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eProfit Monitor Analysis

Tillage Farms 2016

CropsEnvironment& Land UseProgramme

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E-Profit Monitor Analysis | 2016

Contents

Foreword 2Overallperformance 3Rentedland 6ComparisonofeProfitMonitortotheNationalFarm

Survey(NFS)data 8Analysisofcrops 9WinterWheat 10SpringWheat 12SpringFeedBarley 14SpringMaltingBarley 16WinterBarley 18AnalysisofBarleyCrops(Average) 20AnalysisofBarleyCrops(Top1/3) 21WinterOats 22SpringOats 24WinterOilseedRape 26SpringOilseedRape 28SpringBeans 30Beet(Fodder) 32BreakCropscompared(Average) 34BreakCropscompared(Top1/3) 35AllCrops(Average) 36AllCrops(top1/3) 37MachineryAnalysis 38ResultsfromtheMachineryCostsCalculator2016 40

2


ForewordThe Teagasc eProfit Monitor (ePM) is an online financial analysis toolavailable to all Teagasc clients. Tillage farmers work with their TeagascTillageAdvisertogatherthedatarequired.Oncethedataisentered,arangeofreportsforeachenterprise(tillagecrops,drystock,dairy)ortheoverallfarmcanbeproduced.IfthefarmerhascarriedoutanePManalysisonayearlybasis,multipleyearreportstrackingperformanceoveranumberofyearscanbegenerated.Inaddition,ifthefarmerisamemberofadiscussiongroup,agroupreportcanbeproducedallowingeachindividualfarmertobenchmarkhisperformancewithothergroupmembers.Thispurposeofthis publication is to provide a range of benchmarks for both individualfarmers and farmer groups. The analyses in this publication are basedon data provided by Teagasc Tillage farmer clients relating to the 2016productionyearandenteredontotheePMsystempriorto9thSeptember2017.Arangeoftablesareprovidedwithasummaryofthekeyfiguresincludedinthemaintablesandamoredetailedbreakdownofcostscontainedinthelatertables.Where‘Top1/3’resultsarepresented,thedatasetwasinitiallyrankedonthebasisofGrossMarginperhectare.TheGrossMarginreferredtointhispublicationreferstothetillageenterpriseonlyandnotthewholefarm.Otherenterprisesonthefarmmaygeneratesomeadditionalprofitforthefarmbusiness.InadditionBasicFarmPayments,other thanDirectpayments(Proteinpayment),areexcludedfromthisanalysis.Finally,IwouldliketoacknowledgetheworkofallTeagascTillageAdvisersinpromoting,completingandusingePMandtotillagefarmersforprovidingthedatarequiredforanalysis.Withouttheirsupport,thispublicationwouldnotbepossible.IwouldalsoliketoacknowledgetheworkofShayPhelanandKevinConnollyinextractingthedatanecessaryforthispublication.

Michael Hennessy–––––––––––––––––––––––––––––––Michael Hennessy,Head of Crops Knowledge Transfer, Teagasc

�


Overallperformance

TheePMisfilledoutbyfarmers inconjunctionwiththeiradvisor.Allofthe farmers are self-selecting with the majority actively participating inDiscussion Groups and could be classified as progressive farmers. 339growers successfully completed the e-PM for the production year 2016.Alloftheparticipantswereallocatedtobroadfarmingtypecategoriesasfollows:

Table1:Categoriesoffarmsandfarmedarea

Theadvisorcategorisesthefarmerdependingonthepredominanceofthecropmixonthefarm.Forafarmer,tobecategorisedasaCerealsandBeetfarmer,thefarmershouldhaveatfocusonbeetproductionyearonyear.Similarly a farmer categorised as Winter Cereal farmer will have a focusonwintercerealsyearonyearwiththemajorityofthecropsaresownarewintercereals.The Winter and Spring category of farmer were by far the largest groupwith201farmers.Comparisonsofgroupswithlessthan10farmersshouldbetreatedwithcaution.

Tillage - Production Type No. of Farmers Total Land area in group (hectares)

1.WinterCereals 20 12422.SpringCereals 34 10583.W.+S.Cereals 201 171424.Cereals+Beet 24 20815.Cereals+Potatoes 14 8076.Cereals+Other 44 40097.Crops+Contractor 2 104Total ��9 26442

4


Theoverallperformancesofthesegroupsareasfollows:

Table2:Returnsfromfarmercategories

* AverageMachinerycostsincludecontractor,machineryrunning,machineryleasesandfinanceandmachinerydepreciation,**AveragecostofLandLease(includesconacreandshort&longtermLeasedLand)incurred

dividedoverownedandleasedland

ü TheePMaverageNetMarginforallfarmersanalysedis€106/ha

ThiscomparedtotheTeagascNFSfigureforNetMarginforthecerealenterpriseontheaverageperformingspecialisttillagefarmwas-€98/hain2016(Dillonetal,20171).TheequivalentTeagasc,NFSfigureforthetop1/3offarmerswas€293perhectare.

ü Farmers categorised as predominately winter cereal growers were themost profitable (€246/ha) by €140/ha compared to the average. Thisgrouphadthelowestaveragelandleasedcosts

ü SpringCerealgrowershadthelowestreturns(-€102/ha)reflectingthereducedoutputhoweverthegroupstillretainsimilarmachinery,fixedandlandleasecosts

Average (per ha) Average (€/ha)

Tillage - Production Total Leased Gross Variable Machinery Gross Land Fixed NetType Tillage Land Output Costs Costs* Margin Lease Costs/ha Margin area area costs** (inc DP)

1.WinterCereals 1242 16 1458 560 409 489 35 208 246

2.SpringCereals 1058 6 1112 526 370 216 112 207 -102

3.W.+S.Cereals 17142 32 1308 574 336 399 101 195 103

4.Cereals+Beet 2081 29 1468 589 381 498 147 177 174

5.Cereals+Potatoes 807 21 3122 1255 1131 736 228 339 170

6.Cereals+Other 4009 31 1334 529 318 487 106 217 164

7.Crops+Contractor 104 34 1334 517 261 556 203 318 34

Average 26442 28 1�87 591 �77 419 108 206 106

1 Teagasc National farm Survey Results 2016, https://www.teagasc.ie/media/website/publications/2017/NFS-2016-Final-Report.pdf

5


ü Cerealfarmerswitheitherbeetorpotatoeswereat least€64/hamoreprofitablethanaveragewhiletheypaidmoreforrentedlandandincurredhighermachinerycosts

ü Cereal farmers expect fixed costs to decrease as farm size increases.Analysis of farms in the ePM categorising the farms by size shows aslightly positive trend to higher profitability by larger growers. Theincreaseinprofitabilitybythesegrowersisinpartdrivenbylowerfixedcosts*Furtheranalysisofthemachinerycostsareoutlinedlaterinthedocument.

