Input costs likely to fall next year

Farmers spent 25% more on fertiliser in 2013 than in 2012: it's one of the areas where Teagasc expect dramatic farming cost reductions in 2014.

Farmers got good news at a conference organised by Teagasc in Dublin on Tuesday when they learned that input costs in farming were likely to decline substantially in 2014.

This predicted reduction in costs predominantly applies to grassland farms, where the volume of feed, and its cost, are both set to fall. Fertiliser costs are also set to be lower in 2014.

An improved global cereal harvest in 2013 has already led to a fall in cereal prices, and this is gradually being transmitted into the prices farmers pay for feed.

The late 2013 spring adversely affected early season grass growth and contributed to a severe fodder crisis, involving substantial levels of meal feeding to cattle and sheep, and imports of cattle feed in an emergency situation.

A return to normal weather conditions in 2014 should see a 20% drop in the level of feed use on dairy and beef farms, with usage levels returning to normal for the first time since 2011.

Grassland fertiliser use, which spiked in 2013 in response to the fodder crisis, should also return to more normal levels in 2014. Prices for fertiliser in 2014 should be 10 to 15% lower than the average prices in 2013.

The volume used should also be much reduced; Teagasc staff this week revealed that in this year’s efforts to re-build stocks of conserved forage and maximise time at grass for livestock, farmers used 20% more fertiliser than in 2012, and spent 25% more on fertiliser.

With a return to normal weather conditions, fertiliser usage on most farms will decline.

On the dairy side, feed prices increased by 10% in 2013, and there was also an increase in feed usage, of 10%, leading to a 21% increase in expenditure on feed.

Fertiliser expenditure rose also, and these increased costs raised total average production costs to about 28 cents per litre.

It is expected that feed use on dairy farms will fall substantially in 2014: feed and fertiliser prices will also be lower, leading to an overall reduction in costs of production of 3 cents per litre.

Dairy farmers were protected from the worst effects of these increased costs in 2013, by record milk prices.

Some reduction in milk prices is expected in 2014.

Cattle farmers experienced similar increases in volume of feed used and in its cost in 2013 to their dairy counterparts (21% in total expenditure, but this will have varied very widely from farm to farm, depending on the fodder situation).

Fertiliser usage is estimated to have increased by 25%.

Direct costs on suckler farms is estimated to have increased by 16%, while costs rose by 18% on finishing farms. The latter were compensated in higher prices for these higher costs, but the suckler enterprises suffered a severe reduction in incomes, as prices for their output fell in addition to their higher expenditure on feed and fertiliser.

Cattle feed prices in 2014 are expected to be 10% lower than this year. The volume of cattle feed required in a normal year is expected to be down by 20%. Fertliser prices are also expected to be 10% lower. Both suckling and finishing enterprises are expected to have much improved margins in 2014, as a result.


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