Agenda 2000 forces a cost rethink for cereals

21 July 2000

Agenda 2000 forces a cost rethink for cereals

How are French arable

farmers coping with falling

subsidies and poor world

crop prices? Charles Abel

reports from France

FRENCH arable farmers are struggling to restructure to cope with the fast changing profitability of cereal farming under Agenda 2000.

"Savings could be possible in mechanisation costs, but the ways are not easy," admits Valerie Leveau, economics expert with the French Technical Institute for Cereals and Forages (ITCF) at Boigneville, in the Paris basin to the south-west of the capital.

Milling wheats in the area average 8t/ha and feed types 9t/ha. Further north, between Paris and the English Channel in Picardie, breadmaking wheats routinely yield 8-9t/ha and feed wheats 8-10t/ha. In the Paris basin, machinery depreciation, fuel, financing and repairs typically amount to £180-200/ha. "Savings are possible, but only if farmers can farm more land or pool their labour and equipment," says Ms Leveau.

Some large farms are down to £150/ha and a few £110/ha. But the typical farm size is 120ha (300 acres). Even in the most intensive regions of Picardie, Champagne and Marne farms rarely exceed 200ha (500 acres), she says.

Although French farmers have long had a reputation for co-operation, few go as far as selling existing machines and investing in a pool of larger, more efficient machinery to cut per hectare costs.

There are some examples, such as in Picardie where seven farms of 80-300ha pooled resources and now run one machinery fleet for the entire 1200ha (3000 acres). "The trend is not rapid, but it is developing."

Existing machinery sharing associations which offer tax savings for sharing individual machines slow the transition. Furthermore, farmers are reluctant to lose their individual identities and it is difficult to form a joint contracting organisation in France to service individual farms.

Extra labour is costed separately, many 100ha farms using none. But a 200ha farm is likely to employ one man, costing £15,000 a year. "It is a big area for saving, by sharing labour between farms," says Ms Leveau. "But it seems hard to organise."

Other overheads typically total £200/ha, including £80/ha in Beauce for rent on most medium soils.

"Farmers are still making money. But it is becoming increasingly difficult with Agenda 2000s reduced world prices. Modulation will mean farmers with 100% combinable crops will face a big cut in incomes," Ms Leveau concludes. &#42

French co-operation may not be as widespread at farm level as some may think, says Valerie Leveau, economic expert at the ITCF, near Paris.

French wheat costings


8t/ha at £65/t 520

Area aid 220

Total output 740

Variable costs 200

Machinery 200

Rent, labour, etc 200

Total costs 600

Margin 140

Typical variable costs

Variable costs typically total £180-£200/ha, with few price cuts this season. Unlike in the UK, pesticide prices have not fallen. "Compared with last year prices are the same, or slightly higher due to the pesticide tax."

Rates of use continue to fall and there is also more care with buying. "Farmers now compare prices between co-ops and merchants. Even if they do not change their buyer they know what they should be paying."

Trust deals offer end of season discounts on the entire spend rather than by product which hinders comparisons. But the new Agrifirst web-site is aiding price transparency, she says.

Seed cost is typically £30-£40/ha, with over 60% of farmers saving their own in some areas. But the practise is declining as new varieties offer benefits and hybrid types rule out home saving. Great attention is being paid to seed rate to cut cost and boost crop performance.

Throughout France milling wheat production is rising to meet export demand and secure a premium over low intervention prices.

Nitrogen prices are up more than 20%, product priced at £60-70/t last December selling at £90/t this March.

See more