A year like no other before

This annual look ahead into the world of crop production and crop protection has probably never been so perilous.

A huge hike in fertiliser prices, increased energy prices, higher machinery operating costs, the need for additional working capital, uncertain grain price signals and questions over the availability and cost of chemicals all add to the challenges for 2022. And these are before one considers the challenges posed by nature as it fights back with resistance against the intervention of farmers in the control of weeds, diseases and insects.

There are also the unfortunate consequences of the war in Ukraine and the challenges and implications it places on food security.

It has certainly woken the world up to a major negative side of globalisation.

Individuals and governments are beginning to realise the risks associated with depending on anyone else for essentials such as food and energy. Vulnerability on either will impact on the cost of food production.

Political rather than production policies

For decades, many factors have influenced the cost of food production and the value of products ex-farm gate. But these could be and were ignored by the powers that be across Europe because our EU political masters saw free trade as an opportunity rather than the partial liability which it is now proving to be.

In this regard, we hear talk of a need to look again at the policies which drive EU agriculture and policy in general. However, such a move will be resisted by those who know better, supposedly for the greater good. But that idealism falls flat on its face when people in Europe have to pay more to have food on their plates, but still oblivious to the fact that their affluence will see them fed while others will be forced to go hungry.

European agricultural policy may well appear to deliver self-sufficiency but the basics of this premise may need to change again.

The EU’s liberal trade policy has already caused the decimation of self-sufficiency in individual member states like ourselves.

However, the need to look again at what has happened should not disregard the environmental- and climate-based necessities of the future because many of these problems should never have been allowed to happen.

The optimisation rather than maximisation of food production needs to be seen as a better use of resources on which to build a more sustainable model into the future.

With life expectancy increasing and global population continuing to grow, is it right that our food production policy should be based on ideology? I say that as one who believes that healthy soils are the most essential ingredient in the production of healthy food but trading standards that are based on the physical appearance of our foods have been at least partly responsible for where food production systems have been driven.

Some want increased feed imports

It is important to realise that there are two sides to every story. As grain growers, we would want the EU to place far more value on the security of being self-sufficient in grains. But, of course, the EU is already more than self-sufficient overall, with higher exports than imports. And while we in Ireland want our native production to be recognised and valued within the food chain, there are others who would want the EU to tear down any remaining barriers to imports as a means of freeing up supply to counter the current availability concerns in the market.

This is agriculture – one man’s output is another man’s input.

Our Minister for Agriculture is attempting to put focus back on the need to produce more of our own grains but this is difficult to do. The recent announcement to support the ploughing up of grass has merit but many see it as offering nothing to the tillage-only farmer.

This is true, but the only means of increasing the area in tillage is to get access to grassland to get more acres into crop production.

Ruminants can survive on fodder – that is what they are designed to do – but monogastrics like pigs and poultry depend on the availability of concentrate feed.

Higher costs and expenditure

With the 2022 growing season upon us, the inevitability of escalating production costs has already bitten. Fertiliser was first, adding around €60/t for most growers, some lower because they bought earlier and some higher.

The economic response should be to reduce the overall spend and to minimise the least responsive portion of the nitrogen response pattern. This could also be useful as a way of reducing one’s overall exposure to the higher investment required this year.

Chemical costs will also see an increase but generally at much more modest levels. Like everything else currently, background costs are hitting all businesses including farming.

I am told that some specific products will carry a much higher cost this year, so it makes sense to check out the costs of individual products before committing to big orders. Most products have a reasonable alternative so it may be possible to avoid most or all of those high risers.

Diesel and metal costs are also much higher and they too will add to production costs per acre or per tonne. While diesel volatility may level off somewhat, it will be at a higher price level which will be reflected in the cost of doing work, transport and grain drying.

As well as input costs, we are also likely to see cost increases for essential services in farming which will further erode profit. Higher grain prices will not equal higher profits this year.

Grain prices

On the plus side, it looks like we are looking at higher output prices for grain produced this harvest. Markets have strengthened considerably on recent years, with dry prices at €300/t and higher, rather than >€200/t. A big part of this increase has arisen because of uncertainty regarding the tradable supply that may come from Ukraine because of the war.

Futures prices are currently very strong by historical standards so it is sensible to lock in a proportion of one’s grain as a forward sale. But caution is needed here because there is always the risk that we could see a low yield, poor-quality harvest that would not make the selling specs.

As things stand, there seems to be a low likelihood of a collapse in grain prices for harvest and they could rise further. However, not taking some level of forward cover at current price levels must be seen as a higher risk than taking the cover.

A rough estimate puts production cost up by €70/t to €80/t on last year. It is always sensible to take a little of a good price and if it is better tomorrow, take a little more. But never more than half your expected harvest volume.

Evolving policies

While higher costs and increased output prices are the most immediate consequences of the market disruption caused by the sanctions against Russia, energy and food security have gone back on the agenda in the EU.

Where these concerns take crop-related matters is anyone’s guess, but it is better to have them in the limelight than in the rear-view mirror. It may provide some level of rethink as EU policy pushes towards the stated targets in Farm to Fork and legislators set about upgrading the Sustainable Use of Pesticides Directive.

