Teagasc launched its eProfit Monitor Analysis for Tillage Farms 2017 just prior to Christmas. The report showed an average net margin figure of €343/ha, which was three times higher than in 2016. The top one-third of farms were virtually double this value, with an average net margin of €661/ha.
The information used in the eProfit Monitor analysis are the actual numbers belonging to each of the 342 participating farms, which accounted for 25,154ha of crops in 2017. The majority of the area farmed was in some combination of winter and spring cereals (Figure 1) and the majority of growers also belonged in this same category (Figure 2).
The farm types were categorised as one of seven different systems based on the major activity on the farm. However, growers in either winter or spring cereals could have a small amount of a different crop on the farm.
Costs and margins
Average cost and margin details from the different farming systems are shown in Table 1. This shows that spring cereal producer category had the least amount of rented land. The margins calculated are based on crop sales only (grain, straw, roots etc) and do not include basic payments to enable comparisons across farms.
It is interesting to note that systems which included root crops, like beet and potatoes, did not show massively higher variable cost levels. But it is also interesting to note that net margins were noticeably improved where these crops were included with cereals. This was also the case for the category ‘cereals and other’.
Scale has long been a driver of the policy decisions on many cereal farms. The expectation is that fixed costs decrease as the farm size increases. However, this analysis found that when farms are categorised by size there was a relatively similar level of profitability between the largest and smallest groups (see Table 2).
While the larger growers did have lower fixed costs, this was offset by the much higher land lease costs (3.8 times higher than the smaller farm group), reflecting the higher proportion of rented land on these large farms. Land rental accounted for 22% of the total farm area in the smaller holdings compared to 73% in the larger holdings.
While most farms in the analysis were below 100ha in size (Table 2) it appears that it was those with 101-200ha that showed the highest net margin. While land cost is higher (because of the high proportion of rented land) it is likely that other specific variable costs are higher also as a result of the bigger units and the large capacity of modern machines.
The top one-third
As well as the variation between farms there was also significant variability in net margin between crops. Table 3 shows the average performance found for individuals crops alongside the net margin achieved by the top one-third of producers.
The gap is quite significant, with €150/ha being the smallest difference found for spring beans, winter and spring oats. Other crops showed even greater benefit for the top one-third of producers, with spring oilseed rape and fodder beet giving the biggest benefit.
Higher yield was an important component of the higher net margins but it was not the only factor. Table 3 also outlines, in summary format, the main elements that contributed to the higher net margins achieved by the top one-third of producers for each crop.
Most crops performed better in 2017 than they did in 2016 but oilseed rape had a much superior year, helped by higher yield and price. But fodder beet remains the star performer for those growers who are locked in to a market and a price.
Land cost
In the different analyses of crop systems and individual crops, the cost used for land access is the average across the entire tillage area (owned and leased land). This cost can also be spread over the leased land only. Table 4 shows the average price paid per hectare for the actual land leased in the different scenarios.
The table shows that the cost of land access has increased since 2016, on average, but the top and middle one-third of performers have managed to decrease their cost slightly while the bottom one-third experienced a very significant cost increase in 2017, which is part of the reason for margin erosion.
Main points
Crop net margins were generally higher in 2017 than in 2016.While larger farm areas tended to have lower fixed costs, net margin was hit in farms above 201ha, due mainly to higher land access costs.The top one-third of performers produced between €150 and €500/ha higher net margin for each of the crops analysed.Land rental cost has increased compared to 2016.Yield is a significant driver of margin.
Teagasc launched its eProfit Monitor Analysis for Tillage Farms 2017 just prior to Christmas. The report showed an average net margin figure of €343/ha, which was three times higher than in 2016. The top one-third of farms were virtually double this value, with an average net margin of €661/ha.
The information used in the eProfit Monitor analysis are the actual numbers belonging to each of the 342 participating farms, which accounted for 25,154ha of crops in 2017. The majority of the area farmed was in some combination of winter and spring cereals (Figure 1) and the majority of growers also belonged in this same category (Figure 2).
The farm types were categorised as one of seven different systems based on the major activity on the farm. However, growers in either winter or spring cereals could have a small amount of a different crop on the farm.
Costs and margins
Average cost and margin details from the different farming systems are shown in Table 1. This shows that spring cereal producer category had the least amount of rented land. The margins calculated are based on crop sales only (grain, straw, roots etc) and do not include basic payments to enable comparisons across farms.
It is interesting to note that systems which included root crops, like beet and potatoes, did not show massively higher variable cost levels. But it is also interesting to note that net margins were noticeably improved where these crops were included with cereals. This was also the case for the category ‘cereals and other’.
Scale has long been a driver of the policy decisions on many cereal farms. The expectation is that fixed costs decrease as the farm size increases. However, this analysis found that when farms are categorised by size there was a relatively similar level of profitability between the largest and smallest groups (see Table 2).
While the larger growers did have lower fixed costs, this was offset by the much higher land lease costs (3.8 times higher than the smaller farm group), reflecting the higher proportion of rented land on these large farms. Land rental accounted for 22% of the total farm area in the smaller holdings compared to 73% in the larger holdings.
While most farms in the analysis were below 100ha in size (Table 2) it appears that it was those with 101-200ha that showed the highest net margin. While land cost is higher (because of the high proportion of rented land) it is likely that other specific variable costs are higher also as a result of the bigger units and the large capacity of modern machines.
The top one-third
As well as the variation between farms there was also significant variability in net margin between crops. Table 3 shows the average performance found for individuals crops alongside the net margin achieved by the top one-third of producers.
The gap is quite significant, with €150/ha being the smallest difference found for spring beans, winter and spring oats. Other crops showed even greater benefit for the top one-third of producers, with spring oilseed rape and fodder beet giving the biggest benefit.
Higher yield was an important component of the higher net margins but it was not the only factor. Table 3 also outlines, in summary format, the main elements that contributed to the higher net margins achieved by the top one-third of producers for each crop.
Most crops performed better in 2017 than they did in 2016 but oilseed rape had a much superior year, helped by higher yield and price. But fodder beet remains the star performer for those growers who are locked in to a market and a price.
Land cost
In the different analyses of crop systems and individual crops, the cost used for land access is the average across the entire tillage area (owned and leased land). This cost can also be spread over the leased land only. Table 4 shows the average price paid per hectare for the actual land leased in the different scenarios.
The table shows that the cost of land access has increased since 2016, on average, but the top and middle one-third of performers have managed to decrease their cost slightly while the bottom one-third experienced a very significant cost increase in 2017, which is part of the reason for margin erosion.
Main points
Crop net margins were generally higher in 2017 than in 2016.While larger farm areas tended to have lower fixed costs, net margin was hit in farms above 201ha, due mainly to higher land access costs.The top one-third of performers produced between €150 and €500/ha higher net margin for each of the crops analysed.Land rental cost has increased compared to 2016.Yield is a significant driver of margin. 
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