*FixedcostsexcludeLandLeaseandMachinery

Farm Size (ha) Fixed Costs €/ha* Net Margin €/ha0-100 213 147101-200 151 179201+ 178 182

6


Rentedland

Of the 339 farmers 157 had (46%) had leased land (conacre or leasedland).

Table3:Farmercategories–utilisationofrentedland

*Leasedlandonly(ownedlandnotincluded),onlyfromfarmswithLandLease,**NetMarginpluslandrental

ü TheWinterCerealgrouphadthelowestnumberoffarmerswithleasedlandat15%butitrepresented25%ofthetotalarea.Whereas all other farmer groups farmed over 35% of leased land. TheCereals+BeetandtheCereals+Potatoesgrouphadover58%ofleasedland.

ü Despite having the lowest overall profitability the Spring Cerealgroup of farmers paid more on average for leased land (€18/ha)thanW+SCereals

ü Over70%offarmerswithpotatoeshadleasedland,accountingfor37%ofthetotallandfarmed,butpaidmorethan200%moreforleasedlandthantheaveragecerealgrower(group1,2,3)

Tillage - Production No. of No. Farmers Average Area of Average Average AverageType Farmers Growers with area of leased cost of Gross Net Margin with leased Leased land Leased Margin excluding leased land land (% of land /ha land lease land (% total) (ha) total) /ha* /ha**

1.WinterCereals 20 3 15% 16 25% 370 489 301

2.SpringCereals 34 13 38% 6 20% 390 216 99

3.W.+S.Cereals 201 94 47% 32 37% 372 399 254

4.Cereals+Beet 24 14 58% 29 33% 434 498 341

5.Cereals+Potatoes 14 10 71% 21 37% 775 736 424

6.Cereals+Other 44 21 48% 31 34% 380 487 301

7.Crops+Contractor 2 2 100% 34 66% 306 556 372

Average ��9 157 28

7


• Farmers classified as spring cereal are the group with the lowestprofitability per hectare (€99/ha) when land lease is excluded,which is over 2.6 times lower than the other cereal only basedgroups(group1,3)

ü With the exception of Group 2 and 5, there was a positivedifferentialbetweenGrossMarginandLandLeasewiththesurpluscontributingtotheFixedCostsonthesefarms.

ü InGroup2andGroup5(SpringCerealsandCerealsandPotatoes)theaverageGrossMarginwaslessthanthecostsof leasedland.Growersshouldcarefullyassesstheirmarginsbeforecommittingto Leased Land to ensure it is adding to the profitability of thefarm.

8


ComparisonofeProfitMonitortotheNationalFarmSurvey(NFS)data

TeagascproducesananalysisoftillagecostsonanannualbasisusingboththeeProfitMonitor(ePM)andtheNationalFarmSurvey(NFS).Thesere-sultstendtovarysomewhat,whichcanbethesourceofsomeconfusion.TheePMtypicallyreportslowercostsofproductionandhigherprofits.TheNationalFarmSurvey(NFS)involvesthecollectionofdataonanannualbasisfromarandom,nationallyrepresentativesampleofapproximately900farms(ofwhichabout75areclassedasspecialisttillagefarmers).TheNFSisamemberofthepan-EUFarmAccountancyDataNetwork(FADN)whichusesaharmonisedsystemtocollectnationalstatisticsonfarmingacrossEurope.DatavalidationisbytheTeagascdatarecorderwithreferencetofinancialdocuments.TheTeagasceProfitMonitor (ePM) isafinancialbenchmarkingtool thatisavailabletoallTeagascclientsviatheTeagascadvisororcanbeaccessedonline. Data (both technical and financial) are provided by the farmerthroughthecompletionofanInputSheetandcanbeentereddirectlybythefarmeror(asismorelikely)byhis/herTeagascAdviser.Farmersvolunteerare encouraged by the adviser to complete the benchmarking analysisandfarmersareencouragedtorepeattheanalysisoveranumberofyearstoestablishtrendsonthe farm.Theresultsgeneratedarenotnationallyrepresentativeasthefarmsincludedintheannualdatasetareself-selectinganddonotproportionallyrepresenttheentirefarmingpopulation.Whiletherearesomedifferencesinthecostheadingsusedandthecalculationofdepreciation,theresultsgeneratedforanindividualcerealfarmerwillbesimilarforbothanalyses.Thissuggeststhatthemethodologyemployedbybothsystemsissimilarandthatmethodologicaldifferencesdonotaccountforthedifferingresultsfromthetwosystems.Giventherelativelysmalldifferencesinthemethodologiesofthetwosystems,itismostlikelythatthedifferenceintheresultsisduetosampleissues.

9


Analysisofcrops

The following section compares the main tillage crops across all farmcategories.ComparisonsaremadebetweentheAverageofthegroupandtheTop 1/�ofgrowersinthegroup.Forthepurposesofcomparisonthefollowingisincludedineachcategory.

