James O’Reilly from Co Kilkenny operates a large tillage farm with his parents, Larry and Anne. The land base is fragmented—20% owned, 40% under long term leases and 40% in share farming arrangements.
In 2000, the O’Reillys began establishing crops using a minimal cultivation system which Larry pioneered 21 years ago. This system helps improve soil structure as well as establishing crops in a timelier manner and reducing machinery costs.
Crop rotation
Prior to 2012, the main crop on farms was wheat. However, since then a crop rotation system has been introduced.
The O’Reilly farm is in five blocks, each of which follows the same 5-year rotation pattern— winter barley, oil seed rape, winter wheat, oats and then back to wheat. Since switching to this system, margins and yields have improved. Rotation also helps control disease and grass weeds while reducing nitrogen and pesticide usage.
“Switching to crop rotation is not exactly a new farming technique. Our ancestors had good reasons for never growing the same crop in the same field two years running,” says James.
Managing the business
Prior to planting, James creates a budget setting out the costs of producing each crop. He then compares his actual costs against the budget during the growing season.
If you get the costs of production right on the first acre and keep managing the spend on each crop, this will result in higher net margins, he explains.
In 2013, James started applying phosphate fertiliser down the spout at sowing which resulted in a 50% reduction of phosphate used—a big saving on input costs and better for the environment.
Today, he no longer applies pesticides prophylactically. Instead, he treats crops only when necessary. He walks each crop at least once a week during the growing season. This has reduced the cost of production by 20%.
James takes every opportunity to forward sell crops prior to harvest. He is not trying to beat the markets, he just wants to eliminate price risk as this helps achieve more consistent year on year crop margins.
In terms of performance, the 3-year average gross margin across all crops on the O’Reilly farm is €1,278 per ha with a net margin after machinery costs and labour of €957 per ha. This does not include land rental costs or income from Area Aid.