Sound future for main cereal break
THERE IS little doubt that winter oilseed rape is a UK crop with a good future, but not necessarily every season.
That is the view of specialists from banking to agronomy. Their main proviso is that oilseed rape should be treated more as a cash earner in its own right than as a cereal break. That, in turn, means establishing it better and being prepared to use the best husbandry tools available to maximise its yield.
The starting point must be to understand the true cost of producing the crop excluding single farm payments, says HSBC”s head of agriculture Steve Ellwood. “Successful businesses are those that lose least when prices are under pressure.”
With an oilseed rape yield of 3.7t/ha (30cwt/acre), the average farm needs a price of 200/t to break even, says Mr Ellwood. But HBSC figures show the best growers who get higher yields at lower costs, especially for rent and finance, require only 130/t to do so.
Knowing the break-even figure allows them to sell when the price in a volatile market offers an acceptable margin. Many more could have used futures to lock into high prices earlier last year, he believes.
“I expect the end of direct support in the EU will increase that volatility and farmers will have to look more carefully at protecting prices and profits.”
Whether OSR, or any other crop, will be worth growing in any season depends on how adaptable the business is, Mr Ellwood suggests.
That means being ready to change cropping patterns and strategies regularly, and to look hard at labour and machinery needs and rents.
“Will there be a need to set rents on an annual basis reflecting the market prices of the year? It is already beginning to happen with some contract arrangements.
“Will it be possible to create longer-term agreements with a flexible rent formula?
“Is it possible that landlords and tenants might share the risk and reward of farming?
“The most successful businesses in future will be those that are aware of the market-place and know how they can adapt to suit it. Individual businesses” attitudes will be really crucial.”
Under revised arrangements, it might even be sensible to reduce output in years when prospects appear less rosy, he suggests.
“That is going to require a very different attitude to that presently around.”