Table4:Explanationofterms

* MachineryCostsaretreatedasavariablecost(StrictlyspeakingthesecostsareFixedCosts)tohelpfarmerscomparecoststotheTeagascCostsandReturnswhichispublishedeachyear

Fixed costs (including Machinery costs but not Contractor Costs) areautomatically calculated by the ePM software based on the relativeproportionofgrossoutputforeachcropcomparedtothetotaloutputforallcropsinthetillageenterprisei.e.winterwheathasahigheroutputthanspringbarleythereforeitwillattractmorefixedcoststhanspringbarleyThe information from Table 5 onwards outlines the Output and Costsassociatedwiththemajorcropsgrown.Thetablesoutlinethemajorcostandkeyfiguresforeachcrop.Comparisonsarepossiblebetweentheaverageofthegroupandthetoponethirdoffarmersinthegroup.FarmersarerankedbasedontheGrossMarginofeachfarmercomparedtotheGrossMarginforallotherfarmers.Figuresmaynotmatchexactlyduetorounding.

Term IncludedGrossoutput Sales of Grain and Straw (includes all moisture and related

bonuses)MaterialCosts Seed,Fertiliser,Agrochemicals,etcMachineryCosts Machinery Costs*(Repairs, diesel, depreciation, leases, HP

interest)+contractorchargesOtherVariableCosts LeviesandTransportGrossMargin GrossOutputminus(MaterialCosts+MachineryCosts+other

VariableCosts)FixedCosts Land Lease, light, heat, telephone, professional fees, land

maintenance,etc.NetMargin GrossMarginminusFixedCostsNetMargin(incDP) NetMarginincludingDirectPayments(ProteinPaymentsnot

BasicPaymentScheme)

10


WinterWheat

Table5:WinterWheatReturns

*Costpertonexcludingstraw

ü Averageyieldsare0.6t/ha(6%)abovetheCSOnationalaverage,with the top 1/3 of farmers producing 1.2t/ha (12%) above theCSOnationalaverage

ü The top farms grew more area and produced 0.6t/ha more yieldthantheePMaveragewhichdeliveredahigherGrossOutputof€199/haor11.7%higherthantheaverage

Top v Average top 1/� AveragePhysicalTotalNo.hectares 4295

No.OfFarms 166 55

TillageAdj.ha 26 33 +7

Yieldt/ha 10.3 10.9 +0.59

FinancialCropSales€/tonne €148 €154 +6

Gross Output /ha € 1,698 € 1,897 + 199ofwhichisstraw/ha €163 €212 +49

MaterialCosts/ha €699 €665 -34

TotalMachineryCosts/ha €349 €326 -23

ofwhicharecontractor/ha €120 €40 -80

OtherVariableCosts/ha €19 €8 -11

Gross Margin / ha € 6�0 € 898 + 268TotalF.Costs/ha €367 €386 +19

Net Margin/ha € 26� € 512 + 249Key FiguresTotalCosts€/ton* €139 €127 -12

Av.LandLeaseCosts/ha €119 €117 -2

11


ü Despiteachievingahigheryieldthetopgroupspent€68/halessonvariablecostscomparedtotheaverage

ü Fixedcostsare5%higheronthetopgroupcomparedtoaverage

ü TheNetMarginofthetop1/3was€249/ha(94%)higherthantheaveragegroup

€-

€100

€200

€300

€400

€500

€600

Average top 1/3

€/ha

Av. Net MarginWinter Wheat

Av. Variable Costs Crop:-Winter Wheat

1% 1% 1%

4%5%

26%

13%

24%

25%

Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

12


SpringWheat

Table6:SpringWheatReturns


ü Averageyieldsare0.2t/ha(2.5%)abovetheCSOnationalaverage,withthetop1/3offarmersproducing0.7t/ha(9%)abovetheCSOnationalaverage

ü The top group produced 0.43t/ha (5%) more yield and €134/haincreasedgrossoutputthantheaverageontheePM


No.OfFarms 40 13


Yieldt/ha 8.2 8.7 +0.43


Gross Output /ha € 1,�50 € 1,485 + 1�4ofwhichisstraw/ha €144 €134 -9





Gross Margin / ha € 468 € 697 + 229TotalF.Costs/ha €359 €398 +39

Net Margin/ha € 108 € 298 + 190Key FiguresTotalCosts€/ton* €151 €137 -14


1�


ü Thetop1/3groupincurredlowermaterialcostof€26/hacomparedto the averagewhich contributed to a higher Gross Margin of€229/ha

ü Fixedcostswerehigherinthetopgroupbutthenetmarginofthegroupwas€190/ha(175%)morethantheaveragegroup

€-

€50

€100

€150

€200

€250

€300

€350

Average top 1/3

€/ha

Av. Net Margin Crop:-Spring Wheat

7%

29%

9%

27%

21%

Av. Variable Costs Crop:-Spring Wheat

1% 1% 1%

4%Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

14


SpringFeedBarley

Table7:SpringBarleyReturns


ü Average yields are 0.2t/ha (3%) above the CSO national average, withthetop1/3offarmersproducing0.5t/ha(7%)abovetheCSOnationalaverage

ü Thetopfarmsgrewmoreareaandproduced0.26t/hamoreyieldandhadahigherGrossOutputof€95perhectareor7%higher thantheePMaverage


No.OfFarms 240 80


Yieldt/ha 7.5 7.7 +0.26


Gross Output /ha € 1,2�6 € 1,��2 + 95ofwhichisstraw/ha €182 €202 +21





Gross Margin / ha € 45� € 599 + 145TotalF.Costs/ha €311 €339 +28

Net Margin/ha € 14� € 260 + 117Key FiguresTotalCosts€/ton* €146 €139 -8

Av.LandLeaseCosts/ha €151 €173 +22

15


ü Despite achieving a higher yield the top group spent €18/ha less ofmaterial costs and €29/ha less on machinery costs compared to theaverage

ü Fixed costs are 10.5% higher on the top group compared to average(reflectinghigheroutput)

ü NetMarginsinthetopgroupare81%higherthantheaveragereflectingthehigheroutputandlowercosts

29%

30% 9%

5%

9%

16%

€ -

€50

€100

€150

€200

€250

€300

Average top 1/3

€/h

a

Av. Net Margin Crop:-Spring Feed Barley

Av. Variable Costs Crop:-Spring Feed Barley 2016

Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

1% 1% 0%

16


SpringMaltingBarley

Table8:SpringMaltingbarleyReturns


ü Average yields are 0.5t/ha (6%) above the CSO national average, withthetop1/3offarmersproducing0.9/ha(12%)abovetheCSOnationalaverage

