Cereal growers should recalculate their gross margins before making any winter cropping decisions.

That was the message from TAG at Cereals 2008, who pointed out that higher nitrogen costs made some of the alternatives to winter wheat look far more attractive for 2009.

“Growers have to balance the likely gross margin with the relative crop risk,” said Dave Robinson. “This risk includes the chance of not making the premium due to grain quality or lodging issues, as well as less reliability of yield.”

Second wheats are disadvantaged by higher nitrogen costs, he added. “In contrast, malting barley is favoured by a better grain price and lower nitrogen use.”

Dave Robinson

Higher N prices may mean second wheats are no longer so attractive, says TAG’s Dave Robinson

The two highest potential gross margins of £1051/ha and £1072/ha came from spring and winter malting barley, said Mr Robinson. “It’s also the crop with the highest risk, as the malting varieties tend to produce lower yields, have weaker straw and need to achieve the premium for this level of gross margin.”

Another high risk crop was winter oats, he noted. “But it’s a good alternative to a second wheat and is often more profitable than winter barley. Oats are a good break where grass weeds aren’t too serious.”

In the TAG plots, winter oats for feed came out with a gross margin of £742/ha while a milling variety made £766/ha.

Two-row winter barley carries the least risk, he said. “It also has a workload advantage, allowing you to spread the peaks. But it won’t get you as high a gross margin as with a malting variety.”

He sounded a note of caution about pulses for 2009. “There’s a danger you could get trampled in the rush – oversupply is a real risk.”

Mr Robinson also pointed out that the gross margin forecasts were for just one year. “We’re seeing far greater volatility, both in commodity and input prices. But the alternatives to wheat are looking better and more numerous than they were just 12 months ago.”

TAG gross margins for 2009

 

Yield t/ha

Variable costs £/ha

Gross margin £/ha

Second wheat – feed

8.50

511

637

Winter barley – two-row feed

8.84

416

716

Winter barley – six-row feed

9.26

382

803

Winter barley – malting

8.50

416

1,072

Winter oats – feed

6.40

314

742

Winter oats – milling

8.28

310

766

Spring barley – malting

7.49

297

1051

Spring barley – feed

7.63

320

657

Spring wheat – milling

7.18

392

742