Which spring crops to grow in 2016 for highest return?

The spring cropping area in 2016 is likely to be the highest for a number of years – so what are the best choices for farmers given last year’s big malting barley crop and disappointing pulse prices?

Given this year’s low cereal prices, the league table of crop gross margins has changed markedly – in December 2014 pulses looked like they would top the table, but now they have dropped down a peg or two. And with some bean yields failing to impress, will farmers give them another chance?

According to the Andersons Centre’s early bird survey, farmers planted slightly less winter wheat this autumn than last year, with slightly more spring wheat leading to a static total wheat area of 1.83m ha.

Winter barley plantings are down by about 4%, year-on-year, at 424,000ha, with oats up 13% to 148,000ha.

The spring barley area is forecast to increase by 10% to 727,000ha – the largest area since 2009 aside from 2013, which was driven by poor weather conditions in autumn 2012.

“Despite excellent drilling conditions this autumn, the main reason for the increase in spring barley is likely to be the gradual shift towards more spring cropping in an attempt to manage the grass weed burden,” says farm business consultant Joe Scarratt.

As a result of the neonicotinoid ban, the oilseed rape area could be lowest since 2009, at 565,000ha – a 14% drop on the 2015 harvest.

“Pest challenges remain and many contributors, particularly in the South East, have written off large areas of the crop already,” says Mr Scarratt. “However, the extent of the reduction is slightly surprising given that the price prospects for alternative break crops (pulses) have crashed since spring 2015.”

The main reason behind lower pulse prices was the sharp increase in area last year – but according to the survey, farmers intend to plant yet more in spring 2016, at 242,000ha – a 15% increase, year-on-year and the largest area since 2004.

“While the agronomic benefits of pulses are favourable, a significant increase is slightly surprising given that changes in the economic prospects for peas and beans have reduced their attractiveness considerably compared to autumn 2015,” says Mr Scarratt. “Clearly, the contribution of pulses towards a farm’s Ecological Focus Area (EFA) requirement under greening is an important consideration for many.”

Fallow land is likely to increase by 2%, to 197,000ha, with the area of other crops like potatoes, sugar beet, forage crops and vegetables up 6% to 364,000ha. “Contributors reported an increasing amount of maize and temporary grass on arable land, which is mainly destined for anaerobic digestion plants.”

Gross margins

Based on forward prices in November, Graham Redman, author of the John Nix Pocketbook, anticipates that spring malting barley will top the gross margin table in 2016, at £522/ha. That is based on an average yield of 5.45t/ha and a price of £151/t. Spring wheat is likely to come in second, at £498/ha, with marrowfat peas pegged third at £451/ha.

Red wheat, spring oats and blue peas follow, at £439-£446/ha, with spring beans at £429/ha. “The top seven gross margins are all within £100/ha of each other,” says Mr Redman. “Clearly £100/ha is very important, especially this year, but remember that gross margins will all vary according to farm and location. They will not all be in this order for each farm.”

Bringing up the rear are spring linseed and spring rape, at predicted gross margins of £294/ha and £285/ha, respectively.

However, it’s important to bear in mind that some crops won’t be sold until 2017. “There is ample time for crop prices to change dramatically between now and then,” says Mr Redman.

He based his calculations on comparable input costs to last season, with some inflationary increases but reduced fertiliser costs. “Yields are average to good, but not record breaking in this table, so aspire and work to achieve higher.”

Although non-gross margin costs have not been included, farmers should be aware of them when making cropping decisions, says Mr Redman. “Considerations include the nitrogen fixing value of the pulses, the take-all break in non-cereals and the extended cultivation and harvest period for spring crops.”

A recent study by the Andersons Centre revealed that farmers are failing to make the most of the nitrogen fixing value of pulses, with most applying more fertiliser to wheat crops after beans than those following oilseed rape.

“In 2013 (according to Procam), the average crop of wheat after beans received 210kg N/ha, whereas the average crop of wheat after oilseed rape received only 200kg N/ha bagged nitrogen,” says the report.

Although the amount of nitrogen fixed by different pulses does vary, taking an average figure of 50kg/ha, farmers should be able to reduce nitrogen applications to the following crop by the same amount – adding about £38/ha to their gross margin. Instead, they’re actually increasing them by 10kg/ha.

