2021 was a good year overall for tillage farming – prices were up and weather during planting, growing season and harvesting was favourable. This resulted in solid yields and strong profit margins for crops, according to the Irish Farm Accounts Co-operative Society (IFAC) in a July 2022 article.
While price inflation in fertiliser occurred in late 2021, it didn’t affect the 2021 crops’ profit margins. The real effect of the cost of producing a crop will be felt in the 2022 season.
Ukraine effect
At present, there is huge uncertainty over whether European demand for animal feed can be met, with more than 20% of maize globally coming directly from Russia and Ukraine. The current war is estimated to create an 8 million tonne maize shortage, and six million hectares of wheat in Ukraine will not be able to be harvested. In response, Ireland is now actively promoting the planting of tillage crops in 2022.
Regardless of what measures Ireland or the EU put in place, tillage farming crop prices are expected to rise further over the next few months. This increase will have a knock-on effect across all parts of the food economy. We already see the impact in the pig sector, with the cost of feed per pig higher than the price paid for the pig.
Time will tell how rising costs and weather/ price will affect profit margins by year end.