Saturday 1 October 2016

Tillage 'gloom and doom' as concerns grow on grain prices

Published 24/02/2016 | 02:30

Winter barley acreage is up.
Winter barley acreage is up.

Farmers have been urged to complete a financial analysis before sowing this spring, as concerns grow over low grain prices.

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It comes as farmers assess the damage caused by winter storms with many fields facing reduced plant growth due to water-logging. An estimated 500ha has been lost in southern coastal areas to salt burn from sea mist due to harsh winds.

Ivan Whitten, a Teagasc tillage advisor, urged farmers to carry out a cost control analysis, particularly the rental of high-cost land as the latest Tillage Crops report issued a stark profit warning for the sector.

"The economics of it don't add up," the specialist said, with grain prices back €10-15/t on last year's prices. "Tillage growers are feeling the pain as much as dairy and pig farmers," he said, emphasising the price of fertiliser is now out of sync with the price of grain.

Farmers have been weighing up the costs of CAN verses urea, with many opting for urea as it is cheaper per kilo of nitrogen spread, said Mr Whitten.

He also urged farmers to consider the "realistic option" of leaving poor quality tillage ground fallow.

"The doom and gloom there at farm level is also there at merchant level as well," he said, with debts to merchants likely to increase unless prices rise this harvest. Mr Whitten pointed out merchants were also losing money on the stocks of grain stored in sheds and machinery sellers would also be impacted.

"Everyone is exposed in low grain prices," he said.

John Spink, head of crops research at Teagasc, said the winter barley acreage was up again reflecting the high yields of last year.

It is predicted that the area of spring cereals, particularly spring feed barley, will likely drop again due to low margins and increased winter sowings.

The area of winter barley sown is estimated to be up 7pc on last year at close to 75,000ha, with 12,000ha of winter oats.

IFA grain chairman Liam Dunne said growers should insist on minimum price contracts delivering a margin before ordering fertiliser and seed this spring.

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