“The loss is therefore 60kg N/ha,” says the report. “The current price of bagged nitrogen fertiliser (ammonium nitrate at 34.5% nitrogen) is £264/t (based on the ABC book 2015) making 60kg/ha of unnecessary nitrogen application worth £45.91/ha. Spread across the entire UK pulse area of 176,000 hectares in 2014, this comes to a financial cost to the industry of £8.1m.”

In addition, yield improvements after pulses tend to be higher than the equivalent amount of nitrogen fixed, suggesting there are other gains to be made, says Mr Redman.

There are, of course, other considerations to take into account when choosing a spring crop. “Spring crops are increasingly popular, largely because of the ability to manage persistent grassweeds in them and the added crop for greening requirements,” he adds.

“Some spring varieties can be drilled very early, blurring the distinction between spring and winter crops. In addition, costs of production are decreased so cash flow is less of an issue, although it’s important to think about the overall profitability more.”

Niche options

When it comes to profitability, there is potential to make more money from niche crops – although naturally there is a more limited market for them.

According to Nigel Poundbury, seeds and marketing manager at Premium Crops, most niche spring crops are budgeted to produce a gross margin of between £500/ha and £600/ha – although that is based on reasonably good yields rather than Mr Redman’s assumption of average yields.

“The one crop that’s really creating a stir at the moment for us is high Omega 3 linseed for animal feed. We have a contract for that at £375/t, which gives a gross margin of £550/ha if you can get a yield of 2t/ha,” he says. “Where every other crop has dropped a lot in price over the past couple of years, linseed has only come down a little.”

Naked oats are commanding £160-£170/t, which – despite having around a 20% yield disadvantage to conventional spring oats – could produce a gross margin of £550-£575/ha at 4.5-5t/ha, says Mr Poundbury.

One of the lesser-grown crops which can produce a very high gross margin is borage, he adds. “Yields get better with experience – it does require some judgement over harvest timing, and you need a swather and pick-up trailer, but long-term growers can get 450-500kg/ha at £2,500/t.” Adding a couple of beehives to the field will also help boost yields.

Ahiflower produced a gross margin of £600-£700/ha last year, with average yields of about 800kg/ha, says Mr Poundbury. “However, the contract acreage is relatively limited, although it’s expanding slowly.”

Lupins were a new addition to the Premium Crops offering last year, and look very attractive due to the greening rules and nitrogen fixing action. “It’s a different option to peas and beans but you don’t need any specialist harvesting equipment.”

Millet and canary seed are other alternatives, with gross margins around £450-£500/t, he adds. “Millet has a very short growing season, and both can be drilled quite late which is beneficial if you have a blackgrass problem. You can’t use a lot of herbicide but with a short growing season the input costs are relatively low.”

Most niche crops are relatively straightforward to grow, although agronomic advice is essential, says Mr Poundbury. “All spring crops are very dependant on the weather, so get the seed early so you can drill as soon as conditions are right – but don’t rush it, wait for the right time.”

 

Early bird survey (EBS) estimates of UK crop areas for harvest 2016

Thousand hectares

Defra June Survey 2015

EBS forecast harvest 2016

Change (%)

All wheat

1,833

1,825

0

Winter barley

442

424

-4

Spring barley

658

727

10

Oats

131

148

13

Other cereals

36

63

75

Oilseed rape

654

565

-14

Other oilseeds

18

21

16

Pulses

211

242

15

Arable fallow

193

197

2

Other crops on arable land*

344

364

6

Total

4,520

4,532

  • Sugar beet, potatoes, maize, vegetables, roots, other stock feed
  • Source: Defra/The Andersons Centre

 

Spring crop gross margins compared for 2016

 

Spring wheat

spring (malting) barley

Spring Oats

Spring rape

Spring linseed

Spring beans

Blue peas

Marrowfat peas

Red wheat

Price

£150.00

£151.00

£125.00

£280.00

£302.00

£185.00

£190.00

£250.00

£185.00

Average Yield

5.75

5.45

5.50

2.00

1.75

3.70

3.75

3.40

5.00

Average Output

863

823

688

560

529

685

713

850

925

Variables

                 

Seed

75

62

64

49

90

96

88

182

90

Fertiliser

149

99

92

85

81

39

40

36

179

Sprays

140

140

88

141

64

120

146

181

210

Total Variables

364

301

244

275

235

255

274

399

479

Gross Margin 

498

522

443

285

294

429

439

451

446

Rank combinables

2

1

5

9

8

7

6

3

4

 

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