2022 inputs and crops - teagasc.ie
TRANSCRIPT
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@FionaThorne6
Review and Outlook
Inputs and Crops
Fiona Thorne
Outlook 2022 Conference
Webinar December 7th, 2021
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Overview
2021 Inputs and Crops
• Where we are now in terms of the farm gate
» Input costs, yields, price, gross and net margin
2022 Inputs and Crops
• Where we are going in terms of the farm gate
» Input costs, yields, price, gross and net margin
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Inputs Review and Outlook
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6
Feed
Price
+ 16%
Volume
+ 8% in aggregate
Fuel
Price
+29% green
+13% white
farm gate
Fertiliser
Price
+ 10 %
Volume
+ 5% in aggregate
Electricity
Price
+ 10%
Total Costs
Inputs 2021 (Price > volume change)
Sector specific
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2022 Input Story: More price increases
Feed price is a tale of two halves
» Increase in H1 2022 compared to same period of 2021
• ‘hangover’ from 2021 harvest price increases
» Decrease in H2 2022 compared to same period of 2021
• still much production uncertainties
6 percent increase for the year
Feed volume: No change to plus 7% (on a per head basis)
» Due to fertiliser price story0
50
100
150
200
250
300
350
Jan
-14
Oct
-14
Jul-
15
Ap
r-1
6
Jan
-17
Oct
-17
Jul-
18
Ap
r-1
9
Jan
-20
Oct
-20
Jul-
21
Ap
r-2
2
Ind
ex 2
01
5 =
10
0
Feed Price
Feed: More price increases on top of 2021
Source: CSO and Author’s estimates
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2022 Input Story: More price increases
Fuel: more price increases in 2022 for the year as a whole
» Brent crude oil 16% increase in Euro terms
» Slightly lower increase in US$, but ER to heighten € increase
Account for price transmission at the farm level
» Carbon tax increases
» Green diesel: 20% increase in 2022 at farm level
» Motor fuel index: 12% increase in 2022 at farm level
» Sector specific price increases take usage into account0
10
20
30
40
50
60
70
80
90
Bre
nt
cru
de
oil
€
Brent
Fuel: More price increases in 2022 for the full year
Source: AHDB and author’s estimates
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2022 Input Story: More price increases
Price up significantly in 2022
• Reflecting gas price increases
• Nitrogen based products up 120%
• P & K lower price increases than N
High price causing production uncertainties
• Fertiliser supply uncertainty
Sector specific price stories
• Purchase timing
• Product specification
Fertiliser: Unprecedented price increases in 2022 for the full year
Source: CSO and authors’ estimates
0
100
200
300
400
500
600
700
800
900
Jan
-14
Jul-
14
Jan
-15
Jul-
15
Jan
-16
Jul-
16
Jan
-17
Jul-
17
Jan
-18
Jul-
18
Jan
-19
Jul-
19
Jan
-20
Jul-
20
Jan
-21
Jul-
21
Jan
-22
Jul-
22
€ t
on
ne
Calcium Ammonium Nitrate(27.5% N)
Urea (46% N)
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Feed
Price
+ 6%
Volume
0 to + 7% per head
Fuel
Price
+ 12 to 20 % at farm gate
Fertiliser
Price
+ 120%
Volume
-20% to 0
Electricity
Price
+5%
Total Costs
Large increases but
sector specific
Inputs 2022 (Large upward price pressure)
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From Inputs Summary to….Crops
• Inputs summary – For 2022 much larger price changes overall
– Some volume change per hectare (some differences at sector & whole farm level)
– Overall upward pressure on prices
• Feed, fertiliser, fuel, seed
• Implications– Sector specific story in inputs for 2022
• Begin with margin story for crops– Given the importance of feed for other sectors
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Crops Review and Outlook
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Average 13 % increase in crop yield per hectare
6% increase in direct costs
21 - 33% increase in cereal prices
Winter cereal area increase
21% increase cereal production
Approx. €525 per ha increase in cereal net margins
90% increase in gross margin
2021 – Very Positive News Story for Cereals
90 % of cereal farmers earn positive net margin
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Increase in yield, price, moisture bonuses, straw receipts and Straw Incorporation Measure (SIM)
But remember margins in 2020 were extremely low
• Spring barley: Up €580 per hectare
• Winter barley: Up €750 per hectare
• Winter wheat: Up €950 per hectare
• Variability around margins
2021 – A Positive News Story for Cereals
0
500
1000
1500
2000
2500
WINTERWHEAT
WINTERBARLEY
SPRINGBARLEY
€ G
ross
mar
gin
per
ha
2020 2021
Average 90% increase in gross margins for cereal crops in 2021
Source: Teagasc, NFS and authors’ estimates
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Average cereal based enterprise on
specialist tillage farms
• Net margin (incl. SIM)
• Takes account of change in cereal area
90 % earn a positive net margin in 2021
• Average = € 630 per ha.
