With an average net margin of €106/ha recorded, the margins in tillage production in 2016 were just as tight as they were one year later.

However, as you would expect, when the eProfit Monitor (ePM) figures for 339 growers were examined in more detail, large variations were found to exist between the net margins of each crop type.

The messages are striking, as is the range of crop performances.

The performance of these farmers for the 2016 crop year was recently realised by Teagasc in the annual eProfit Monitor analysis report.

The farmers in question are categorised as specialist tillage farmers and between them cover some 26,000ha, almost one tenth of Ireland’s tillage area.

The report excludes direct payments (with the exception of coupled protein payments) and refers only to the tillage enterprise of any farm.

Further analysis is also carried out by comparing the performance of the top one-third of growers with that of the average grower’s figures.

This article looks exclusively at the average performance from the different cereal crops and further reports will look at other crops, the impact of land rental and the range of performance within individual crops, etc.

Highest- and lowest-performing growers

Those who were categorised as predominately winter cereal growers had the highest net margin of €246/ha when compared with the other growers. This figure includes the cost of leasing land.

Interestingly, this group of growers had the lowest land lease costs when compared with the average of €108/ha and this may have had some bearing on the margins found.

Those who were growing both winter and spring cereals were placed fifth on the list in terms of net margin, coming in at €103/ha. However, it was those who grew predominately spring cereals who once again fared worst, with net margins of -€102/ha.

According to the report, this is as a result of lower output and similar land lease, fixed and machinery costs compared with other more profitable categories.

Crop performance

The individual performance of each of the crops was then analysed and makes for an interesting comparison (see Table 1). The cost of own labour is excluded from these figures. The overall difference in net margins between the highest and lowest performing crops was €166/ha. Winter wheat delivered a net margin of €263/ha, the highest of all cereal crops, but, as one would expect, it also had the highest inputs.

This margin nearly doubles (€526) when looking at the top one-third of producers only.

These producers achieved 0.6t/ha more than the average yield and they spent €68/ha less on variable costs.

Winter oats performed well, delivering the second-highest cereal margin of €235/ha, but, once again, this figure doubled (€505/ha) when comparing it with the top one-third of growers.

The results from the analysis of barley crops proved interesting. Despite the challenging year which saw quality issues arise due to skinning, spring malting barley delivered the best margins at €223/ha.

This was closely followed by winter barley, which delivered a margin of €211/ha. There was virtually no difference between the cost of producing one tonne of grain for both crops.

Feed spring barley ranked the lowest of the three, delivering a net margin of just €143/ha, €80 less than malting barley.

However, once again the top one-third of producers significantly outperformed the average numbers.

The remaining two cereals on the list, spring wheat and spring oats, delivered the lowest returns at just €108 and €97/ha respectively.

There is potential to increase these margins by between €117 and €190/ha, just as the top one-third of producers have done.

Fixed costs

Cereal farmers generally expect fixed costs to decrease as farm size increases. Table 2 outlines the analysis of farms in the ePM, categorising them by size.

The table shows a positive trend in terms of higher profitability by larger growers. The increase in profitability by these growers is in part driven by lower fixed costs (excluding land lease and machinery).

Rented land

Of the 339 farmers in this report, 157 (46%) had taken land (conacre or leased land). The average land price paid by these farmers was €108/ha.

Despite having the lowest overall profitability, the spring cereal group of farmers paid more on average for leased land.

However, it would be no surprise that over 70% of farmers who grew potatoes had leased land and they paid more than double the price for this land compared with the average cereal grower.