11 December 1998

Agenda 2000 kind to oilseeds

AGENDA2000

IMPLICATIONS

&#8226 Breakcrop margin must = 2nd wheat

&#8226 Osr best bet at current prices

&#8226 Max guaranteed area regs must go

Gross margins forecasts under single area-aid rate

Crop Yield (t/ha) GM £ ha GM £ ha

*Price Nov 98 Nov 99

2nd Wht 7.5 586 638

W Osr 3.5 583 507

4.25 680 639

(*Nov 98 Wht @ £75/t, osr @ £160/t, Nov 99 Wht @ £82/t, osr @ £145/t)

OILSEED rape has a bright future under Agenda 2000 proposals, at current prices at least, claims one consultancy firm. However, other break crops look marginal.

"It will continue to be a major player," says Masstock farm business consultant, James More.

Breakcrop margins must equal or beat second wheat and barley to justify their inclusion for harvest 2000 onwards, he says. For many only winter oilseed rape will do this under the single cereal and oilseed area-aid rate plans.

No linseed will be grown as gross margins are set to plummet to £370/ha (£150/acre), and pulses will be less profitable despite a slightly higher area aid payment, he forecasts. At current prices of £75/t for wheat and £160/t for oilseed rape, a 3.5t/ha (28cwt/acre) crop of oilseed rape would be needed to make the break worthwhile.

However, if cereal markets rally and oilseeds fall, then rape yields have to increase substantially to justify their place, he notes.

Forward prices for Nov 1999, applied to Nov 2000, would mean just that. At £82/t and £145/t for wheat and oilseed rape respectively, a 4.25t/ha (34cwt/acre) crop would be needed.

Crucial to these calculations is the end of the Blair House agreement. Provided the US government consents to this, area limits and consequent payment penalties in the event of an area overshoot would be abolished. That looks more likely as recent payments by the US government to their own farmers has weakened their negotiating position, notes Mr More.

Spread workload and reduced marketing risk are further reasons for including oilseed rape in the rotation. "With oilseed rape the grower has another egg to sell, in a different basket."

TABLE

Gross margins forecasts under single area-aid rate

Crop Yield (t/ha) GM/ha GM/ha

*Price Nov 98 Nov 99

2nd Wht 7.5 586 638

W.Osr 3.5 583 507

4.25 680 639

(*Nov 98 Wht @ £75/t, osr @ £160/t, Nov 99 Wht @ £82/t, osr @ £145/t)

BOX:

Agenda 2000 implications

Breakcrop margin must = 2nd Wheat

Osr best bet at current prices

Max guaranteed areas regs have to go

Will oilseed rape stand up financially on your farm under Agenda 2000 proposals? For most it will, reckons Masstock farm business consultant James More.