Margin Calculations Highlight
Short-Term Planting Decision Risks

July, 2006 - Short-term planting decisions based on individual crop rather than whole rotation margins could seriously threaten the profitability of many UK arable units from this autumn, warns ProCam Agronomy following the latest calculations with its powerful 4cast crop management advice tool.

Indeed, the most up-to-date figures from the extensive national crop-by-crop performance database show growers could be more than £80/ha/year worse off if they introduce too much additional oilseed rape into their rotations without sufficient care.

"Our recorded growers averaged 3.61 t/ha from their OSR over the past four years at an average input cost of £238/ha," explains ProCam technical agronomist, Nick Myers. "At the same time, they averaged 8.84 t/ha from their first wheats and 8.13 t/ha from their second wheats at costs of £258/ha and £263/ha respectively.

"Assuming oilseed rape realises £165/t this harvest, on this performance our growers would be looking at an average gross margin of £358/ha. This is significantly less than the £400/ha they'd be achieving from first wheats at a price of say, £75/t. Equally, though, it's more than the £352 they'd be making from their second wheats at the same price (Table 1); very much more if oilseed rape reaches £170/t or more."

"Our individual crop performance records suggest many units would be better off growing oilseed rape in place of second wheat in the coming season," he notes. "But would they actually be ? It all depends on the extent to which oilseed rape yields can be maintained as well as workloads balanced in the very much tighter rotations involved."

To examine this critical question, Nick Myers has used the 4cast figures to assess the annual margin offered by the different rotations. Adding together the gross margins of each crop and dividing by the length of the rotation, he has been able to take account of the impact of every crop on its successors, rather than merely viewing the individual crops in isolation. And the results are most illuminating.

At the same £165/t oilseed rape and £75/t wheat prices, for instance, he calculates growers would achieve an annual rotation margin of just £287/ha from wheat/rape as against £370/ha from the more conventional wheat/wheat/rape alternative (Table 2).

"If you assume you'll maintain the same oilseed rape performance, of course, you'll be slightly better off with wheat/rape at £379/ha/year," agrees Nick Myers. "But all our experience suggests OSR yields decline and costs increase the more frequently the crop is grown. Increased disease and pest problems are clearly an issue, as is the capacity of most units to get the extra rape established well enough while completing the cereals harvest, let alone harvested in time to avoid compromising wheat harvesting.

"For this reason, we have to assume oilseed rape performance will fall. In our calculations I've used the level achieved by our bottom 25% growers over the past four years - 2.64 t/ha at a cost of £263/ha - rather than the average. At the sort of performance many will find familiar, it leaves an annual rotation margin £83/ha less than wheat/wheat/rape.

"Interestingly, even if you assume oilseed rape yields will only drop off marginally - to say 3.4 t/ha - and wheat performance won't suffer at all, in rotational margin terms it's still less attractive to grow rape than second wheat," he points out. "Unless, your second wheats are particularly disappointing that is."

At the end of the day, Nick Myers stresses the cropping decision has to be a matter for individual evaluation. Those who can raise their OSR-growing game sufficiently while coping with half as much oilseed rape area again in their rotation may find moving to wheat/rape a viable option.

On the other hand, those who have a doubt about their ability to cope with the extra area without compromising either their oilseed rape or wheat performances are likely to be better off sticking with a more familiar wheat/wheat/rape strategy.

"Everyone should do their own annual rotation margin calculations," he recommends. "Look at the performance you've been able to achieve recently from your wheat and rape, and use this to calculate your likely performance with any cropping change.

"Make sure you do this across the whole rotation, though, or you could easily find a single year's improved performance proves unsustainable. In particular, you must appreciate the extent to which you may need to improve your oilseed rape management to maintain its annual contribution in the face of increased agronomic pressures.

"At the same time, you'd also be well-advised to examine the potential for improving second wheat performance by better variety choice and specialist take-all seed treatment use," Nick Myers adds. "It may prove a less risky way of achieving as much - or even more - improvement in the long run."

Table 1: ProCam 4cast Crop Performance

Table 2: ProCam 4cast Rotation Performance

* Using crop margins from Table 1

** Total margin from the crops in the rotation divided by the number of years.