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Swing To Winter Cropping As Spring Barley Margins Suffer - An SAC Comment (Archived Content)

SAC News Release Ref. No: 09N55
Published: 03 Sep 2009

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With the weather making this a stop-start harvest, many farmers have had little time to settle their plans for autumn sowing. It is doubly difficult because sharply lower grain prices have left many wondering whether any of the crops they plant this autumn will actually return a profit.

The key, says senior consultant Julian Bell of SAC’s Rural Policy Centre, is for farmers to understand their costs and margins before committing to planting.

“That way they know if they have any flexibility to adjust their cropping, leave poor yielding land fallow or sell a proportion of crops forward."  He argues selling between a quarter and a third of the crop at planting will cover fuel, fertiliser and sprays and reduce the chance of growing at a loss.

The positive news is that forward prices for harvest 2010 are currently £10/t to £15/t higher than spot market values.  In addition, fertiliser costs are less than half the level of a year ago.  The difficulty is that grain prices are well below the high levels seen in the last couple of years and, for many producers, below their total production costs.

Wheat and winter rape are the two crops most likely to deliver a positive margin and, weather permitting, most growers will be aiming to maximise the area of both of these this autumn.  The profitability of other crops particularly spring barley looks much less certain. 

According to Julian Bell, compared with last year, the gross margins for winter wheat at planting are potentially £86/ha higher at £628/ha (£542/ha in 2009).  He puts this down to fertiliser costs more than halving.  From  £412/ha in autumn 2008 to £177/ha this season.

“For many farmers this more than offsets increasing spray costs and a £15/t fall in forward wheat prices, currently at around £110/t for November 2010."  Julian Bell points out this year’s rapeseed forward margins at planting are also comparable to or better than those seen this time last season.

“Spring barley is the main loser in all this," believes Julian Bell. “It is due to the sharp fall in malting barley prices this harvest.  Prices for Scottish malting barley are not yet decided for much of the 2009 crop, never mind 2010.”

In England, spring malting barley has been trading for 2010 at around £105/t for low nitrogen samples. Taking these values, spring malting barley gross margins are estimated to fall £36/ha to £445/ha for next harvest, despite lower fertiliser prices reducing variable cost by some £158/ha to £258/ha.

However, Julian warns these SAC estimates are based on average figures and only a guide to highlight trends.  Performance on individual farms will vary, so he strongly advises farmers to sit down and work out their own detailed gross and net margin estimates before committing to planting.  He questions the wisdom of planting on poor-yielding land, particularly on mixed farms where feed barley can be bought in cheaper than it can be grown.

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News Release Contacts

SAC Contact

Mr Julian Bell
Senior Rural Business Consultant
SAC (Scottish Agricultural College) Work SAC Consulting, Rural Business Unit, Bush Estate,
Penicuik
EH26 0PH
TelWork 0131 535 3438
Fax 0131 535 3431

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News Release Issued By

Mr Ken Rundle
Senior Communications Officer
SAC (Scottish Agricultural College) Work SAC, King's Buildings, West Mains Road,
Edinburgh
EH9 3JG
TelWork 0131 535 4196

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