ü Thetopfarmsgrewmoreareaandproduced0.37t/ha(4%)moreyieldthantheePMaverage


No.OfFarms 77 26


Yieldt/ha 7.8 8.2 +0.37


Gross Output /ha € 1,�88 € 1,492 + 104ofwhichisstraw/ha €171 €174 +2





Gross Margin / ha € 559 € 72� + 164TotalF.Costs/ha €336 €358 +22

Net Margin/ha € 22� € �65 + 142Key FiguresTotalCosts€/ton* €149 €138 -11

Av.LanLeaseCosts/ha €146 €189 +43

17


ü The Gross Output of the top group was €104/ha higher than average,resultinginaGrossMarginof€164/hamorethantheaverage

ü Fixedcostswere6%lowerinthetopgroupcomparedtoaverage

ü NetMarginswere€142(63%)higherinthetop1/3groupcomparedtotheaverage

Average top 1/3

€/h

a

Av. Net Margin Crop:-Spring Malt Barley

Av. Variable Costs Crop:-Spring Malt Barley 2016

Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

2% 1% 0%

29%

28%

9%

15%

11%

5%

€-

€50

€100

€150

€200

€250

€300

€350

€400

18


WinterBarley

Table9:WinterBarleyReturns


ü Averageyieldsare0.2t/ha(2%)abovetheCSOnationalaverage,withthetop1/3offarmersproducing0.6t/ha(7%)abovetheCSOnationalaverage

ü Thetopfarmsgrewmoreareaandproduced0.35t/hamoreyieldresultinginahighergrossoutputof€115/ha(8%higher)comparedtotheePMaveragegroup


No.OfFarms 267 89


Yieldt/ha 8.8 9.2 +0.35


Gross Output /ha € 1,49� € 1,609 + 115ofwhichisstraw/ha €231 €255 +25


TotalMachineryCosts/ha €316 €317 +1



Gross Margin / ha € 550 € 689 + 1�9TotalF.Costs/ha €339 €351 +12

Net Margin/ha € 211 € ��9 + 128Key FiguresTotalCosts€/ton* €145 €138 -7


19


ü Despitehavinghigheryieldthetopgroupspent€22/halessonmaterialcostswithfertiliser(€21/ha)makingupthebiggestdifferencecomparedtotheaveragegroup.Thecontractorcostswere€29/halowerinthetopgroupcomparedtotheaveragegroup

ü Fixed costs are marginally higher in the top group (4%) compared toaverage

ü Netmarginwas54%higherinthetopgroupcomparedtotheaverage

€ -

€50

€100

€150

€200

€250

€300

€350

€400

Average top 1/3

€/h

a

Av. Net Margin Crop:-Winter Barley

Av. Variable Costs Crop:-Winter Barley

Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

1% 1% 1%

7%

27%

9%

25%

25%

4%

20


AnalysisofBarleyCrops(Average)

Table10:BarleyReturns-Averagegrowerssummary

ü TheNetMarginbetweenwinterbarleyandspringmaltingbarley(+5%)issmallbutsignificantnonetheless

ü Maltingbarleyoffers thebestopportunity to increaseprofitability fortheaveragespringbarleygrowerwithreturnsfrommaltingbarley€80/ha(55%)higherthanspringfeedbarley

ü Costs of production of malting barley (€149/ton) are higher than theothercategoriesdespitehavingaloweraveragelandleasecost

Average Winter Spring Spring Malt Barley Barley Barley

Physical

TotalNo.hectares 6379 6684 2531No.OfFarms 267 240 77TillageAdj.ha 24 28 33Yieldt/ha 8.8 7.5 7.8Financial

CropSales€/tonne €142 €141 €155Gross Output /ha €1,49� €1,2�6 €1,�88

ofwhichisstraw/ha €231 €182 €171MaterialCosts/ha €613 €489 €528TotalMachineryCosts/ha €316 €279 €283

ofwhicharecontractor/ha €80 €80 €102OtherVariableCosts/ha €15 €15 €18Gross Margin / ha €550 €45� €559TotalF.Costs/ha €339 €311 €336Net Margin/ha €211 €14� €22�Key Figures

TotalCosts€/ton €145 €146 €149Av.LandLeaseCosts/ha €147 €151 €146

21


AnalysisofBarleyCrops(Top1/3)

Table11:BarleyReturns–Top1/3growerssummary

ü Winter barley is 7% lower in net margin compared to Spring MaltingBarley

ü Thetop1/3ofmaltingbarleygrowershavehighermarginsthaneitherWinterFeedBarleyorSpringFeedBarley.Thecostsofproduction forbarleyaresimilaracrossallcategories

ü The top 1/3 of spring feed barley growers return a higher margin of€37/hathantheaveragemaltingbarleygrower

Top 1/� Winter Spring Spring Malt Barley Barley Barley

Physical

No.OfFarms 89 80TillageAdj.ha 31 35 26Yieldt/ha 9.2 7.7 8.2Financial

CropSales€/tonne €146 €146 €161Gross Output /ha €1,609 €1,��2 €1,492

ofwhichisstraw/ha €255 €202 €174MaterialCosts/ha €591 €471 €518TotalMachineryCosts/ha €317 €250 €238

ofwhicharecontractor/ha €50 €25 €22OtherVariableCosts/ha €12 €12 €13Gross Margin / ha €689 €599 €72�TotalF.Costs/ha €351 €339 €358Net Margin/ha €��9 €260 €�65Key FiguresTotalCosts€/ton €138 €139 €138Av.LandLeaseCosts/ha €147 €173 €189

22


WinterOats

Table12:WinterOatsReturns


ü Averageyieldsare0.1t/ha(1.2%)abovetheCSOnationalaverage,withthetop1/3offarmersproducing0.6t/ha(7%)abovetheCSOnationalaverage

ü Thetopfarmsgrewmoreareaandproduced0.45t/ha(5.3%)moreyieldandachievedafarhigherpriceforgrainthantheePMaveragegrower.


