New initiative launched to help boost combinable crop profitability

A NEW initiative aimed at helping farmers boost profitability from combinable crops is being launched by a leading crop protection manufacturer this spring.

Partnership for Profit, from Syngenta, seeks to provide growers with a greater insight into the relationship between changes in input use and agronomy and resulting effects on margins, explains Mark Hall, the firm’s business analyst and a former farm business consultant.

For 2010 it will focus primarily on helping growers mitigate the risk factors posed by continued tight grain prices, he says. But for the future the intention is to look at more positive aspects of improving profitability, such as use of precision farming, and even the application of advanced science such as sensor technology to provide early warnings of disease.

“For 2010, the key challenge is that, although margins for combinable crops look like they will increase over 2009, due to lower fertiliser costs, the amount of money which needs to be invested per hectare to achieve these margins will be higher than it was a few years ago,” explains Mr Hall. “That’s because, since 2006, arable farm operating costs have increased by around 26%.”

Looking at this in more detail, Mr Hall calculates that based on an average selling price for feed wheat of £75/t in 2006, farmers would have needed to achieve around 10 t/ha that season to break even, including rent and finance costs and excluding single farm payments.

At an estimated average 2010 feed wheat price of £100/t, he says this season’s breakeven yield will be similar, and there should be good margins to be made above the breakeven point. However, the higher costs versus 2006 mean there are extra risks involved in achieving that yield, he points out, and it is these risks which will need to be managed.

“To put this into perspective, £80/t spent on growing feed wheat in 2006 translates into £105/t in 2010. So producing high yields will be crucial, but so too will be protecting business returns against these higher risks.”

Overall, Mr Hall says there are two types of risk where margin could be lost – one is on low yield potential sites where there’s a risk that costs spent on the crop could exceed potential returns; the other is where yields fail to reach their expected potential.

“In order to help protect against the first risk of costs exceeding returns, growers should look for efficiency gains. These include using products that offer the best value for money; tailoring dose rates to individual situations; combining correct nozzle choice with low water rates to improve operational and environmental efficiency; and tank mixing products where possible to minimise the number of spray passes while maintaining crop safety.

“To help protect against risk of yields failing to live up to potential, the first step is to achieve excellent crop establishment. However, as establishment has already happened for winter crops, growers need to ensure products are used at the right time and right rate, and to use products and mixes that give additional benefits – for example improved green leaf retention or improved uptake of water and nutrients.”