Big cost cutting debate as ROI farm incomes plummet

The focus is on cutting costs on Irish farms in 2010 following a year in which farm incomes fell by 30 per cent and some believe there’s scope for cost saving on disease control programmes, in spite of Ireland’s high disease pressure.

Average farm income Eire in 2009 is estimated to have declined to €12,000 per farm, the lowest since 1999.

Speaking at the Teagasc Outlook Conference 2010 in January, Liam Connolly, head of the National Farm Survey, said farm gate prices plummeted last year, resulting in the largest annual decline in farm incomes in decades.

The dairy sector suffered the largest decline but cereal farming also had a bad year.

In theory at least there’s a glimmer of hope for this year, with Teagasc economists predicting an upward movement in cereal prices and a reduction in input costs, which are likely to result in an increase in cereal crop gross margins. But despite these forecast improvements, the net margin for the average cereal producer is likely to remain negative.

“Cost cutting will be essential,” says County Wicklow-based Teagasc adviser and farmer Martin Bourke, who is working to achieve a €100/acre (£220/hectare) cost reduction, based on a break-even yield of 7.9t/ha (3.22t/acre).

He’s pinpointed a number of major cost reduction targets: second wheats, fields with additional costs such as a difficult to control weeds, the higher cost agronomy associated with early drilling and conacre (rented land), as well as minor targets, which include herbicide and fungicide inputs.

Any decisions, however, to cut spending on the latter, typically amounting to €160-165/ha (£140/ha) over a programme according to teagasc figures, must be made very carefully, he says.

Saving at T1

Among the proposed cost saving measures being put to Irish growers are foregoing T0 fungicide applications and making savings at the T1 timing.

Mr Bourke admits to having mixed feelings about this approach given Ireland’s notoriously high septoria disease pressure.

“I’m not a fan of abandoning T0. A litre of Bravo (chlorothalonil) in with the PGR is the approach I would take,” he says. He’s also wary of skimping at T1.

“My feeling is that crops could be very clean approaching the T1 timing, you recommend a less-than-robust T1 and all of a sudden you could end up with a big spray interval and find yourself chasing disease.”

Ireland’s wetter climate means achieving the optimal fungicide spray interval timing is a challenge in most seasons anyway.

Wicklow tillage farmer Colin Walsh is only too aware of the need to cut costs.

He has seen his winter wheat gross margins plummet from €1051/ha (£946/ha) in 2007 to €15/ha (£13.50) in 2009 on owned land and €780/ha (£702/ha) to minus €83/ha (-£75/ha) on rented land, with support payments averaging €400/ha (£360/ha).

He farms 200 hectares (490 acres) on mainly heavy soils, mostly down to continuous wheat, with average yields of typically just over eight tonnes per hectare (3t/acre) sold off the farm.

If this situation continues I will seriously consider not planting at all next year

Colin Walsh

He’s already taking action to cut costs, with the main focus being on machinery. He’s halved his machinery budget, normally set at €150/ha (£135/ha), for the coming season and any plans to purchase replacement kit this year have been shelved.

He doesn’t believe cutting fungicide costs, however, is a route worth pursuing. Last season’s four-spray programme was a fairly typical approach (see box below).

A ‘dash’ of Opus (epoxiconazole)+Bravo (chlorothalonil) at T0 (GS30/31) gave flexibility, while the T1 was deliberately robust to accommodate high disease pressure on relatively septoria-prone varieties (Cordiale, Einstein, Oakley).

Expensive

“It was an expensive programme but disease pressure was high.

In previous years I would have gone in with something like Amistar Opti at T3 but I think Venture (boscalid+epoxiconazole) has much more of a greening effect.

“A T0 gives peace of mind and flexibility. I’d rather put on a T0 and perhaps cut back a little on my T1,” says Mr Walsh.

He admits to being concerned about the lack of certainty in the Irish tillage industry and professes to have little confidence in price prospects. “If this situation continues I will seriously consider not planting at all next year,” he says.

Gerry Kelly, BASF technical manager for Ireland, is well aware farmers are looking for cost savings. “But they won’t be cutting fungicides,” he predicts.

That said he’s not expecting to see a lot of T0 spraying done in Ireland this season.

While between one-quarter and one-third of the Irish wheat acreage would typically receive a T0 spray, the hard winter has held septoria back and in addition there’s a feeling T0 sprays could be contributing to selection pressure for resistance to triazoles in the septoria population.

Field performance of triazoles in ROI, however, remains good, he says, and BASF is supporting the industry-wide Fungicide Resistance Action Group (FRAG) position in terms of not restricting the number of azoles used in a fungicide programme and not using azoles alone.

“We will not be promoting Opus (epoxiconazole) straight, just to make sure we are not shifting the septoria population,” says Mr Kelly.

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