FARMER FOCUS: Set to make a loss on crops this season
For farmers who are producing grains on rented farms, as in my case, the prospect for this season are looking poor.
A combination of late planting (due to wet weather), expensive rents, tax retentions, and drought during last January and into February, has cut estimated yields, and the net margin will in many cases be a loss.
For example, this year I increased my area by renting an additional 65ha paying 1.6t/ha (soya) as rent in advance around the Bigand area. Estimating a soya bean price of US$330/t (£218), I have to get close to 3t/ha just to break even, but that performance will be difficult to achieve this year.
Considering that many of the first soya bean crops yields will be in the range of 2.6t/ha, this will generate losses of US$100/ha (£66) in the case of rented land.
In maize crops, with an estimated US$185/t (£122), after all input and operating costs the yield must be 8t/ha to breakeven. If we only achieve 7t/ha, we will make a loss of US$185/ha.
The above calculations have been made with good prices at harvest, although the situation may worsen if the price falls during harvest.
The official estimates of the national soya bean have not yet been announced, but are predicted to be well below the estimated figures at the beginning of the planting.
In short, until the national soya bean production is known, producers like myself will not take out any trading positions on covering forward prices. On the other hand, while crop prices are good, and with the prospect of higher prices in 2013, storing the crop in silo bags on the field could, I hope, create some additional value from the stored crop.
Federico Rolle farms 2,250ha of rented arable land in the Pampa area of Argentina. He grows soya beans, sorghum, maize and wheat using no-till techniques and GM crops. He has a part-time role helping Brown & Co in the region.
