Farmers braced for poor harvest yields

It’s been cold outside and Irish tillage farmers everywhere are casting a nervous eye toward the rain clouds.

Approaching the harvest season, conditions look set to produce just an average cereal crop this year and in the air hangs the dismal possibility of another wash-out summer with its potentially devastating effects.

The harsh winter and exceptionally cold spring have already reduced the amount of crops in the ground but much will depend on global production and prices, the latter of which were strong in 2012, dulling the pain of an otherwise catastrophic year.

"It's very much fingers crossed," says Fintan Conway, executive secretary of the grain committee at the Irish Farmers Association (IFA).

“We are in the critical stage and weather is still very much against us; temperatures are too low and there is still a fair bit of rain around.

“Last year the crops were powering ahead and it looked like come June we were looking at one of the best harvests ever.”

Then came continuous rain and a 20 to 30 per cent reduction in sunlight.

“That very much affected the winter wheat crop. It was one of the unmitigated disasters.”

An economic report forecasting 2013 from the Agricultural Economics and Farm Surveys Department at Teagasc noted that last year, poor harvests in the US and Europe pushed tillage prices up.

However, production conditions in Ireland impacted severely on yields and, therefore, on farmers' ability to take advantage.

Of this year, he says: “It is anticipated that the price of key input variables such as fertiliser and seed will increase in 2013, while fuel prices should remain relatively flat.

“There is considerable volatility in the cereals market, but based on futures prices as of December 2012, it is forecast that 2013 barley harvest prices will be down on 2012 levels, while wheat prices may remain relatively stable.”

The outlook for the profitability of winter wheat production is quite positive for 2013, based on a return to more normal yields, but barley prices do not look as favourable.

“It’s probably difficult to call in terms of yield potential. We have a much smaller crop in terms of winter wheat, about half of what it was last year,” said Conway.

“Given the rough winter that we had and the weak spring, it’s probably [going to be] a 3.7 tonne per acre crop. That doesn’t make money, you need to be four plus.”

Overall, he said, expectations are of a total harvest yield of about 2 million tonnes, as compared to a typically “good year’s” reap of 2.5 million tonnes.

About 9 per cent of farmed land here (378,000 hectares) is under crops, with about 11,000 tillage farmers.

The harvest begins in July, starting with winter planted barley, oats and then wheat (which should have the largest yield) and then spring barley. August sees the completion of the main spring crops and everything should be finished up by the second week in September.

'Perfect storm'
Harvest in late June in Germany, France, Poland and the UK tends to set the price.

Rape seed here was drilled in September last year instead of August, so in some areas it didn’t get big enough to survive the winter challenges and, in many cases, was entirely replanted.

Then there was the coldest March in around 70 years. “It really put the tin hat on it. Perfect storm,” said Tim O’Donovan, tillage specialist at Teagasc, the agriculture and food development authority.

Its three-weekly progress report due tomorrow will say that growth rates are about two weeks behind schedule, not a major setback, and disease remains relatively low.

“The current mood is pretty optimistic that prices will be pretty similar to the last two years,” said O’Donovan.

“The important consideration in Ireland is that input costs rise accordingly, so we have to have good yields in order to pay the bills.”

Lurking in the background, the ongoing Cap negotiations also present a threat to tillage farmers, if currently distracted by weather, its effects on yields, and price.

One concern relates to the amount of land that may be given over to environmentally-friendly crops, possibly impacting on tillage space.

They are also worried about what form an equalisation of single farm payments per hectare might take.

“The proposal is that, to an extent, people with high payments per hectare will be brought down and those on lower payments will be brought up,” says O’Donovan.

“Tillage payments are relatively high per hectare, so that could take away a lot of income. But it’s being negotiated at the moment.”

Better machinery
In spite of last year's disastrous weather – even if offset by good prices – a bumper crop in 2011 precipitated a spurt of investment in machinery.

Sales of combined harvesters in particular are a good indication of performance in the sector.

Gary Ryan, chief executive of the Farm Tractor and Machinery Trade Association (FTMTA), said that, where sales of 40 harvesters (average price €250,000 plus Vat) would be a typical yearly average, 80 last year reflected the financial success of 2011.

And this year looks to be promising too, with farmers opting to invest in better machinery to harvest crops in poor weather with minimal damage to fields.

“Based on what you hear talking to the dealers, it will be north of the average this year, closer to 50,” he says.

“And coming off the back of 80 last year: that is incredible.”

However, Tom Murphy, director of the Professional Agricultural Contractors (PAC) of Ireland, says a more continental model of farmers' reliance on contractors would help reduce costs.

“They should be looking at more contractor use, as is the case in Europe,” he says, although admittedly partisan.

“They enter into whole farm contracts for a three-year rolling period, so they know their costs.”