Regarding this latter legislative update, reports suggest that it was set to propose another hammer blow to EU producers. From the rumours that had been suggested, it seems that the 50% targeted reduction in pesticide usage might be very achievable based on the inevitable further loss of actives from the EU marketplace.

And still the issue of double standards rumbles on, with actives being banned in the EU for reasons more related to potential hazard rather than risk to health or environment.

The real niggle is that these same actives continue to be allowed on imported materials.

EU farmers have long argued, and rightly so, that a policy which bans the use of a product in the EU should equally ban the importation of feed materials that have any trace of these actives present. Current regulations governing trade allow such imports as long as the maximum residue limit (MRL) does not exceed the agreed international level.

Double standards for producers and importers

The reason given for this is that the imposition of a ban on the importation of products that contain any level of an active banned in the EU would contravene international trade agreements. This would inevitably result in trade disputes with all sorts of knock-on complications across other sectors.

However, it also shows the double standards operated by EU legislation which continues to pressurise its own producers through the loss of products which helped to keep costs down, while allowing imports of products treated with the same actives.

Agrochemical manufacturers are caught in the middle of this conundrum.

On the one hand, the removal of older actives which are now in the generic arena leaves the door wide open for price premiums for new and superior actives. However, the ever-increasing cost and difficulty of getting a new active to market makes the development of new solutions for the EU market less appealing. And the return from any investment can be threatened by the development of resistance due to the loss of other actives that could help protect it.

So can there be a solution? The answer could be “yes”, but it needs to be based on the fact that an active substance should only be banned and removed where there is genuine proof that it presents a real risk or danger to operators, consumers or the environment. And if this proof is robust, then that same active should be removed from the marketplace across the globe, solving the double standards issue.

This must be one of the areas to be addressed in any reassessment of policy decisions. Continuing down the road of disadvantaging internal producers for the prize of cheaper imports should now be seen for what it is. EU producers are not asking for products that pose a real risk anywhere along the supply chain, but they do want fair play and that has been lacking up to now.

Alongside these very real issues sit global warming and environmental measures which need to be addressed.

Again, most people have no issue with the fact that certain measures must be taken but to impose such measures on internal producers while allowing imports, regardless of production practices or origin, is only acting to increase dependence on imports while ignoring the potential benefits of self-sufficiency.

But not everyone sees it like this and some believe that the further freeing up of imports provides the solution.

It is inevitable that there are now people asking that all constraints on the importation of GM feeds into the EU be removed to help avoid a food/feed crisis. The irony is that this might be seen by some in the EU as a possible short-term solution.

Climate issues must also be considered in respect of the possibility of a warming climate and its implications for the development of new pests and diseases.

There can be little doubt but that warmer temperatures would favour most pest species and speed up the development of current and possibly less-common diseases.

Regardless of the implications of the next Sustainable Use of Pesticides Directive (SUD), we in the tillage sector must continue to find ways to decrease our dependence on chemicals for every crop problem – we need to wean ourselves off. But to do this, we need access to other tools which can be used to complement the jobs required of chemicals.

So we need access to gene editing to help reduce some of the need for chemicals, as well as more and better integrated pest management techniques (IPM) to guide the need for effective intervention with chemicals.

Solutions such as these are not instant. They require research and investment alongside an amount of scientific endeavour. So they do not and cannot provide an instant alternative to pesticide and fertiliser use to achieve the objectives set out in the Green Deal.

Technologies take time to develop but now we must wait and see if the longer-term objectives of the Commission will begin to reflect the need for food security, as well as the health and safety of its citizens.

Nature continues to be a major adversary with the continuing emergence of resistance in all our pesticide targets – weeds, diseases and insects.

This may be partly due to our high product usage but problems such as fungicide resistance in diseases also occur in other regions where there is much less intensive use of fungicides.

The story around resistance development in nature is real and it can only get worse as the toolbox narrows to very few families of actives.

This has been a major consequence of the continuing loss of actives but we must still strive to find ways to decrease our dependence on chemical inputs so as to enhance the sustainability of tillage production on this island.

While gene editing, IPM and other new technologies will help, there is also a need for healthy soils that grow healthier plants that can better withstand some of nature’s adversities.

We continue to hear about the appearance of disease mutations that increasingly challenge the ability of individual fungicide families to control them.

But it is also noteworthy that many of the mutations found in recent times appear to show incomplete cross resistance across other actives in a fungicide family.

It must also be said that some mutations discovered elsewhere, which showed very significant levels of resistance in labs, appear not to have proliferated in the natural environment and so seem to be contained by some other natural process, such as lack of fitness to infect or reproduce.

While this can be seen as good news, it is probably not the first time this has occurred in nature and it is no guarantee that a fit and highly resistant mutation will not emerge in the future, even in the most unexpected disease or pest.

Vigilance remains the best overall defence alongside every available IPM measure, gene-edited crops and all other technologies to help minimise the pressure on the pesticides we use to help stave off the selection for resistance.