By Robert Harris
CONVERTING conventional oilseed rape into an industrial crop to fulfil a farms 10% set-aside requirement could raise profits on that area by almost £300/ha.
The switched crop will avoid hefty scalebacks on oilseed area payments, but, more importantly, frees land for more profitable spring cropping, says Mike Bullen of FPDSavills Research.
Growing crops can be switched for the first time this season after a relaxation of the rules by the ministry. Industrial crops can now be registered with the Intervention Board by 31 December, rather than by sowing date.
“The 1999 UK oilseed area payment is likely to be scaled back by as much as 60%,” says Mr Bullen. This stems from cumulative penalties, mainly caused by growers exceeding the maximum guaranteed area.
If realised, oilseed area aid payments would fall by £250/ha. But industrial crops attract set-aside payment, worth £306/ha. Even allowing for a £25/t cut in seed value, the gross margin for the industrial crop is almost £50/ha higher (see table).
The biggest bonus comes from extra spring cropping. In this case, spring barley produces a gross margin of £614/ha, well above that for fallow set-aside. Even after allowing for extra fixed costs of £74/ha, the industrial OSR/spring barley option produces an extra margin of £296/ha.
A surge in switching would reduce scalebacks, Mr Bullen adds. This would increase aid payment on remaining conventional area. “But our analysis still shows it will remain marginally more profitable to switch to industrial oilseeds up to the set-aside commitment.”
|Benefits of switching to industrial OSR (£/ha)|
|Conventional OSR||Fallow set-aside||Industrial OSR||Spring barley|
|Total gross margin||756||1126|
|Extra fixed costs||(74)|
|Total gross margin||756||1052|