Unless there is a dramatic turn-around in grain prices, many tillage farmers would be better off leaving land fallow or growing fodder crops rather than producing cereals, IFA Grain Chairman Liam Dunne has said.
He said this is especially true where the work is contracted out.
Dunne was speaking at the IFA Grain Market Outlook Conference this week.
The Grain Chairman said growers should insist on minimum price contracts from their co-op or merchant that deliver a margin before ordering fertiliser and seed this spring as current price offers for grain for the 2016 harvest are significantly below the cost of production.
“The international and home markets are sending a clear message to cereal growers to drastically cut production.
“Growers’ incomes have been decimated over the last three years as a result of low grain prices and rising costs.
“Negative sentiment from speculative investors based on the assumption of high carryover of grain stocks to the new harvest continues to drive old and new season prices lower.”
All crops at today’s price offers, with the exception of spring oilseed rape and contract malting barley, will deliver a negative margin this season.
“Current new crop grain price offers of €115/t to €118/t for green barley with €5/t to €7/t for wheat coupled with high fertiliser, seed and spray prices will see all growers subsidising grain production from their Basic/Greening payment.”
EU action needed on grain prices
Dunne has said that the current situation is not sustainable and will lead to land abandonment across Europe.
“There is an onus on the EU Commission to take action to protect farmers’ incomes.
“The Commission must immediately abolish anti-dumping duties and customs tariffs on non EU fertiliser imports, reopen intervention for feed grains such as barley and realign the intervention price to reflect current production costs.”
Furthermore Dunne said that unless there is a dramatic turn-around in grain prices, many tillage farmers would be better off leaving land fallow or growing fodder crops rather than producing cereals especially where the work is contracted out.
However, spring oil seed rape looks attractive at the moment with €365/t on offer for dried new crop for October collection.
“Alternatively growers could look at growing forage maize or grass on contract.
“The conference examines the options open to farmers to mitigate price volatility, boost productivity and add value to the crop in order to return sustainable incomes.”