillage farms in 2024.
Fertiliser
Market report data coming from the fertiliser industry at present are suggestive of a very uncertain supply, demand and price situation for products in 2024, according to Teagasc.
Market sources indicated that the price of CAN and Urea are approximately 55% and 45% lower than the corresponding time last year, due in a large part to factors affecting supply of fertiliser products and movement on energy costs.
Taking all of these issues into account, including seasonality of purchases, it is forecast that the decrease in fertiliser price for cereal crops in 2023/24 will be 35% lower than for 2022/23.
This is given that fertiliser on crop farms is purchased over the number of months from Autumn in one year through to June in the following year.
Fertiliser usage on a whole farm basis in 2024 on crop farms could also be expected to decrease slightly, due to lower levels of winter crop sowing due to autumn weather conditions.
The report states that it is expected that at a farm level there will be further efforts to reduce fertiliser application, if at all possible.
It added that there should be some benefits evident from the straw incorporation measure on those farms that entered the scheme, which would have an effect on fertiliser demand in 2024.
Overall, it can be expected that fertiliser expenditure will be about 40% percent lower per hectare.
Cereals expenditure and income
Approximately 6,200 specialist tillage farms were represented by the Teagasc national farm survey (NFS) in 2022, which showed income increased by 34% year-on-year.
Gross output on a whole farm basis increased by 32%. Overall, total costs on a whole farm basis increased by 31% on average.
These changes resulted in an average Family Farm Income (FFI) in 2022 of €76,013, which is equivalent to an 88% increase on the five year average FFI on tillage farms.
Total expenditure on all input items is estimated to have decreased in 2023 relative to 2022. The most significant decrease in expenditure on a per hectare basis occurred for fertiliser and fuel, which are estimated to have decreased by 20% and 15% respectively.
Overall, it is estimated that direct costs for the average cereal enterprise decreased by less than 10%.
The increase in crop protection costs in 2024 relative to 2023 is forecast to be of a smaller magnitude to the changes seen in 2023, much of which were related to energy price hikes and supply constraints post the Covid-19 pandemic.
Assuming no further significant price changes on a monthly basis, from the current prices in November 2023, it is likely that price increases for plant protection products will be about 3% in 2024.
All other direct costs are forecast to increase by about 2% in 2024, in line with projections for general inflation.
The international balance sheet for 2023/24 is projected to have relatively high ending stocks in the main export regions internationally.