Tillage farmers are in a high-risk situation when planning for harvest 2023 as markets continue to fluctuate and fertiliser prices remain high, Bobby Miller, chair of the Irish Grain Growers’ Group has said.
With just weeks until the beginning of the new season, farmers are becoming increasingly concerned about their yields covering costs, as input prices continue to rise. Speaking on the latest Farmland programme, Miller said:
“For 2023, you’re talking about €800 to €900 for nitrogen, while compound fertilisers are heading for €1,000 presently. These are phenomenal expenses but we have to start taking the risk now in less than a month’s time.
“Grain prices are stronger than normal, we all know that, but the costs and risks associated are still there, and as always we’re dependent on the weather too.”
Miller added that costs aside, the tillage sector is also at the mercy of other factors. He explained that is was a favourable year weather-wise as Ireland had a particularly dry growing season and got rain when it was needed.
“There was a worry there that we were going into a drought season but the rain came at the right time.
“Harvest was early this year, the weather has brought forward the oat and oilseed rape, they usually wouldn’t start for another week or so,” he explained.
Fluctuating markets
Another key risk that is out of the tillage farmers’ control is “the mercy of the markets”, which have been fluctuating a lot in recent months following Russia’s invasion of Ukraine and the consequential blockades of country’s ports.
International grain prices dropped after an agreement was reached between Russia and Ukraine on, July 22. However, shortly after this deal, a missile strike on the city of Odesa caused them to increase slightly again.
“We’re all observing what’s going on in Ukraine. The markets are fluctuating and nobody knows what’s going to happen next,” Miller said.
“There are other parts of the world too, north America is going to be very important with what way the crop reports will go there.
“So, we’re at the mercy of the markets here in Ireland because we compete with imports.”
Managing risk
Speaking about measures that could help to manage the risk for tillage farmers, Miller and Agriland’s tillage specialist Richard Halleron discussed the practice of forward selling grain.
Forward selling a portion of future harvests can be a good option for locking in some degree of profit, they said, although Miller pointed out that farmers should not be too ambitious.
“The rule of thumb is you don’t sell more than 50% of your crop because you actually don’t know what you’ll have until you harvest,” he said.
According to Miller, it is not the most common practice in Ireland yet, with only about 5% of tillage farmers engaging in forward selling. However, he believes it is becoming a more popular option.
“It’s an area I’d like to see focused on more for tillage farmers to lower the risk going forward,” he said.
“If you’re thinking about buying fertiliser for next year you’re going to have to consider forward selling some of your grain to reduce the risk going forward.”
You can watch the full interview with Bobby Miller on Farmland by clicking here.