Tillage farmers are facing a potentially large decrease in margins for 2022 compared to 2021, according to Teagasc.

The anticipated decrease is due to increasing costs, especially in fertiliser prices, a return to normal yields and grain prices.

Over the past six months, fertiliser prices have continued to increase at alarming rates, largely driven by the continued rise in the cost of natural gas, which is a key input in the production of nitrogen fertilisers.

Costs of other major elements such as phosphorus and potassium have doubled in the past few months, with these increases expected to contribute to higher costs for 2022.

As fertilisers are one of the largest inputs to tillage crops, these huge cost increases will severely affect profit margins in 2022.

2022 v 2021

Teagasc budgets show that tillage margins in 2021 are well above the five year average. This is due to the effects of increased grain price and good yields, giving a gross margin in winter wheat of €1,302/ha and spring barley of €916/ha.

Comparing margins from 2021 to predicted margins in 2022, winter wheat margins (€554/ha) decrease by 57%, and spring barley (€444/ha) decreases by 52%.

The 2022 margins are based on average yields, September 2022 forward grain prices (a €30 per tonne drop compared to 2021) and an increase in fertiliser prices of 100% compared to 2021.

Other cost increases in direct inputs such as fuel and spare parts are not factored in here, but will also erode margins further.


Other crops, such as beans, a legume crop fixing its own nitrogen, are not as dependant on chemical fertiliser inputs and are not expected to see as big a decrease in margins next year, but margins are affected nonetheless.

The predicted margins in beans are €529/ha in 2022 compared to €702/ha in 2021, a decrease of 25% (2022 margins based on trend yields, grain price of €245/t and an increase in fertiliser prices of 100% compared to 2021).

Speaking on the figures, Michael Hennessy, head of crops knowledge transfer in Teagasc, said: “All avenues of protecting margins should be looked at on-farm, including forward selling grain, targeting fertiliser to minimise use and costing out fertiliser types to maximise money spent.”

He added: “Growers need to be very careful when committing to large outlays such as machinery purchases and especially land rental, as the rental demands from land owners will quickly erode margins in this high cost environment.”