No.OfFarms 75 25

TillageAdj.ha 12 12 0

Yieldt/ha 8.4 8.9 +0.45


Gross Output /ha €1,�78 €1,609 + 2�1ofwhichisstraw/ha €144 €167 +22





Gross Margin / ha €5�0 €771 + 242TotalF.Costs/ha €295 €266 -29

Net Margin/ha €2�5 €505 + 271Key FiguresTotalCosts€/ton* €136 €124 -11


2�


ü ThetopgrouphadaGrossOutputof€231perhectareor16%higherthantheaverage

ü Despite achieving a lower yield the average group spent €17/ha morethanvariablecostscomparedtothetopgroup

ü TheNetMarginofthetopgrowerswas€271/haor115%higherthantheaveragegroup

€-

€100

€200

€300

€400

€500

€600

Average top 1/3

€/h

a

7%

26%

9%28%

25%

Av. Net Margin Crop:-Winter Oats

Av. Variable Costs Crop:-Winter Oats

Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

1% 0% 1%3%

24


SpringOats

Table13:SpringOatsReturns


ü Average yields are 0.3t/ha (4%) above the CSO national average, withthetop1/3offarmersproducing0.6t/ha(8%)abovetheCSOnationalaverage

ü Thetopfarmsgrewmoreareaandproduced0.38t/hamoreyieldachievedahigherprice,soldmorestraw,andspentlessonvariablecoststhanthetoponethirdofgrowersresultinginahigherGrossMarginof€186/haor42%higherthantheePMaverage.


No.OfFarms 67 22


Yieldt/ha 7.6 8.0 +0.38


Gross Output /ha €1,229 €1,�96 + 166ofwhichisstraw/ha €138 €190 +52




OtherVariableCosts/ha €20 €21 +1

Gross Margin / ha €4�7 €62� + 186TotalF.Costs/ha €339 €409 +69

Net Margin/ha €97 €214 + 117Key FiguresTotalCosts€/ton* €149 €148 -1


25


ü Thecoststoproduceatonofgrainissimilarinthetwogroups.Howeverthe top group retained more profitability due to higher yields andoutput

ü The top farmers Net Margin was €117 (98%) higher than the averagegroup

30%

27%

23%

€-

€50

€100

€150

€200

€250

Average top 1/3

€/ha

Av. Net Margin Crop:-Spring Oats

7%

Av. Variable Costs Crop:-Spring Oats

2% 1% 1%Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert7%

2%

26


WinterOilseedRape

Table14:WinterOilseedRapeReturns


ü Winteroilseedrapeaverageyieldsare0.2t/ha(5%)belowtheTeagascestimatedaveragenationalyieldforIrelandin2016,withthetop1/3offarmerproducing0.1t/ha(3%)abovethisnationalaverage

ü Thetopfarmsgrewmoreareaandproduced0.3t/hamoreyieldthantheePMaverage.Thisishugelysignificantgiventherelativelylownumberoftonnesproducedfromthecrop.


No.OfFarms 46 15

TillageAdj.ha 14.3 19.1 +1

Yieldt/ha 3.4 3.7 +0.30


Gross Output /ha € 1,246 € 1,405 + 159ofwhichisstraw/ha €2 €4 +2





Gross Margin / ha € �0� € 486 + 18�TotalF.Costs/ha €350 €317 -33

Net Margin/ha -€ 47 € 169 + 216Key FiguresTotalCosts€/ton* €380 €334 -46


27


ü Themachinerycosts(allocated)arelowreflectingthelowoutputfromthecrop

ü Thetopgroupspent€24/ha lessonmaterialandmachinerycostsandalso€33/halessonfixedcoststhantheaveragegroup(enoughtopushthetopgroupintoprofitability)

ü The costs of production per ton were €46/ton higher in the averagegroupscomparedtothetopgroup

-€100

-€50

€-

€50

€100

€150

€200

Average top 1/3

€/ha

8%

27%

6%

23%

27%

Av. Net Margin Crop:-O.S. Rape - Winter

7%

Av. Variable Costs Crop:-O.S. Rape - Winter

1% 1% 0%Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

28


SpringOilseedRape

Table15:SpringOilseedRapeReturns


ü Bothgroupscontainsmallnumbersthereforeanycomparisonsshouldbetreatedwithcaution

• Thetopfarmsgrewmoreareaandproduced0.15t/hamoreyieldwhichincreasedoutputby€51/hacomparedtotheaverage

ü Themachinerycosts(allocated)arelowreflectingthelowoutputfromthecrop


No.OfFarms 11 4


Yieldt/ha 2.9 3.0 +0.15


Gross Output /ha € 998 € 1,048 + 51ofwhichisstraw/ha €7 €0 -7





Gross Margin / ha € ��4 € 402 + 68TotalF.Costs/ha €351 €392 +41

Net Margin/ha -€ 17 € 10 + 27Key FiguresTotalCosts€/ton* €355 €345 -10


29


-€20

-€15

-€10

-€5

€-

€5

€10

Average top 1/3

€/h

a

5%8%

35%

1%

23%

26%

Av. Net Margin Crop:-O.S. Rape - Spring

Av. Variable Costs Crop:-O.S. Rape - Spring

1% 1% 0%Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

�0


SpringBeans

Table16:SpringBeansReturns


ü Springbeansaverageyieldsare0.2t/ha(3%)abovetheTeagascestimatedaverageNationalyield for Ireland in2016,withthetop1/3of farmerproducing0.8/ha(13.5%)abovethisnationalaverage

ü Thetopfarmsgrewmoreareaandproduced0.6t/hamoreyieldthantheaverage.Note:DuetoanunevenrecordingofinformationsomeoftheDirectPaymentassociatedwithbeanswasincludedinGrossOutputforsomegrowersbutnotothers.


