Farmers are taking measures to offset high costs

Sharp price increases in four of farming’s major inputs – fertiliser, fuel, elec­tricity, and protein feed- have increased total farm input costs in Sweden by 10 billion Skr, according to Palle Borgström, chairman of The Feder­a­tion of Swedish Farmers.

And this is not a sustain­able solu­tion; farm­gate prices falling quicker than input costs is a very real scenario that could have serious conse­quences for under-prepared farm buis­nesses. However, farmers are being proac­tive and re-eval­u­ating their strate­gies with the cost crisis encour­aging explo­ration of newand some­times untrodden avenues to secure farm income.

Many of the county’s farmers would have faced bank­ruptcy if it hadn’t been for higher farm­gate prices.

Palle Borgström

For the arable or mixed enter­prise, each stage of produc­tion – from tillage to harvest – offers different oppor­tu­ni­ties to improve effi­cien­cies, reduce costs, and make gains on margins.

Cost effec­tive farming: eight ways to save money during produc­tion

Tillage

Zero-tillage has become more popular with the high fuel costs, and farmers have become much more keen on leaving the plough, prefering the sprayer to tackle any weeds. 

The cost of ploughing is much higher than spraying in fuel terms, says Fredrik Halle­fält, who advises in gentle driving at the Swedish Rurality and Agri­cul­ture Insti­tute. Starting out with roughly 40% plough cultivation Per Sahlberg at Tagel­berg Gård in the Swedish province of Västergöt­land, now farms his 700ha almost exclu­sively on a zero-tillage basis and that has saved money in lower fuel costs. “Just in my pre-planting work I have managed to reduce my fuel consump­tion from 40 litres/ha to only 10 litres/ha,” explains Mr Sahlberg.

But ploughing is some­times needed for e.g., breaking new grass­land, following a legume crop, or when weed burden requires the use of a plough.

Sowing

So far, seed costs have not become a major problem, but farmers are antic­i­pating that these will rise as well and so are looking at ways they can offset any increases. However, they are not willing to take any chances and do not want to jeop­ar­dise a good harvest while grain prices remain high.

But there are ways of economising on seeds, as proven by Jonas Nilsson, who runs an 800ha combined chicken and arable farm in Äspäng, Norrq­varn, together with his brother and father. “We’re using vari­able rate appli­ca­tion for our seeding and our seeder counts the number of seeds drilled,” explains Mr Nilsson. “Often we have one or two bags of seed over from what we ordered.”

Regarding vari­eties, Mr Sahlberg adds that choice is often depen­dent on what is requested by the markets and clients but will also be influ­enced by farmers’ percep­tion of risk.”Farmers are also letting less produc­tive farm­land lie idle, rather than investing in it with high input costs to risk only a meagre crop.”

Crop manage­ment and rota­tion

Although crop manage­ment and rota­tion are largely influ­enced by soil and crop needs, farmers are now taking larger risks by exper­i­menting with changes in their crop choice and rota­tion. For example, aban­doning typical six-year rota­tions in favour of cash crops like winter vari­eties of wheat, oilseed rape, and barley. As well as being more inclined to intro­duce new and unproven crops.

One farmer was said to have sown his entire farm with winter wheat, some­thing that could look risky – but Fredrik Tidström, farm advisor and owner at Växtab, does not dismiss alto­gether. “It´s a good strategy in general to go for safe crops such as winter wheat and winter rape. Should they fail to survive the winter, you could always resow the fields in the spring,” he said, adding that he had seen fields where wheat had been sown for 50 years in a row without losing yield or causing soil degre­da­tion. And for Mr Sahlberg, favourable autumn condi­tions in 2022 saw him increase his winter wheat and oilseed rape acreage (2022). Sowing condi­tions for wheat were excel­lent this autumn.”

However, in northern Sweden a harsher climate has made earlier winter crops a less likely alter­na­tive. But here are farmers trying out winter wheat instead of proven crops like spring barley, according to farm advisor Sigrid Tirén at Rural Economy and Agri­cul­tural Soci­eties. “There are mainly two reasons for this: Winter wheat yields better, and you have less work during spring, which for live­stock farmers is a busy period anyway.”

And live­stock farmers have also increased their own protein produc­tion by culti­vating more legumes as imported protein feed prices have gone up as well.

Cattle farmer Joakim Jonsson in Vaggeryd, has planted Sudan Grass for the first time this year in a triall aimed at becoming more self-suffi­cient in feed. “It´s frost-sensi­tive but other­wise an easy crop to grow, the yields are good – and we only fertilise with manure,” he explains. “We don´t know how the cows will like it, but Sudan Grass is common outside Sweden.”

Steep feed costs have also been a big problem for organic farmers with many forced to abandon organic farming alto­gether. Soaring costs have coin­cided with higher food prices resulting in consumers opting for conven­tional prod­ucts rather than the more expen­sive organic alter­na­tives.

“Organic protein feed prices have doubled to roughly 11 Skr/kg and some farmers save up to 300,000 Skr in feed costs by going conven­tional,” said Andreas Svensson, farm advisor at the SRAS advi­sory group.

