Grain prices take gloss off perfect harvest
There is a very interesting line in Richie Hackett's tillage management piece on page eight this week relating to volatility.
And before anyone gets ideas, I don't mean that as a back-handed compliment to the man from north Co Dublin; his columns are invariably informative and interesting.
However, in this week's contribution, Richie questions how many tillage growers will stay in business if the grain price volatility that we have witnessed over the last few years continues, while the high cost base of producing cereals also remains in place.
Richie's comments tally with those of at least one senior Teagasc official who claimed that the precarious state of tillage farmer margins had been virtually ignored in all the talk about redistributing single farm payments (SFP). He claimed that tillage farmers were among those with the highest SFP entitlements per hectare, but Teagasc research showed that profit levels among this group were surprisingly low and dependency on EU payments was very high.
This appears to be borne out by the expected margins for this year's harvest. The quotes for barley off the combine range from €137/t to €145/t, while wheat is at €154 to €155/t.
At a yield of 3.5t/ac for barley, which is the level being reported at the moment, growers will be looking at the crop bringing in around €480-510/ac.
However, with input costs taking out €260-270/ac for even the very best of growers, and machinery costs and repayments accounting for a further €170/ac, it is clear that growing barley is no Klondike, even in a good harvest like this one.