The Teagasc report, Crop Costs and Returns 2018, was recently published and serves as a guide to crop margins for the coming year.
In the annual publication, key variable costs such as inputs, machinery, transport and interest, along with projected harvest prices, are used to calculate expected gross margins (see Tables 1 and 2).
These figures exclude certain fixed costs such as land and overheads, as well as basic payment and greening payments.
The cost of inputs such as fertiliser, pesticides and other inputs, as well as machinery costs, were compiled in December 2017 through surveying various suppliers and contractors.
The input costs are generally quoted as recommended retail prices but actual prices which the farmer receives may be lower or higher in specific instances.
It is important to note that the publication is intended to be used as a guideline only. Growers must also take into account rotation, land suitability, machinery availability, workload, risk level and the knowledge of crop agronomy when deciding to grow any crop.
Main trends
Estimated gross margins across all cereal crops at specific target yields are higher when compared with 2017’s figures. This is primarily driven by higher harvest prices of between €10/t to €15/t when compared to the values used last year.
Prices for non-cereal crops remain unchanged but gross margins at target yields are expected to rise for main crop potatoes, peas, beans and winter oilseed rape (WOSR) but fall for beet, maize, and spring oilseed rape.
Input costs are expected to rise by an average of 3.6% across all crops. This is primarily driven by an 8% rise in fertiliser costs (10% in cereals and 6% in non-cereal crops) and a slight increase in fungicide costs.
The average machinery costs on the other hand are down by 2.2% compared with 2017.
Transport costs have largely remained unchanged with the exception of maize and fodder beet whose figures have been adjusted to reflect higher delivery costs.
Crop performance
The report details the cost of production per tonne and the target yields for each crop.
This article looks at the figures for key crops, based on their target yields, including the baled value of straw.
With a very achievable target yield of 11 t/ha and at a cost of €115/t to produce, winter wheat is expected to make a gross margin of €475/ha (see Table 2).
Spring malting barley is expected to be the second most profitable cereal crop at a target yield of 7.5t/ac.
The price of malting barley is based on €168/t which delivers a gross margin of €422/ha.
Based on a target yield of 9t/ha, feed winter barley is expected to make a gross margin of €384/ha. This factors in a price of €140/t for grain, as well as €140/ac for straw. This makes it the third most profitable cereal in the report.
Spring feed barley on the other hand is expected to produce a gross margin of €280/ha with a target yield of 8t/ha.
Winter oats is expected to gross €360/ha based on a target yield of 9t/ha while spring oats is expected to gross €220/ha with a target yield of 7.5t/ac.
The key points from the non-cereal crop margins is the impact of transport costs on the profitability of beet and maize. The cost of transport was increased by €290/ha and €230/ha for beet and maize, respectively.
These figures decrease gross margins to €496/ha for a 70t beet crop and €502/ha for a 50t crop of maize.
WOSR is projected to return a gross margin of €584/ha with a target yield of 4.5t/ha while spring rape is forecast to gross €299 on a target yield of 3t/ha. Both of these projections are based on a price of €380/t.
Forward-selling grain
The option to forward-sell grain is available to many farmers through various merchants and companies.
Forward-selling a proportion of a crop at different times of the year presents an opportunity to manage the risk of grain price volatility.
However, in order to forward-sell, growers need to know the cost of producing grain on their farm. This is where the estimated production costs found in this report may be of particular benefit to some growers.
Teagasc is keen to stress, however, that producers should calculate the costs per tonne of each crop over the three most recent harvests on their own farm before making any decision to forward-sell. This reflects the variation in production costs between producers.
Gross margins on most crops are expected to rise in 2018 in comparison with previous years. Input costs are expected to rise by an average of 3.8%, which is driven mostly by fertiliser prices.Knowing the cost of producing grain on a farm is vital when making decisions to forward-sell.
The Teagasc report, Crop Costs and Returns 2018, was recently published and serves as a guide to crop margins for the coming year.
In the annual publication, key variable costs such as inputs, machinery, transport and interest, along with projected harvest prices, are used to calculate expected gross margins (see Tables 1 and 2).
These figures exclude certain fixed costs such as land and overheads, as well as basic payment and greening payments.
The cost of inputs such as fertiliser, pesticides and other inputs, as well as machinery costs, were compiled in December 2017 through surveying various suppliers and contractors.
The input costs are generally quoted as recommended retail prices but actual prices which the farmer receives may be lower or higher in specific instances.
It is important to note that the publication is intended to be used as a guideline only. Growers must also take into account rotation, land suitability, machinery availability, workload, risk level and the knowledge of crop agronomy when deciding to grow any crop.
Main trends
Estimated gross margins across all cereal crops at specific target yields are higher when compared with 2017’s figures. This is primarily driven by higher harvest prices of between €10/t to €15/t when compared to the values used last year.
Prices for non-cereal crops remain unchanged but gross margins at target yields are expected to rise for main crop potatoes, peas, beans and winter oilseed rape (WOSR) but fall for beet, maize, and spring oilseed rape.
Input costs are expected to rise by an average of 3.6% across all crops. This is primarily driven by an 8% rise in fertiliser costs (10% in cereals and 6% in non-cereal crops) and a slight increase in fungicide costs.
The average machinery costs on the other hand are down by 2.2% compared with 2017.
Transport costs have largely remained unchanged with the exception of maize and fodder beet whose figures have been adjusted to reflect higher delivery costs.
Crop performance
The report details the cost of production per tonne and the target yields for each crop.
This article looks at the figures for key crops, based on their target yields, including the baled value of straw.
With a very achievable target yield of 11 t/ha and at a cost of €115/t to produce, winter wheat is expected to make a gross margin of €475/ha (see Table 2).
Spring malting barley is expected to be the second most profitable cereal crop at a target yield of 7.5t/ac.
The price of malting barley is based on €168/t which delivers a gross margin of €422/ha.
Based on a target yield of 9t/ha, feed winter barley is expected to make a gross margin of €384/ha. This factors in a price of €140/t for grain, as well as €140/ac for straw. This makes it the third most profitable cereal in the report.
Spring feed barley on the other hand is expected to produce a gross margin of €280/ha with a target yield of 8t/ha.
Winter oats is expected to gross €360/ha based on a target yield of 9t/ha while spring oats is expected to gross €220/ha with a target yield of 7.5t/ac.
The key points from the non-cereal crop margins is the impact of transport costs on the profitability of beet and maize. The cost of transport was increased by €290/ha and €230/ha for beet and maize, respectively.
These figures decrease gross margins to €496/ha for a 70t beet crop and €502/ha for a 50t crop of maize.
WOSR is projected to return a gross margin of €584/ha with a target yield of 4.5t/ha while spring rape is forecast to gross €299 on a target yield of 3t/ha. Both of these projections are based on a price of €380/t.
Forward-selling grain
The option to forward-sell grain is available to many farmers through various merchants and companies.
Forward-selling a proportion of a crop at different times of the year presents an opportunity to manage the risk of grain price volatility.
However, in order to forward-sell, growers need to know the cost of producing grain on their farm. This is where the estimated production costs found in this report may be of particular benefit to some growers.
Teagasc is keen to stress, however, that producers should calculate the costs per tonne of each crop over the three most recent harvests on their own farm before making any decision to forward-sell. This reflects the variation in production costs between producers.
Gross margins on most crops are expected to rise in 2018 in comparison with previous years. Input costs are expected to rise by an average of 3.8%, which is driven mostly by fertiliser prices.Knowing the cost of producing grain on a farm is vital when making decisions to forward-sell. 
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