No.OfFarms 96 32


Yieldt/ha 6.1 6.7 +0.6


Gross Output /ha € 1,064 € 1,257 + 19�ofwhichisstraw/ha €1 €0 -1





Gross Margin / ha € �61 € 576 + 214TotalF.Costs/ha €320 €337 +18

NetMargin/ha €41 €238 +197

Net Margin/ha (Inc. DP) € 225 € �20 + 95Key FiguresTotalCosts€/ton* €168 €152 -16


�1


€-

€50

€100

€150

€200

€250

€300

Average top 1/3

€/ha

10%

11%

31%8%

25%

14%

Av. Net Margin Crop:-Beans - Spring

Av. Variable Costs Crop:-Beans - Spring

1% 0% 0%Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

ü Despiteachievingahigheryieldthetopgroupspentmarginallylessonmaterialsand€54/halessoncontractorcoststhantheaverage

ü Net Margin (inc DP) (Direct Payments) brought both groups closertogether(seepointabove).Thetopgroupachievedahighernetmarginof€95/ha(42%)highercomparedtotheaverage

�2


Beet(Fodder)

Table17:BeetFodderReturns


ü Yieldsonthetopgroupwerealmost10%higherthantheaveragegroupwhichcombinedwithahigherpricereflectedahighergrossoutputperhectareof€376/ha

ü Despitetheloweryieldstheaveragegroupspent€108/ha(13%)moreonmaterialcoststhanthetopgroup


No.OfFarms 48 17

TillageAdj.ha 9 8 -1

Yieldt/ha 73.6 81.2 +7.61


Gross Output /ha € 2,626 € �,002 + �76ofwhichistops/ha €32 €52 +21





Gross Margin / ha € 1,078 € 1,585 + 507TotalF.Costs/ha €436 €357 -79

Net Margin/ha € 642 € 1,228 + 586Key FiguresTotalCosts€/ton* €27 €20 -7


��


€-

€200

€400

€600

€800

€1,000

€1,200

€1,400

Average top 1/3

€/ha

11%

10%

22%

2%

31%

23%

Av. Net Margin Crop:-Beet - 2016

Av. Variable Costs Crop:-Beet - 2016

1% 0% 0%Lime

Insecticide

Growth Reg.

Herbicide

Seed

Av. Land Lease

Fungicide

Machinery

Fert

ü Thenetmarginofthebothgroupsisquitehighcomparedtoothercropshoweverthetopgroupachieved€586/ha(91%)morethantheaveragegroup

�4


BreakCropscompared(Average)

Table18:BreakCrops-Averagegrowerreturnscompared

ü Winter oats and beans are the most profitable non root crop breakcropinthetop1/3andaveragegroupshoweverwinteroatsisthemostprofitableinbothgroups

ü Thereisawidevariationonlandleasecostsof€101/haor82%howeverthisinmanycasesreflectstherotationpositionofthecropwithdifferencesintheproportionofeachcropsownonownedorleasedland.

ü WinterorSpringoilseedrapelostmoneyin2016buttheyieldofwinteroilseed rape was below trend yields therefore increased output wouldincreaseprofitabilitysubstantially.Howevertheyieldofspringoilseedrape reflects average yields therefore only exceptionally high yieldingcropsreturnedaprofit

Average Winter Spring Winter Spring Beans Beet Oats Oats Oilseed Oilseed Spring Rape RapePhysicalTotalNo.hectares 934 775 661 147 1192 431No.OfFarms 75 67 46 11 96 48TillageAdj.Ha 12 12 14.3 13 12 9Yieldt/Ha 8.4 7.6 3.4 2.9 6.1 73.6FinancialCropSales€/tonne €146 €143 €366 €347 €162 €35Gross Output /ha €1,�78 €1,229 €1,246 €998 €1,064 €2,626

ofwhichisstraw/ha €144 €138 €2 €7 €1 €32MaterialCosts/ha €516 €465 €640 €427 €435 €898TotalMachineryCosts/ha €317 €307 €289 €230 €256 €594

ofwhicharecontractor/ha €120 €119 €82 €55 €74 €238OtherVariableCosts/ha €15 €20 €14 €7 €12 €56Gross Margin / Ha €5�0 € 4�7 €�0� € ��4 €�61 €1,078TotalF.Costs/Ha €295 €339 €350 €351 €320 €436Net Margin/ha € 2�5 € 97 -€47 -€17 €41 €642Net Margin (inc DP) /ha € 225Key FiguresTotalCosts€/ton €136 €149 €380 €355 €168 €27Av.LandLeaseCosts/ha €122 €169 €180 €223 €179 €136

�5


BreakCropscompared(Top1/3)

Table19:BreakCrops-Top1/3growersreturnscompared

ü Beet is by far the most profitable crop of these break crops @€1,228/ha.Howeversalesofthecropareonafarmtofarmtradeandgenerallyfor a limited/defined quantity and to farms with an existing tradingrelationship.Growingsignificantquantitiesofbeetmaynotbepossibleforeveryfarmerandamarketshouldbesecuredbeforeplanting

ü Winter Oats is the next best alternative with spring beans relying ontheDirectPaymenttoincreasethemarginstoacceptablelevels(DirectPaymentonbeans~€250/hain2016)

ü Returnsfromthetop1/3offarmersfromoilseedrapecropsstruggletocompeteagainsttheNetMarginreturnsofaveragegrowersofallothercrops. Growers should consider this very carefully before planting thenextcropespeciallyofspringoilseedrape

Average Winter Spring Winter Spring Beans Beet Oats Oats Oilseed Oilseed Spring Rape RapePhysicalNo.OfFarms 25 22 15 4 32 17TillageAdj.Ha 12 14 19.1 25 14 8Yieldt/Ha 8.9 8.0 3.7 3.0 6.7 81.2FinancialCropSales€/tonne €161 €151 €378 €349 €163 €36Gross Output /ha € 1,609 € 1,�96 € 1,405 € 1,048 € 1,257 € �,002

ofwhichisstraw/ha €167 €190 €4 €0 €0 €52MaterialCosts/ha €499 €435 €628 €421 €430 €789TotalMachineryCosts/ha €329 €317 €277 €218 €240 €615

ofwhicharecontractor/ha €86 €54 €36 €- €21 €177OtherVariableCosts/ha €9 €21 €14 €8 €12 €12GrossMargin/Ha €771 €623 €486 €402 €576 €1,585TotalF.Costs/Ha €266 €409 €317 €392 €337 €357Net Margin/ha € 505 € 214 € 169 € 10 €238 € 1,228Net Margin (inc DP) /ha € �20Key FiguresTotalCosts€/ton €124 €148 €334 €345 €152 €20

