Teagasc’s Crops Costs and Returns 2024 booklet identifies a consistent fall-off in variable costs associated with cereal production over the past 12 months.
This is good news, in relative terms, for all cereal growers.
Back in January 2023, the predicted variable costs associated with winter and spring feed wheat were estimated at €2,199/ha (excl. VAT) and €1,798/ha (excl. VAT), respectively.
This year, however, the indicative variable costs associated with winter and spring feed wheat are €1,711/ha (excl. VAT) and €1,430/ha (excl. VAT), respectively.
This decline has occurred largely due to a reduction in materials, machinery hire and miscellaneous costs.
The most notable cost decline was in fertilisers, falling €498/ha (excl. VAT) in the case of winter feed wheat and €370/ha (excl. VAT) for spring feed wheat from last year’s cropping period to this year’s.
This reduction is largely due to declining fertiliser prices and, to a lesser extent, altered fertiliser strategies.
On account of this variable cost reduction, the breakeven yields (grain only) required for winter feed wheat has declined by 1.1t/ha – moving from 9.2t/ha in 2023 to 8.1t/ha in 2024.
Likewise, a reduction in the breakeven yield for spring feed wheat is also anticipated – moving from 7.5t/ha in 2023 to 6.8t/ha in 2024.
The Crops Costs and Returns 2024 booklet also points to a fall in the expected grain price for feed wheats this year – back by €30/t on the corresponding prediction in 2023.
However, on account of lower variable costs, the gross margins expected at harvest time (included straw yields and at target yields) are expected to rise for both winter and spring variants of feed wheat this year.
Feed barley
Although challenges arose at sowing time, growers who established winter barley crops appear to be in a better position in terms of the potential margins from these crops than this time last year – albeit only slightly.
Overall, variable costs associated with the production of winter barley – provided the crop is established and requires no replanting – are expected to decline by €345/ha.
Again, this is largely due to a reduction in material costs associated with fertiliser in particular.
Due to this decline in variable costs, the grain-only breakeven yield for winter barley is expected to be 8.1t/ha (8.6t/ha in 2023), while at targeted yields (including straw), gross margins of €671/ha are expected – up €45/ha on 2023.
On the spring feed barley front, total variable costs of €1,318/ha are expected, declining from €1,589/ha in 2023, once again driven by a decline in materials costs.
Like the cereals mentioned above, this should result in a lower breakeven yield requirement – moving back from 6.9t/ha in 2023 to 6.6t/ha in 2024.
Again, at a targeted yield of 8.0t/ha, gross margins are only expected to increase slightly on the 2023 prediction, moving to €531/ha.
Malting barley
The potential margins from spring malting barley are also examined as part of the Crops Costs and Returns 2024 booklet, with the assumptions based on the availability of a malting contract and the fulfilment of this contract’s specification and quality requirements.
Assuming a premium price of €40/t over feed barley, it is predicted that breakeven yields (grain only) of 5.8t/ha are required in spring malting barley this year and at targeted yields (7.5t/ha), gross margins of €706/ha are envisaged.
Again, like the above mentioned feed cereals, malting barley growers can expect some respite in terms of input costs, with variable costs expected to be €264/ha lower than in 2023 at €1,305/ha this year.