With significant price fluctuations over the last few years, increasing costs and variable yields, net margins for UK oilseed rape (OSR) farmers have fluctuated considerably.
AHDN’s graph below shows the average variable cost, overhead cost, income, and net margin per hectare over the past five production years for OSR crops. Please note that these years relate to the growing season for the crop and not the marketing season, e.g. 2022/23 is the production year for crops harvested in 2023.
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The data was analysed by AHDB economist Helen Plan using information from Farmbench with each year calculated from a minimum of 200 OSR enterprises from across the UK.
The graph shows that income per hectare has been highly variable over the last five years. A strong market price was the main driver of higher net margins in both 2020/21 (harvest 2021) and 2021/22 (harvest 2022). Outside of these years, the net margin has been tight or even negative, with an average £100 loss per hectare.
Reduced yields were a contributing factor to the low margins in 2019/20 (harvest 2020). Farmbench data shows that yields were down 12% compared to the five-year average. However, a larger yield drop of 22% was reported by Defra, suggesting net margins might have fluctuated even more for some farmers. Increasing costs also played a role in 2022/23 (harvest 2023) returning a loss.
By far the biggest factor affecting the variable costs has been rising fertiliser prices, which made up 64% of the total variable costs in 2022/23 (harvest 23). Previously they have typically been less than 50% of the total, with the remainder made up of crop protection costs, seed costs, and other variable costs. Spot fertiliser prices have eased over the past 12 months, although they remain above the levels seen before the Ukrainian war.
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Overhead costs have also been rising, in a steadier way, over the last five years. Machinery and equipment costs make up the biggest percentage of overhead costs, along with labour and property and energy costs. These all saw notable increases in 2022/23 (harvest 2023) compared to the previous five years, by an average of 15%. It is important to note here that the figures shown in the graph represent the full economic net margin, which includes imputed costs, such as family labour and rental equivalent on owned land.
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