Av.LandLeaseCosts/ha €69 €191 €151 €263 €190 €57

�6


AllCrops(Average)Average

Winter W

inter Spring Spring

Spring W

inter Spring

Winter

Spring Beans

Beet

Wheat

Barley Barley

Malting

Wheat

Oats Oats

Oilseed Oilseed

Spring

barley

Rape

RapePhysical TotalNo.hectares

42956379

66842531

527934

775661

1471192

431No.OfFarm

s166

267240

7740

7567

4611

9648

TillageAdj.ha26

2428

3313

1212

14.313

129

Yieldt/ha10.3

8.87.5

7.88.2

8.47.6

3.42.9

6.173.6

FinancialCropSales€/tonne

€148€142

€141€155

€146€146

€143€366

€347€162

€35Gross Output /ha

€1,698 €1,49� €1,2�6 €1,�88

€1,�50 €1,�78 €1,229 €1,246

€998 €1,064

€2,626ofwhichisstraw/ha

€163€231

€182€171

€144€144

€138€2

€7€1

€32M

aterialCosts/ha€699

€613€489

€528€528

€516€465

€640€427

€435€898

TotalMachineryCosts/ha

€349€316

€279€283

€335€317

€307€289

€230€256

€594ofwhicharecontractor/ha

€120€80

€80€102

€165€120

€119€82

€55€74

€238OtherVariableCosts/ha

€19€15

€15€18

€20€15

€20€14

€7€12

€56Gross M

argin / ha €6�0

€550 €45�

€559 €468

€5�0 €4�7

€�0� €��4

€�61 €1,078

TotalF.Costs/ha€367

€339€311

€336€359

€295€339

€350€351

€320€436

Net Margin/ha

€26� €211

€14� €22�

€108 €2�5

€97 -€47

-€17 €41

€642Net M

argin (inc DP) /ha

€225Key FiguresTotalCosts€/ton*

€139€145

€146€149

€151€136

€149€380

€355€168

€27Av.LandLeaseCosts/ha

€119€147

€151€146

€192€122

€169€180

€223€179

€136

Table20:AllCrops:Averagegrow

erreturnscompared


�7


AllCrops(top1/3)Top 1/�

Winter W

inter Spring Spring

Spring W

inter Spring

Winter

Spring Beans

Beet

Wheat

Barley Barley M

alting W

heat Oats

Oats Oilseed

Oilseed Spring

barley

Rape Rape

PhysicalNo.OfFarm

s55

8980

2613

2522

154

3217

TillageAdj.ha33

3135

4515

1214

19.125

148

Yieldt/ha10.9

9.27.7

8.28.7

8.98.0

3.73.0

6.781.2

FinancialCropSales€/tonne

€154€146

€146€161

€155€161

€151€378

€349€163

€36Gross Output /ha

€1,897 €1,609

€1,��2 €1,492 €1,485 €1,609

€1,�96 €1,405 €1,048

€1,257 €�,002

ofwhichisstraw/ha€212

€255€202

€174€134

€167€190

€4€-

€-€52

MaterialCosts/ha

€665€591

€471€518

€502€499

€435€628

€421€430

€789TotalM

achineryCosts/ha€326

€317€250

€238€274

€329€317

€277€218

€240€615

ofwhicharecontractor/ha€40

€50€25

€22€20

€86€54

€36€-

€21€177

OtherVariableCosts/ha€8

€12€12

€13€12

€9€21

€14€8

€12€12

Gross Margin / ha

€898 €689

€599 €72�

€697 €771

€62� €486

€402 €576

€1,585TotalF.Costs/ha

€386€351

€339€358

€398€266

€409€317

€392€337

€357Net M

argin/ha €512

€��9 €260

€�65 €298

€505 €214

€169 €10

€238 €1,228

Net Margin (inc DP) /ha

€�20

Key FiguresTotalCosts€/ton*

€127€138

€139€138

€137€124

€148€334

€345€152

€20Av.LandLeaseCosts/ha

€117€147

€173€189

€166€69

€191€151

€263€190

€57

Table21:AllCrops:Top1/3grow

erreturnscompared


�8


MachineryCostsAnalysis

Teagasc developed a Microsoft Excel based Machinery Cost Calculator(MCC)overthepastnumberofyears.TheMCCisfilledoutbytheadvisorwiththefarmer.Thefarmer listsallmachineryonthefarmundervariousheadings;ownedorleased,purchaseprice,usage,lengthoftimeonthefarm,yearlyrepairs,fuelusage,etc.Theresultingoutputallowsafarmertoassessthecostsofthemachineinthatyearincashcosts(lookingatHPrepaymentsbutnotdepreciation)andalsoin longer term costs (Depreciation included). Each machine is allocatedcostsaccordingtothetimededicatetotillageoperations,otherenterprisesandalsocontracting.Thisgivesamoreaccuratefigureformachinerycostsonthetillageenterprisethanbroadfiguresusedinfarmtaxaccountswhereassumptionsvaryfromaccountanttoaccountant.

How it worksThe calculator divides the machinery into two categories those withrepaymentsoutstandingandwithnodebtoutstanding.Formachineswithrepaymentsoutstandingtheprogrammeusestheactualrepaymentfiguresforthemachineeachyear.Thisfigureisusedtocalculatethecashexposureofthefarmereachyearandalsothecostoffinancingthemachines.Thedepreciationfigureiscalculatedbasedonadecliningbalancebasedontheoriginalcostofeachmachine,includinganytradeinaspartpayment, the length of time the machine is expected to be on the farmandalsothepredictedresidualvalueofthemachineatdisposal(attoday’svalue). Repairs, maintenance and diesel are allocated according to themachineusagetothetillageenterprise,otherenterprisesorcontracting.Formachineswithnodebtoutstanding,thesameproceduresarefollowedin calculating the depreciation costs and the proportional costs to otherenterprisesorcontracting.Repairsandmaintenancecanalsobeassociatedwitheachmachineoratotalfigurecanbeaddedinatthisstage.Diesel costsare recorded fromreceiptsonthe farm.Othercostssuchasmachineinsurance,roadtaxandcontractorchargesarerecorded.

