Tillage farmers will face direct higher costs next year because of forecasted increases in fertiliser expenditure and seed costs, Teagasc has warned.

In its latest Economic Outlook for Irish Agriculture report published today (Tuesday, December 13)  Teagasc sounded a downbeat note of caution on cereal forecasts for 2023 with both prices and yields expected to flatten on this year’s performance.

This will have a significant impact on average tillage incomes next year which could decline by as much as 48% to around €33,000.

Teagasc highlighted that the net effect of input price, output price and volume movements will likely have a “very significant negative effect on gross margins for 2023”.

It noted that gross margins for winter wheat and winter barley are forecast to decrease by approximately €1,200 and €690/ha while gross margins for spring barley are forecast to decline by approximately €880/ha.

In the outlook report Teagasc stated:

“The overall story for the 2023 forecast is for a decrease in gross margins as a result of achievement of trend yields, a significant decrease in cereal prices and a further increase in direct costs.”

It anticipates that the high cereal yields achieved in 2022 are unlikely to be repeated in 2023.

Actual 2020, estimate 2021 and forecast 2022, for cereal crop gross margins. Source Teagasc

Teagasc also outlined how an increase in winter cereal area and yields at harvest time this year had delivered a significant increase in harvest price which in turn drove average tillage farm incomes up by 10% to around €64,000.

Tillage margins

However it has warned that the forecast for net margins on tillage farms next year will likely show a “significant decrease in margins owing to a return to trend yields”.

Teagasc stated in the outlook report:

“The downward movement in margins forecast for 2023 will mean that cereal based net margins will be negative on approximately 50 percent of specialist tillage farms in 2023.”

Overall Teagasc has forecast that the net margin for the average cereal enterprise in 2023 will decrease by about €680/ha compared to corresponding 2022 margins.