Machinery depreciation and running costs can account for as much as 60% of production costs on an arable farm, according to benchmarking analysis across AHDB’s monitor farm network.
Depreciation alone makes up around one-third of production costs. Repairs account for another 8% to 15%, with fuel around 13%, according to AHDB’s Harry Henderson, a technical specialist working with cereal growers across the UK.
During the meeting, benchmarking results for machinery running costs were detailed for Carsehall Farm, run by monitor farmer Alister Craig alongside his father Robert and uncle Thomas.
The farm is practically self-sufficient in terms of machinery, owning all aspects of kit required for cereals.
Barring a forager, the farm is almost self-sufficient in silage and grassland equipment for its 240-cow dairy herd.
Crop establishment costs
Establishment costs on 85ha of arable crops totalled £150/ha for 2022. This covers 71 hours of ploughing with a five furrow reversible machine and tractor.
A shallow ploughing method is used to a maximum depth of five inches, with 1.2ha of ground covered hourly.
Fuel consumed is around 15l/hour, costing £13/hour based on a litre of red diesel averaging 87p/l (excluding VAT) for the farm in 2022.
Factoring in the cost of owning and running machinery, ploughing costs £91/hour or approximately £76/ha (£31/ac) last year.
Around 25 hours were accrued with a tractor and 4m drill to sow out the 85ha of winter crops, giving an hourly work rate of 3.4ha or 1.4ac/hour.
Diesel consumed is estimated at 33l/hour, costing just shy of £30/hour. This rises to £161/hour when the cost of the tractor and drill are included. This equates to £47/ha or £19/ac.
Additional costs include four hours with a telehandler (£30/hour) for loading the drill with seed and there were 10 hours spent on land included at a cost of remedial work (£107/hour).
All field applications come to £250/ha. The main jobs involved include 71 hours spent spreading slurry to stubbles using a 12m dribble bar.
Again, this can be broken down to a fuel cost of £8.10/hour for 9l of diesel consumed, which multiplies up to £45/hour.
Around 69 hours of spraying was recorded, which includes filling the tank, road travelling time and wash-out rather than solely measuring hours spent applying the chemical.
A trailed 4,000l sprayer is used and doubles up to apply liquid fertiliser. The sprayer is on 36m tramlines and covers 8ha/hour, using 15l/hour of fuel costing £13.
Total spraying costs amount to £63/hour, or almost £8/ha, when full operating and machinery costs are included. Fertiliser spreading works out at the same rate.
Peak workload occurs from July to September, with 600 hours per labour unit recorded during this period. May to June averages 350 hours per labour unit.
The farm runs a combine with a 25ft header and covers 1.6ha/hour, which includes headland turning and grain unloading time.
Fuel consumption averages 25l/hour, costing £22.50. This would increase significantly in a situation where straw is being chopped, as the combine travels at a slower rate.
Factoring in the cost of the combine, harvesting costs come to £119/ha or £48/ac, which according to group members, is in line with most contractor charges in the region.
However, given the short windows of opportunity for harvesting grain during most NI summers, the consensus among group members was that owning a combine was an acceptable cost for the business to be able to work once conditions permitted.
Grain carting is carried out with two trailers, both fixed to a designated tractor. Fuel consumption by the tractors is 18l/hour and includes time spent hauling on main roads, which is sizeable.
Depending on trailer weight, fuel use is costing between £108 and £127/hour for each grain cart, with an additional £27/hour in fuel costs for a telehandler pushing tipped grain into storage.
According to Harry Henderson, the top 25% of cereal farmers benchmarked are keeping diesel use below 100l/ha to operate their own machinery for cropping.
As technology progresses and engines become more efficient, Henderson said there are farmers reducing fuel use towards 75l/ha.
On average, area combined per day is 70ha, with the typical farm harvesting 545ha of grain. A simple rule of thumb for gauging the size of combine to suit the farm is 1m in header width for every 10ha of cropping area.
On the Limavady monitor farm, the combine is cutting 14ha for every 1m width in the combine header.
The impact of fertiliser prices will result in costs of production rising by an estimated 32% in 2023, according to AHDB economist Julie Clark.
This follows a 15% increase in production costs in 2022, and in both scenarios, the outlined increases apply to the farmers in the middle 50% of the Farmbench programme.
“Fertiliser has already been purchased for the 2023 harvest and will filter through to production costs for a full cropping year.
“Our analysis is based on 4,000 farms using the Farmbench service with over 11,500 combinable crops.
“Within our forecast, we have allowed for a 10% reduction in fertiliser use due to the higher cost, so it is probably realistic to expect yields to be lower as a consequence.
“If grain prices stayed static at current levels, break-even yields for winter wheat would need to increase from 5.6t/ha in 2022 to 7.9t/ha this year,” said Clark.
While costs did rise by an estimated 15% in 2022, so did grain prices. Clark outlined that net profits on winter wheat price increased by 80% last year, but will fall by around 60% to 65% in 2023.
“With winter wheat, our data shows the middle 50% of farms saw cost of production rising from £1,258/ha in 2021 to £1,484/ha last year. Net margin subsequently rose from £516 to £939/ha.
“In 2023, our forecasts point to production costs of £2,049/ha, with net margin falling to £337/ha on winter wheat,” she said.
Clark also outlined economic modelling for spring barley and winter oilseed rape. In both instances, forecasts point to a loss-making scenario based on projected input costs for the average farm in 2023.