• High margin farms = €1290 per ha.
• Low margin farms = €27 per ha.
2021 – A Positive News Story for Cereals
-400
-200
0
200
400
600
800
1,000
1,200
1,400
Lowmargin
Moderatemargin
Highmargin
Average
€ N
et m
argi
n p
er h
ecta
re
2020 2021
€525 per hectare increase in net margin in 2021
Source: Teagasc, NFS and authors’ estimates
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Yields Prices Costs Margins
2022 – The Calculations
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2022 Production To Decrease Very Slightly
Decrease in some EU stock/use ratios in 2021
• Increase EU, wheat, barley and maize production
• 4.5 percent increase in EU grains
• But increase in demand for wheat and maize
• Leaving some stock/use ratios low
• Increase in wheat and barley prices
Will ‘21 global harvest be replicated in ‘22?
• Not much change in winter plantings in the EU
• Return to trend yield in 2022, lower EU yield potential
0
50
100
150
200
250
300
Wheat Barley Maize Total
M t
on
nes
Estimated and Forecasted EU Production Grains 2021/2022
EU 27 2021 EU 27 2022
Source: Strategie Grains, November 2021
Very slight reduction in EU production potential in 2022 forecast
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Yield Price Cost Margin
2022 – The Calculations
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2022 Futures Wheat Harvest Price to Increase (by 2%)
0
50
100
150
200
250
300
1997 2002 2007 2012 2017 2022
€ p
er
ton
ne
(2
0%
mo
istu
re) Historic prices Predicted 2022 price
Low 2022 forecast High 2022 forecast
Source: Authors’ own estimates and forecasts
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‘Grain quality and moisture’
‘ ‘Market fundamentals more in balance’
‘Less panic buying’
‘La Niña’‘Trend yields’
‘Exchange rate’‘Supply chain difficulties’
2022 Futures Harvest Price to Increase
Slightly positive +2%
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Yield Price Cost Margin
2022 – The Calculations
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Overall increase in direct costs in 2022
Source: Authors’ estimate for 2021 and forecast for 2022
2022 direct costs per hectare
Fertiliser
Up 100 %
Seed
Up 6%
Machinery Hire
Up 10%
Crop protection
Up 1%
Direct Costs
Up 35%
0
200
400
600
800
1,000
1,200
1,400
WINTERWHEAT
WINTERBARLEY
SPRINGBARLEY
euro
per
hec
tare
2020 2021 2022
2022 direct costs per hectare
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Yield Price Cost Margin
2022 – The Calculations
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Decrease in 2022 Gross Margins
Gross margin per hectare to decrease by €315 for spring barley and €610 for winter wheat and €470 for winter barley
Source: Authors’ estimate for 2021 and forecast for 2022
0
500
1,000
1,500
2,000
2,500
W wheat W barley S barley
euro
per
hec
tare
2020 2021 2022
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Source: Authors’ estimate for 2021 and forecast for 2022
Net margin per hectare forecast to decrease by over €350 per hectare
Decrease in 2022 Net Margins
-500
0
500
1,000
1,500
Low margin Moderate margin High margin Average
euro
per
hec
tare
2020 2021 2022
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Summary of 2022 Crops Forecast
Forecast 2022
Prices
Probability that price will increase at harvest 2022 by approx. 2%
Much uncertainties about 2022 price at present
Reversion to trend yields – decrease in yields
Direct costs to increase by on average 35%
Overall decrease in gross and net margins in 2022
Average net margin for cereal enterprise €258 in 2022
Average cereal based net margin will be negative on 40% of specialist tillage farms
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@FionaThorne6
Review and Outlook
Inputs and Crops
Fiona Thorne
Outlook 2022 Conference
Webinar December 7th, 2021
![Page 30: 2022 Inputs and Crops - teagasc.ie](https://reader035.vdocuments.mx/reader035/viewer/2022081409/6297eb7b839ab4170f6a9f05/html5/thumbnails/30.jpg)