Fertiliser

Fertiliser costs are the main expense for arable enter­prises, and as prices have soared farmers have been focusing on these costs. “My fertiliser costs have gone up from 2,000Skr/ha to 7,000Skr,” says Mr Nilsson.

But cost is not the only chal­lenge he has faced, supply is also under great pres­sure. “Supply started to become a problem during the Covid-19 pandemic,” he explains. “But then it became worse with the conflict in Europe because potas­sium and phos­phorus are imported from Belarus and Russia – so I use less fertiliser now.” He also says that he had to cut down on rates of appli­ca­tion. But both he and Mr Sahlberg are careful to not jeop­ar­dise their respec­tive yields, given the high farm-gate grain prices.

Another change in Mr Nilsson’s fertiliser startegy is applying nitrogen, potas­sium, and phos­pho­rous in three sepa­rate passes rather than in one. “I have created appli­ca­tion maps in MyJohn­Deere so I can apply vari­able doses depending on the fields I work on,” he explains. “I am forced to do more passes, but it does pay off with the grain prices we have at the moment. You have to apply the right product in the right place at the right time.”

BM Agri’s Mats Eriksson says farmers are cutting down on their potas­sium and phos­phorus doses – but advises caution when looking at reducing nitrogen doses.”You don´t need to apply until spring, so hopfully prices will have come down a bit by then.”

BM Agri has even temporarily halted some of its fertiliser imports due to high prices, which Mr Eriksson sees as unsus­tain­able should manu­fac­turer prices fall. “Farmers are seeking out liquid nitrogen and urea are, as well as manure, sludge and biogas bi-prod­ucts, as cheaper alter­na­tives.”

Live­stock farmers are also more concerned with their manure handling and its use as a reli­able fertiliser for grass produc­tion – vital to guar­antee live­stock yields. “Many farmers are using more manure now,” says Fredrik Tidström, farm advisor and owner at Växtab. “But we have to be better at analysing it so it can be used more effec­tively, partic­u­larly when it comes to the nitrogen and phos­phorus content.”

Crop protec­tion

Crop protec­tion is some­thing that farmers are not willing to compro­mise on as they do not want to risk a good yield.

“Fung­cides are not a big expense, but glyphosate has doubled in price,” says Mr Nilsson.

But despite higher prices, crop protec­tion is not some­thing Per Sahlberg will save on. “Crop protec­tion is impor­tant. You have to keep weeds under control, I don´t want to see a weed explo­sion to save 300Skr/ha, if you have already­in­vested so much in the crop with fertilisers and so on – I am aiming for as high a yield as possible.”

Harvesting

Getting good yields is as impor­tant as keeping costs down. Arable farmers that bought most of their inputs at 2021 prices and sold grain for 2022 prices, have done well.

But the problem comes when farm-gate prices start falling, says Mr Tidström. “That is why it´s a good idea to sell maybe 5% to 10% at the most per week at today´s prices – just as it is a good idea to spread out the purchases of inputs.”

Mr Sahlberg can store about 70% of his crop on the farm and that is the volume he theo­ret­i­cally can pre-sell, either through contracts or finan­cial futures. And as he believes prices will fall, he is prepared to set prices now for about 50% of his harvest.

The risk they take is that they are bound to deliver the phys­ical volumes they have agreed to, however, should the harvest fail, it could be costly. “But you also can’t sit still and do nothing,” says Mr Tidström. “You have to be able to think outside the box; think differ­ently but with the situ­a­tion we have today. It demands an enor­mous amount of involve­ment from the farmer.”

Machine use

With fuel prices having doubled since last year, not only are the hours of machine oper­a­tion impor­tant but also how farmers use them.

Fredrik Halle­fält advises in gentle driving at SRAS and he sees several ways of not only reducing fuel costs, but also main­te­nance costs and machine value. “About 25% of the time the engine is running the machine stands still. Reducing the time, the engine is running at a stand-still will save fuel, but also prolong the time between servicing the tractor or machine. And it will also reduce the price depre­ci­a­tion when you sell it.”

He also advis­escon­trol­ling tyre pres­sure, another way to save fuel, as well as avoid soil compaction. Farmers can use a digital tyre pres­sure tool to reduce pres­sure when out in the fields, and increase it for road trans­port. Fine-tuning plough depth based on next crop is another vital point in saving fuel, adds Mr Halle­fält. “You should not plough deeper than neces­sary as every centimetre adds to the work­load. Each centimetre of soil depth adds up to 150 tonnes/ha.”

Others

On top of input costs soaring, farmers are also squeezed by higher borrowing costs and higher elec­tricity costs. These costs are mainly fixed over a longer period and there is little they can do in the short term to offset them. Swedish farmers’ aggre­gated debt is roughly 350 billion Skr, and if just half of that were to be re-nego­ti­ated at one percentage point higher rates, financing costs would jump by 1,75 bln Skr. Energy advi­sors urge farmers to pay atten­tion to their elec­tricity use, and where, if they can, save on it..

Inter­est­ingly, appli­ca­tions for building farm biogas plants have jumped nearly tenfold. SRAS is working on a ‘digital power station’ that will aid farmers in moni­toring their use of elec­tricity. The tool will also help farmers, in the future, who produce elec­tricity on their farms, to sell their surplus at higher prices.