Will Very High Input Costs, Cause A Drop In Production?

[Top Tip.]

Doesn’t that risk a price crash if everyone supplies them to market at the same time?

Absolutely but as @Tarw Coch says how many will actually do it is another thing. I guess it will depend on circumstances in the backend and the availability of alternative feeds.

 

[Sandpit Farm]

In dairy, deliveries globally are down 2% which is unprecedented. All the market signals seem to suggest the price of cereals rising further still. Russia and Ukraine are responsible for about 29% of grain exports so that market will be looking further afield which will certainly increase the cost of bought in feed.

Russia exports a lot of fuel and we have already seem month on month increases of 10% - we have felt it here with diesel!

Argentina, Australia and NZ are having weather issues.

There are new milk price rises being announced for 'some' processors for April. Retail-aligned price seems to be falling behind - but this is likely because it is not market-based, it is cost-based (not linked to markets) so the fact it is based on a rolling average means there will be a delay to rises there.

In dairy, I think that buying fertiliser is a no-brainer as the alternative to not having enough forage is horrendous. Either that, or cull some cows. The other issue (probably greater than cost/profit margins) is cash flow. I believe AHDB will be doing some work on which dairies are going to be most exposed on cash flow, I suspect it will be anyone with a Spring calving bias where yields from forage early in the season are critical.

In terms of national herd, the number of farmers are still contracting but the number of cows isn't. However, there was a recent piece I read about heifer replacements... we have always over-produced but the numbers have flattened right off. This has not happened like that before. Who knows, next year could prove to increase the 2% exodus of farmers.

Sorry it's not more positive

 

[Aircooled]

Big issue will be Russian grain entering the market (its still going to be there !) , due to sanctions the ruble is now very low value which will make it very cheap to buy , im certain someone that will deal with russia will buy it and re sell it onto a higher market , prob india or pakistan (may find its way to uk feed / flour mills eventually ) , maybe undercutting domestic that needs to be higher to cover input cost .could be a blood bath at some point

Unless China has completed a deal for the Russian grain long ago as part of the big plan that we have yet to witness.

 

[bluebell]

For what its worth, ive seen a few recessions, national emergencies? from way back in the early seventies, the 3 day week when we had in the Uk no electric for 4 days a week? Coal miners were on strike, broke the heath govt., any one on here remember that? i was at school at the time, my father had a small business at the time, he said they soon adapted and got the work done in the 3 days? I also remember in about 1980 when fuel, petrol prices suddenly went up? everyone forcast then that it was the end of big engined cars? That never happened, if anything right up to now, every drive has 3-4 cars, even alot of people have a hobby car? All through this, ive seen people, businesses go bust, many because they lived high on the hog? or borrowed to much money from the banks? Best placed businesses are ones that own all there assets such as the land, business premises, live within their means and have not got to much if any borrowings? We are very fortunate to be in the latter? Anyone who rents, has high borrowings will be at most risk, thats a fact?