How one farmer hopes to overcome poor crop prices in 2016

High cereal yields came to the rescue in 2015 for one Oxfordshire arable farmer, who is being forced to reconsider his strategy for 2016 in light of poor prices and rising costs.

“After a good harvest, all of our cereal yields were better than expected,” reports Wantage monitor farmer Julian Gold.

“It meant we made a profit on the farm overall, even though our growing costs had risen and grain prices were dropping.”

Mr Gold, who manages the 800ha Hendred Farm Partnership in Oxfordshire, refers to the high yields as his “get-out-of-jail card”.

See also: Trim grain growing costs to survive the profits squeeze

“It was looking dodgy back in the summer,” he admits. “The only disappointment this year was our spring beans, which made a £100/t loss after suffering with bruchid beetle.”

Actives

  • Atlantis – iodosulfuron + mesosulfuron
  • Avadex – tri-allate
  • Crystal – flufenacet + pendimethalin
  • Defy – prosulfocarb
  • Hurricane – diflufenican

The winter beans fared better and achieved 5t/ha, almost making a profit.

“Pulse crops do pose some questions for us. Should we be looking at them individually or as part of the whole farm system? Are we growing break crops at any cost?”

They do, however, make a contribution to the fixed costs, he says.

“Unfortunately, commodity prices don’t respect our costs of production.”

Top performer

Once again, the most profitable crop on the farm was winter barley, he reveals. “It’s consistently been our highest-margin crop. It had a cost of production of £104/t and we were able to sell some of it for £165/t.”

Being a member of the Molson Coors grower group has been a good move, he acknowledges.

“It allows me to pre-book a certain tonnage. This autumn, I have been able to commit one-third of our production at a price above the cost of production. Although it’s down on last year, it is likely to make the crop our top performer in 2016.”

Julian Gold holding a plant.

Julian Gold.

Whether that situation will continue remains to be seen, he says. “Those contracts may come to an end after next year, as Soufflet has now bought the UK malting activity of Molson Coors.”

Winter wheat yields averaged 11.6t/ha, meaning the cost of production was £102/t. To date, Mr Gold has sold just over one-third of the grain, starting at £130/t, but more recent transactions in September have been at a lower price of £110/t.

“There’s been a bit of a rally in the past few weeks, so the last deal was for £116.50/t for May/June. Now I have to decide whether to sell the rest – my aim is to make the business profitable, so the marketing strategy is to be safe and go for a small profit, rather than taking risks and ending up with a loss.”

OSR woes

Even the winter oilseed rape made a profit after it yielded 4.35t/ha.

“I managed to sell a small amount for £275/t including bonuses, so with a cost of production of £264/t, it came up trumps. The rest should come out at £285 all in, so it is in the black.”

That may not be the case in 2016, he accepts. “The risk-reward situation with oilseed rape isn’t looking good. My budget suggests it will cost me £300/t to grow this year and the new-crop price is below this level.”

As a result, the farm’s experiment with low-cost oilseed rape establishment will continue, although Mr Gold accepts he needs to find a consistent and reliable way of spraying out strips of the crop in December.

“We have looked at throwing on loads of home-saved seed and not spending any money in the autumn before we know that we have a crop.

“Avoiding all the front-end costs could save us a packet. If the crop survives the autumn pest and weed onslaught, we then spray out strips to get the required canopy size and plant population.”

There are difficulties with spraying out the strips, he acknowledges. “It may be that we have to invest in a second-hand sugar beet band sprayer to make the system work well.”

Knowing whether to plant crops if they are likely to make a loss is a problem shared by growers, accepts Mr Gold.

“Having the flexibility to suddenly change our plans has implications for labour and machinery. It may be that we just have to weather the bad years.”  

Hendred Farm Partnership: Harvest 2015 costs of production

Crop

Variable costs (£/ha)

Operations (£/ha)

Non-fieldwork plant and machinery (£/ha)

Share of overheads (£/ha)

Total cost (£/ha)

Yield (t/ha)

Cost (£/t)

Winter wheat

597

236

184

164

1181

11.6

102

Winter barley

501

237

184

164

1086

10.44

104

Winter OSR

559

240

184

164

1147

4.35

264

Winter beans

348

186

184

164

 882

5.0

176

Spring beans

391

182

184

164

 921

4.0

230

Spring barley

381

162

184

164

 891

8.5

105

Grass

180

 28

 –

164

 372

   

Cover crops

112

 79

 –

 –

 191

   

Crop-specific operations include all cultivations and operational costs, including combining, but excluding grain carting and outloading.


Herbicide costs

All the winter wheat, barley and oilseed rape for harvest 2016 is already drilled at Hendred Farm Partnership, reports Mr Gold.

“I’ve spent on the pre-emergence herbicides, using a Crystal/Defy/Hurricane mix costing £63/ha, and then following up with Avadex at an extra cost of £37/ha on the worst fields.

“So we are already up to £100/ha on the wheat across one-quarter of our acreage.”

He has opted to replace the post-emergence herbicide Atlantis with Avadex this year.

“Atlantis isn’t working anymore and I worry about the residues of spring-applied Atlantis potentially causing problems with the following rapeseed crop establishment, as well as selecting for resistant blackgrass. So the plan is that there won’t be any spring-applied Atlantis used on this farm again.”

Seed and fertiliser costs are lower than they were 12 months ago, he says. “Otherwise, my budgeted costs for all the crops are very similar to last year.”