How a switch to no-till can increase arable margins

Understanding the costs, both fixed and variable, of producing a tonne of any crop is the first step in finding ways to maintain profitability in a period of low prices.

This performance indicator is useful, both as an absolute measure (£/t) and relative to crop price (percentage of crop price).

Anthony Pope
Anthony Pole
Independent consultant

The graph below from the latest Savills Spotlight report shows variable and fixed costs, as a percentage of crop prices for conventional tillage.

The figures highlight that the fall in crop prices (table 2), in most cases, further squeezed net margins per tonne of crop produced.

See also: Many UK growers missing out on the benefits of zero tillage

Only winter oilseed rape, winter barley, spring barley and spring beans show their noses beyond the cost of production breakeven point (excluding subsidy), but can only realise profits of less than 20%.

Therefore, reducing costs of production and/or improving crop yields is necessary for enterprises to remain profitable without relying on subsidies in the coming season and beyond.

One way to cut costs is by reducing cultivations or better still, eliminating cultivations altogether by following conservation tillage.

Graph showing total costs as a proportion of crop price

Variable costs

Harper Adams University professor Dick Godwin, recently looked at the reduction in variable costs as experienced by five farmers in their conversion from conventional farming to conservation agriculture (tables 3 and 4).

These were outlined in his report Potential of No-Till Systems for Arable Farming, which he prepared for the Worshipful Company of farmers.

They found that costs of herbicides (glyphosate) and pesticides (against slugs and snails) may be slightly higher with conservation agriculture.

Interestingly, there is a great similarity in the positive responses despite the range of farms. They were located from Kent to Yorkshire, with soils ranging from gault clay to fen peats, with mean annual rainfalls from 600mm to 800mm and cropped areas from 400 to 1,250ha.

No-till advantages

  • 40% reduction in crop production costs/variable costs
  • Reduced machinery investment, running costs and fixed costs
  • Reduced labour costs – by 30-40%
  • Considerably reduced diesel consumption – by more than 50%
  • Small reduction in fertiliser use (particularly P and K) over time
  • Optimal timeliness of field operations, particularly drilling
  • Many other subsidiary benefits (see table 1)

Variable costs are a crucial benchmark and these can reasonably be reduced by 40% compared with conventional systems, in line with the findings in tables 3 and 4.

This would produce a lower cost of production breakeven line, above which most crops would now be making a worthwhile profit before subsidy. Some making nearly 40%.

Yield reductions can have a big influence on crop gross margins and, therefore, they need to be maintained to maximise returns.

However, yields can in some cases be reduced by 15% (table 5) during an initial transition phase of two to three years when moving to conservation agriculture. After this period, yields are comparable with conventional systems.

Fixed costs

Looking at fixed costs, changes attributable to no-till farming are more difficult to quantify.

Fixed costs are a significant production cost and represent 40% to 60% of crop price. Savills research shows that average fixed costs (as a proportion of total gross farm output) were broadly similar in harvest years 2013 and 2014.

With conservation agriculture, machinery needs and costs are very greatly reduced, as is the cost of labour. All the case study farmers reported a reduced investment in machinery (see table 4).

In summary, the figures show an opportunity to improve business performance, even bringing crops back into the black, by switching to no-till conservation agriculture.

Farmers adopting this approach have some big advantages over conventional farmers, valuable in periods of low prices.

Table 1: A comparison of tillage methods

Traditional tillage Min-till Conservation agriculture
Cultivation Disturbs the soil and leaves a bare surface Reduces the soil disturbance and keeps the soil covered Minimal soil disturbance and soil surface permanently covered
Erosion Wind and soil erosion: Maximum Wind and soil erosion: Reduced significantly Wind and soil erosion: The least of the three with stubble and crop residue to protect
Soil physical health The lowest of the three Significantly improved The best practice of the three
Compaction Used to reduce compaction but can also induce it by destroying biological pores Reduced tillage is used to reduce compaction, but may create a pan at 10cm Compaction can be a problem but use of mulch and promotion of biological tillage helps reduce this problem
Soil biological health The lowest of the three owing to frequent disturbance Moderately better soil biological health More diverse and healthy biological properties and soil biota populations
Water infiltration Lowest after soil pores clogged Good water infiltration Best water infiltration
Soil organic matter Oxidises soil organic matter and causes its loss Soil organic build-up possible in the surface layers Soil organic matter build-up in all layers much better than min till
Weeds Controls weeds and also causes more weed seeds to germinate Reduced tillage controls weeds and also exposes other weed seeds for germination Weeds are a problem especially in the early stages of adoption, but problems are reduced with time, and residues can help suppress weed growth
Soil temperature Surface soil temperature: More variable Surface soil temperature: Intermediate in variability Surface soil temperature: Moderated the most
Diesel use High Intermediate Much reduced
Crop production costs Highest Intermediate Lowest and much reduced
Timeliness Operations can be delayed Intermediate timeliness of operations Timeliness of operations more optimal
Yield Can be lower where planting delayed Yields same as traditional tillage Yields same as traditional tillage, but can be higher if planting done at optimum time
Source: A Pope

 

Table 2: Average crop prices (£/t)

2013 2014 % change 2015 % change
Winter Wheat £166 £132 -20.4% £115 -13%
Winter barley (feed) £149 £121 -19.0% £106 -12%
Spring barley (malting) £152 £144 -5.6% £120 -17%
Oilseed rape £330 £296 -10.2% £252 -15%
Spring beans £230 £220 -4.5% £150 -32%
Source: Savills

 

Table 3: Cost factors during conversion

Farmer Overall costs of production for CA vs other tillage Time taken for crop establishment Fuel consumption
1 25% lower costs 40 minutes/ha -33%
2 Establishment costs are reduced by 50% Subsoil 4ha/hour, drill 4ha/hour -33%
3 Approximate reduction of £160-£200/ha One drill pass only -54%
4 About £6.70/t cheaper compared with min-till 26.33 min/ha -73%
5 Approximately £45-£50/ha less 30-40ha/day Not quantified
Source: “Potential of No-Till Systems for Arable Farming” report

 

Table 4: Farmer experience of reduced machinery investment with CA

Farmer Has conservation agriculture allowed you to reduce your total investment in machinery?
1 Yes, massively.  A subsoiler is still required to repair any soil compaction
2 Yes
3 Yes
4 Yes.  £5,000/year
5 It has meant that we have not upgraded some of our other cultivation kit
Source: “Potential of No-Till Systems for Arable Farming” report

 

Table 5: Crop yields during conversion

Farmer Crop yields achieved conservation agriculture versus other tillage practices
1 Cereals: 11t/ha CA v 11.5t/ha min till for first wheat

Oilseeds: No difference – About 4.5t/ha

Spring beans: No difference – About 6t/ha

2 Cereals – Average to better

Oilseeds – Average to better

3 Crop yields in general reduce over the first 2-3 years, more so on heavy clay soils. Years 4-6 they return to normal levels. Now they are higher than they were before we started
4 Cereals slightly less

Oilseeds the same

Other peas: Improved

5 Cereals: No comparison as yet

2013 Spring rape: 3t/ha

2013 Spring beans: 4.2t/ha

2013 Linseed: CA exceeded the conventional rapid drilled by 25%, undoubtedly due to going into moisture and growing straight away, whereas conventional drilling tended to dry out a bit

Source: “Potential of No-Till Systems for Arable Farming” report

 


Anthony Pope has spent more than 40 years in farming, working in many countries, seeing first-hand the benefits of conservation agriculture