Over the past few months, ration prices have crept upwards as the cost of ingredients increased. Millers were able to hold prices to an extent over the summer months, as they used up supplies bought forward earlier in the year at lower cost.

However, with those supplies depleted, millers have had to implement a price rise, if they have not done so already.

The Irish Farmers Journal carried out a survey of ration prices around the country and the results are shown in Table 1. It is clear that there are significant differences in prices between similar ration types, with the highest-priced feeds not necessarily the highest quality.

In some cases, a high protein content is used to increase the profile of a feed. The advice is to weigh up deals on energy content, protein content and price. Ask what type of proteins are used in the feed, eg soya (a high-quality protein). Inclusion rates will dictate the cost.

Markets

Irish livestock ration prices are very much driven by international market forces. Domestic supplies only represent about one third of total usage in Irish feed mills.

Therefore, much of the cereals that make up the ingredients of our livestock feed rations are imported. That is why ration prices are at the mercy of global cereal price trends.

Over the summer months, cereal prices increased steadily. There are a number of reasons why cereal prices, and in turn ration prices, have been on the up.

Drought has been one of the main explanations. Since early summer, there was concern for global cereal supply, as the combination of high temperatures and low rainfall took over in European countries and further afield.

Because cereals are a commodity and are traded on the stock exchange, price fluctuations are often based on expectations of harvest yields of different cereal crops around the world, global demand for these cereals, potential barriers to trade and the political climate at a given time.

Chicago (US) grain prices for 2018 November wheat rose from $175/t in mid-January to $219/t in mid-August.

This increase was on the back of speculation that grain yields would be down, not only in Europe but also in the US. Other factors at play include EU tariffs on US maize imports. Although these imports are small, it still slows down trade, which has consequences.

The drought had a major impact on grass production at home, especially in the south and east. It also reduced domestic grain yields.

At the peak of the drought in July and August, feed mills in Ireland were at double the production they would normally see. This put major pressure on mills at the time.

With all these factors at play, domestic ration price increases were inevitable. Prices over the past number of months have increased by €5 to €40/t, with most millers increasing their ration price at this stage.

The good news for livestock farmers is that the price of grain has eased since the summer.

This is mainly because the maize harvest in the US is predicted to be better than expected, which is hoped will offset deficits elsewhere.

Most millers we talked to during the survey do not expect prices to increase further during the winter.

If grain prices continue to ease, this should, in time, be reflected in reduced ration prices. Many buy a proportion of their cereals now to hedge against possible future price hikes that may come down the line. This limits their exposure to further price increases, but can be detrimental in a falling market.

Bargaining

To keep costs down, always make sure to ring around to get a quote from different millers – this may also help when negotiating a price.

Cash will be king this winter. Millers are keen to accept cash in place of giving more credit. Many are already carrying unsustainable levels of debt since the summer.

Payment up front may lead to discounted prices of €5 to €10/t, depending on the supplier and circumstance. If using credit, try to keep the payback period as short as possible. An agreement of some sort should help reduce the interest bill and avoid possible confrontation with the miller.