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Wednesday 17 October 2018

Analysis: Have most tillage farms gone backwards in the last five years?

Stock Image.
Stock Image.
UCD Agricultural Science student Ian Atkinson from Old Leighlin, Carlow with a set of two-day-old triplets on the farm of Eddie and Robert Storey outside Dunlavin last week. Ian is currently on work placement at the farm which will lamb down some 140 ewes this month for the Easter trade. A further 140 are due in March.
PJ Phelan

PJ Phelan

Ricard Deasy told me many years ago that "if you are not making progress you are going backwards".

Given the yields, prices and difficult harvests of the past five years little if any progress has been made on tillage farms in the midlands and if Ricard was right most have gone backwards.

January is the month to make decisions for the coming year. Decisions on cropping programmes and acreages to be farmed are financial decisions skewed by emotion and guesswork.

Emotion and guesswork play havoc with financial decisions. It is very hard to walk away from lands you have been renting for a "lifetime" if someone else comes along and offers a higher price. It is even more difficult to part with your own land if someone offers you a higher price than you can possibly make from it.

The future viability of your farm is determined by profit. Financially if you can earn more by farming land you should farm it and if you can earn more by leasing it out do so.

Tillage farmers have always lived for the prospect of bumper yields and a bumper price. The last one we saw was 2012.

Prices for rental land this year generally ranged from €200/ac to €240/ac which was beyond the limit of what most tillage farmers could justify.
Prices for rental land this year generally ranged from €200/ac to €240/ac which was beyond the limit of what most tillage farmers could justify.

Last year, with depressed yields across many European countries, should have given a lift in prices but for imports from outside of Europe. The fact that we did not get a lift in prices last year decreases the likelihood of occasional bumper prices in future years.

Straw sales

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In most areas of agriculture, we require a minimum of three years data in order to make a decision. Therefore, in order to give a realistic financial prediction for crop production for the coming year take the average yield for each of your crops multiplied by the average price add straw value and subtract all production costs.

In many cases profit, if any, is coming from straw sales If you want to take a more optimistic position multiply the highest annual crop yields by the highest price; anything more than that is a dream. If you are satisfied with the answer continue to do as you have been doing; if not it is time to make a substantial change.

The only real prospect for a lift in grain price is growing crops for which a quality premium will be paid. However, failure to meet the specification will generally mean selling a reduced yield for the price of feed grain. If you are in an area where there is a substantial demand for grass you should look at either growing grass on contract or leasing out land.

I have no doubt that tillage farmers can grow more grass and better quality grass than most other farmers.

The option of leasing out entitlements presents a real opportunity of earning an income from entitlements without incurring costs and freeing up both labour and machinery for other income opportunities.

Will leasing out entitlements put the farmer at risk of losing them under the next scheme? Only time will tell and unless you can make money in the interim the answer will be irrelevant as if you have not made progress you will have gone backwards.

PJ Phelan is a tillage advisor based in Tipperary and is a member of the ACA and ITCA

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