Shay Phelan: Tips on Forward Selling and Other Ways to Reduce Rising Risk on Farms
Rarely, if ever, have farmers been as financially exposed as they are now, given the rising cost of inputs.
Some of the farmers I’ve met on Teagasc spring walks across the country have taken steps to reduce this risk by selling grain forward.
They were sold at a variety of prices, many of which look bad today, although the choices looked reasonable back then.
Something have said they will resell some though wait for grain to reach a certain price before selling it, which can be a dangerous game as it may never reach that price.
Many, to my surprise, have done nothing at all and are waiting until harvest to see what price they will get for their harvest.
It is very risky indeed, but I can understand that farmers who have been burned before may be reluctant to sell forward again.
But in these uncertain times, when multiple factors are affecting the market, there’s no guarantee that prices won’t fall.
Quite a few farmers expect prices to remain high in 2022 but are concerned about a scenario of even higher input prices next year and a collapse in grain prices.
Most are talking about taking advantage of futures prices that will be available at planting and selling some of the crop to at least cover fertilizer and seed costs.
Rapeseed appears particularly attractive with forward prices of over €700/t for the 2023 harvest.
There are other options farmers can take to reduce costs and reduce risk, starting with crop choice.
Beans, oats and spring barley are cheaper to grow than winter wheat and winter barley.
Also, crops grown after cover crops typically have less disease pressure and require less nitrogen.
Organic fertilizers can also reduce the amount of artificial fertilizer needed, and a growing number of farmers are able to apply fertilizer to winter crops in spring to maximize their effect.
The choice of variety also plays a role in reducing costs: plants with good straw properties and a good disease profile are cheaper to grow.
For example, the Bennington winter wheat variety is susceptible to yellow rust, which can increase fungicide costs by €40-50/ha.
Cover crop growing is a great way to lock in nutrients in the soil left after harvest and helps improve soil structure – reducing the cost of next year’s spring crops.
The straw chopping system can return phosphorus and potassium to the soil, which in turn reduces fertilizer spending.
After that, once you’ve seeded a crop, there’s only so much you can do to reduce input before yield is affected. So plan early.
Another issue that came up at the meetings was the new nitrates directive (SI 113 of 2022 in case you want to look it up), which was signed in March. There are two new rules for tillers (Pages 20 & 23) that give cause for concern.
First, the obligation to cultivate all land after harvest that year. Farmers must cultivate the ground flat or sow a crop within seven days of baling the straw.
Where straw is chopped, shallow tillage or sowing must be resumed within seven days of harvest. In any case, cultivation or sowing must take place within 14 days of harvest.
The aim of this measure is to prevent the leaching of nitrates into the groundwater or the surface runoff of phosphorus into water bodies.
The second problem concerns the late harvested crops (e.g. beets, potatoes, corn) or late harvested summer cereal cropswhere there must be a minimum buffer of 6m to protect any crossing watercourses and avoid pollution.
While these new regulations add pressure on growers at a very busy time, failure to comply could put your Single Farm Payment at risk.
Shay Phelan is a Teagasc crop and potato specialist based in Oak Park, Co. Carlow
https://www.independent.ie/business/farming/tillage/shay-phelan-tips-on-forward-selling-and-other-ways-to-reduce-the-rising-risk-on-farms-41669437.html Shay Phelan: Tips on Forward Selling and Other Ways to Reduce Rising Risk on Farms