�9


Analysing ResultsTheresultsarepresentedtothefarmerunderthefollowingheadings:

- tillagecosts,- coststootherenterprises,and- Costsforcontracting.

Thecostsassociatedwiththeotherenterprisesandcontractingcanthenbeusedtocompareagainsttheincomefromeachactivity.The tillage costs are further broken down in cash costs and long term tillage costs.Thecash costsarerecordedasallpaymentsmadebythefarmer inthatparticular calendar year such as repayments, repairs, diesel, leases andmachinehire,itdoesnotincludedepreciation.The longer term cost include repairs, diesel, depreciation and interest (butdoesnot includethecapitalpartoftherepayment).Thesecosts better reflect the longer term machine costs on the farm and areusefulinassessingthereplacementstrategyonthefarm.Othercostswhicharerecordedaretheoverallamountinvestedinmachineryonthefarmandtheresidualvalueofthemachinery.The MCC reflects a one year view of the machinery on the farm and allfarmersareencouragestocontinuallyupdatethefigurestoestablishtrendson the farmover time.Analternativeprogram isavailable fromTeagascwhichcanbeusedtodeveloplongertermmachinerypolicyonthefarmTheMCCgeneratesoutputforfarmerstouseinthee-ProfitMonitor.Thekeyfiguresare:Machineryrunning(diesel,repairs,insurance,etc.),MachineryLeases(leasesorHPinterest)andMachineryDepreciation.Thefiguresarespecifictothetillageenterpriseonthefarm.ThesefiguresareclassedasaFixedCostandareallocatedtoeachcropbasedontherelativegrossoutputperhectareofthecropcomparedtothetotaloutputperhectareofallthecrops.

40


MachineryCostsCalculator2016:ResultsDuring2016alargenumberoffarmersfilledouttheMCCandthecombinedresultsareoutlinedinthisreport.

Table22:MachineryCostCalculator-Mainresults

*Notetop1/3rankedbasedonthetotalmachinerycosts(€/ha)

- Thetop1/3offarmersmachinerycostsare€199/ha.Thesefarmersareineitheroftwogeneralbrackets;a)Smallerfarmerswitholdermachinerywhichisunderutilised-84%farmhaveanaverageareaof77hectares(Av.Machinerycosts€201/ha)orb)Verylargefarms-16%offarmershaveanaverageareaof506ha(Av.Machinerycosts€216/ha)andhavematchedcapacity to farmsizeandcombined thiswithclevermachinepurchasingandmaintenancepolicies

- 14%offarmerscouldsavemoneybyhiringacontractortocompleteallthemachineryoperations,i.e.theyhavecostsabove€400/ha.

TotalNumberofFarms139Totalarea15,000(ha) Average Top 1/�Farmsize(ha) 112.5(Range7–1000ha) 335OfwhichTillagearea(ha) 108 131TotalTillagecosts(€/ha) 335 199Av.TillageCashcostsperha 293 178%offarmerswhosecostexceedatypical 14% 0contractorcosts(estimatedat€400/ha)Dieselusage(L/ha) 65 57DieselCosts(€/ha) 108 95

41


- The top 1/3 of farmers are spending less on diesel but 83% of thesefarmersarefarmingwithin8kmoftheirbase,withonly17%offarmsareclassifiedasveryfragmented

Effect of Scale on Machinery Costs

- Farmerswithlargerareadecreasedcosts.The201hectareandovergrouphad18%lowercoststhanthe0-80hagroupoffarmers

- The81-200hectaregrouphadhighermachinerycostswhichmayreflectovercapacityontheirfarmedarea.

- Ofthegrowersineachgrouplandfragmentationcanalsoinfluencethecosts of machiery. The expectation would be that the 201 ha+ groupwouldbemorefragmentedthereforeincurahighercost.Thebreakdownofeachcategoryisasfollows:

0

50

100

150

200

250

300

350

Farm Size

€/Ha

0-80ha

81-200ha

201ha+

Machine costs & scale

324 320

265

% of Farmers in each categoryFarmedArea 0-80ha 81-200ha 201ha+90%inonearea 27% 15% 14%within8km 62% 46% 28%Veryfragmented 10% 38% 57%

42


- For the smaller farmers, despite having the highest costs, the vastmajority of farmers are not very fragmented. Conversely the largerfarmerswhichwewouldexpecttohavemorefragmentationhavelowermachinerycosts

Effect of Land Fragmentation on costs

- The figures reflect the extra travel involved in having a fragmentedholding. Farmers with land close to the base (90% in one area) had alowercost(11%)comparedtofarmerswhohad75%oflandwithin8km.Thedifferentialbetweenthefarmerswith90%oflandinoneareaandtheveryfragmentedfarmersissmallerwhichispartlyareflectionthatthelargerfarmerstendtohavealowermachinerycost.

90% in one area

75% within 8km

very fragmented

€/Ha

0

50

100

150

200

250

300

350

297 336 320

4�


Farms who engage in contracting

- Farms who engage in some contracting (these farmers would notbe considered contractors) have lower costs (-16%). This group havevaryingdegreesof contractingbutother factors suchas sizeand landfragmentationmayallcontributetothisdifference.

0

50

100

150

200

250

300

350

Farms who completecontracting for hire

Farms withno contracting

€/ha

Farms and contracting

269

324

44


Contact DetailsTeagasc Crops, Environment & Land-UseResearch Centre, Oak Park, CarlowTel: +353 (0) 59 9170200Fax: +353 (0) 59 9142423Email: [email protected]

crops environment eprofit monitor analysis programme ... · ü the epm average net margin for all...

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