The role for benchmarking within Ireland’s tillage sector
A recent Teagasc-focussed discussion centred on the role of benchmarking within Ireland’s tillage sector.
Participants included Teagasc tillage specialist, Ciaran Collins and economic researcher Dr. Fiona Thorne.
Benchmarking is underpinned by a very clear principle: if you do not measure something, then it’s very hard to improve it.
But this is only the starting point.
Most tillage farmers keep some records regarding crop performance.
But very few take the next step of bringing these figures through to in order to calculate accurate margins for their various cropping enterprises.
Once this level of detail has been achieved, it is a case of comparing individual farm performance figures with others.
Adding momentum to the benchmarking debate within tillage has been the recent publication by Teagasc of the Cereal Enterprise FactSheet for 2024.
Dr. Thorne commented: “It’s important to contrast this data with the information that is available in Teagasc’s annual Crop Costs and Returns publication.
“The National Farm Survey sees information from 1,000 farms analysed and collated on an annual basis.
“This includes data provided by cereal farmers."
Cereal Enterprise FactSheet
The Cereal Enterprise FactSheet looks at two of the main cropping enterprises within the tillage sector: spring barley and winter wheat.
Dr Thorne said: “Crop Costs and Returns is a budgeting exercise, undertaken at the start of a cropping year.
However, the National Farm Survey delivers information on actual performance levels achieved on farm.
“However, benchmarking is a key driver within both of these projects."
Fixed costs stand out as being a significantly larger figure (€695/ha for spring barley) in the Cereal Enterprise FactSheet relative to the much smaller figure (€204/ha) referenced in the current Costs and Return publication.
“Contracting changes make a big difference in this regard," Dr. Thorne explained.
"The reality is that the fixed costs included in the Costs and Returns booklet excludes machinery and labour costs.
“Land rent is one of the biggest fixed costs incurred on most tillage farms. However, it is excluded from the Costs and Returns’ figures.”
The analysis generated from the National Farm Survey take in all options, where land ownership and rental levels are concerned.
Land rental charges
Over recent years land rental changes have increased consistently to currently average €220-€250/ha.
Moreover, Irish tillage farmers are more likely to have a higher proportion of rented land within their enterprise than would have previously been the case.
But are land rental charges having such a dynamic impact on the net margins achieved within tillage enterprises?
“Teagasc economists are currently researching this very issue,” Dr. Thorne commented
“There are actually a lot of differences impacting on tillage enterprises.
"Poorer performing farms on a net margin basis are laying more in terms of land rental on a per hectare basis
“But in statistical terms, when all other controls are factored in, there is not that much of a difference. It just means there is an awful lot going on."
The economic researcher noted that there are are differences in farm size, systems and soil classification.
“The management expertise of the farmer must also be factored in," Dr. Thorne said.
“It’s not a case of just looking at specific aspects of cost. Rather there is a need to look at the entire management system that has been out in place.”
Spring barley net margins
Ciaran Collins addressed the reasons why the Cereal Enterprise FactSheet confirm the €847/ha range in net margin figures between the top and poorest performing spring barley enterprises.
The best performing farms generated a margin of €600/ha while at the other end of the spectrum losses of up to €247/ha had been recorded.
The Teagasc tillage specialist explained that agronomy and the timing of inputs is a key issue.
"It is feasible to get two different growers spending the same amount on a winter wheat fungicide spraying programme and getting two polar opposite results," he said.
“And this has all to do with the timing of the actual spray programmes are concerned. Tackling septoria is a case in point.
“Sowing dates and conditions at planting are other issues that determine the final margins generated by crops.
“And, again we can have different growers spending the same money but getting totally different results.”
According to Ciaran Collins, there are huge differences in the efficiency of machinery usage.
“The reality is that machinery cost structures on farms has a very important impact on final net margin results," he said.
“The whole issue of crop rotation and soil quality is a big factor as well.
“When we survey growers at the end of the year after the harvest and assess high yields and low yields, rotation has such an impact there.
“And, fundamentally, soil fertility is also a major factor in determining whether growers make a profit or a loss from their various crop enterprises."
