The recent Teagasc National Tillage Conference looked at the economics of the tillage sector and possible Brexit implications

Past and recent trends in relation to economic factors pertaining to the Irish tillage sector indicate a sector that has suffered from input costs rising faster than output costs over the past number of decades.

A decline in cereal area associated with relative economic performance has been particularly evident over the past number of years. Specialist tillage farms in Ireland continue to have high reliance on direct payments as a proportion of income.

Looking to the future, Teagasc economists using the Teagasc FAPRI-Ireland policy modelling tools which has focused on possible implications of Brexit for the Irish tillage sector. Two scenarios were specified: a baseline scenario and a ‘No Deal’ scenario.

The baseline scenario is based on the assumption of no change in trade relations between the UK and the EU (i.e. no Brexit). The ‘No Deal’ scenario is based on the assumption that the UK leaves the EU on 29th March 2019 without a trade deal with the EU.

In the ‘No Deal’ scenario, the UK imposes tariffs that are equivalent to those in the EU tariff schedule on all imports from the EU and the EU treats the UK as a third country and applies tariffs on imports into the EU that originate in the UK.

The likely economic implications of a ‘No deal’ Brexit outcome for Irish specialist tillage farms are relatively benign, compared to the other main sectors of Irish agriculture. Ireland is a net importer of cereals and a large proportion of these imports are from the UK. The imposition of tariffs on imports from the UK leads to the replacement of imports from the UK by imports from other EU markets.

These imports are more expensive than those imported under the Baseline, and this is reflected in somewhat higher Irish farm gate cereal prices (relative to the baseline). In addition, some inputs that are used in the Irish tillage sector are produced in Britain or sourced from there. As a result of a ‘No Deal’ Brexit, it would become necessary to source inputs from beyond Britain.

FAPRI-Ireland farm level model, after accounting for Brexit related inflationary pressures on farm gate cereal prices and input costs, indicates that average net margin on specialist tillage farms could increase by over 10 per cent per hectare.

In a ‘No Deal’ Brexit compared to the baseline, by the year 2026. There are key caveats which need to be considered when interpreting these results, such as the possible impact of exchange rate movements, CAP support payments post 2020, structural change and wider economy inflationary factors.

A good example of a large and successful tillage framer is John Cullen who with his brothers, Francis and Stephen, run a large tillage operation in south Wexford. John was awarded the Zurich Insurance Tillage Farmer of the Year in 2018.

John first started farming 38 years ago with his father and brothers. They farmed 161 hectares (400 acres) of which two thirds were rented. The tillage operation consisted of a mix of spring malting and feed barley. The business has grown over the years and now stands at a little over 850 hectares (2,100 acres).

Cropping has also changed on the farm with winter cereals forming the back bone of the production. John tries to focus on first wheats (5 year Av. yield 10t/ha) as much as possible with approximately one third of the tillage area dedicated to this crop. Winter barley (5 year Av. 9.1t/ha) takes up approx. one third of the sown area and is mainly sown as a 2nd cereal.

John is a huge advocate of break crops and has as close to one third of the farm sown to either winter oilseed rape, winter oats or beans. Labour steadily became a problem on the farm so John decided to change to a “Min-till” establishment system in 2018. Almost all crops were planted using this over the past 2 years but John recognises the system’s short comings in relation to grass weed pressure and utilisation of organic manures.

The farm runs a very efficient machinery outfit with only one combine completing the entire farms harvest each year. The total machinery cost across the farm in 2018 are €271/ha (€110/ac).

Low profitability from tillage crops is the most pressing issue for John. Consistency of yields from cereals but especially from break crops is challenging. John is working hard to improve soils by increasing soil indexes, applying organic manures and being more patient around field operations (partially forced by the conversion to min-till).

The potential loss of key chemistry is of particular concern and may adversely affect the viability of many crops on the farm. According to John Increased farmer co-operation is necessary to control machinery costs, which are too high on tillage farms, and this co-operation can help to cope with lack of available labour at peak times.

For larger farms, increased precision is needed, which is an area John intends to develop on the farm by utilising yield mapping and improving field recording/analysis. John is confident that tillage will remain an important part of the agriculture mix in Wexford. Tillage is profitable at the moment but farmers need to avail of and act on the latest information/research from Teagasc (and elsewhere) to remain profitable