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.
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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.
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.”
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 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 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.”
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.”
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.”
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.