With arable crop profits set to decline, farmers must consider 2009 land use options carefully, warns Brown & Co agricultural business consultant Charles Whitaker.
While this season’s crops were largely being grown with inputs and operating costs before ag-inflation, escalating operating and variable costs would make certain crops very expensive to grow, he said.
At Cereals 2008 the firm forecast surpluses for wheat, OSR and beet production would be very close to cost of production before allowing for the single far payment.
“It is vital arable farmers look at net returns given volatility in the market and increased costs,” said Mr Whitaker.
“Costs are spiralling while the market is showing signs of cooling. While the forward wheat price hit £190/t in early 2008, it’s now fallen back to around £130/t.
“Meanwhile input costs are going through the roof – fertiliser and fuel costs have tripled from 2007 to 2009.”
“Consider different land use options and what they each deliver. Look carefully at pricing options for 09 and understand net returns.
“Pulses and malting barley may be worth another look on certain soil types and on many farms sugar beet doesn’t appear to be delivering any more margin than cereals and OSR.”