Less, worse and cheaper. The 2024 harvest is extremely difficult

Mniej, gorzej i taniej. Żniwa 2024 są arcytrudne

Cereal prices are lower than, among others, in 2007 and 2008.
The correlation between agricultural produce prices and inputs is stable, but very unfavorable.
This year is no easier than the last one, and maybe even more difficult.

Cereal prices from 20 years ago

Poland, by European standards, is a large country. Therefore, it is impossible to generalize, although taking into account the overall situation, one may be tempted to say that this year's harvest is even more difficult than last year. In the south-western regions, rapeseed and cereal yields are lower, and there are more and more signals from other parts of the country of slightly lower results year to year. After last week's rainfall, but also yesterday's, which occurred sporadically in various regions of Poland, it is also difficult to obtain consumption wheat. And the common denominator for all farms is the terrible price.

It was said that grain prices had bottomed out a year ago. However, it turns out that this was not the case, because this year they are even lower. Taking into account the high production costs, one does not know whether to laugh or cry when we see grain prices. Consumer wheat usually costs around PLN 800 – 830/t. And there will also be lower prices, even PLN 780/t consumption. Feed wheat, on the other hand, is locally valued below PLN 700/t. Triticale around PLN 600/t, rye even around PLN 500/t. Low prices also apply to barley, and usually also to oats. These are unacceptable prices because they were higher almost 20 years ago! For example, in 2007, feed wheat was valued at over PLN 740/t, a year later at over PLN 870/t. At the same time, the minimum wage was PLN 936 (2007) and PLN 1,126 in 2008. Now grains are cheaper and the minimum wage is four times higher. At that time, ammonium nitrate cost approximately PLN 1,000 – 1,100/t, and in 2007, for example, the average price of diesel was PLN 3.74/l.

Despite all this, rapeseed looks much better when it comes to grain prices. At the beginning of the harvest, prices reached PLN 2,100/t. Now it is cheaper, below PLN 2,000, although at least at the beginning the valuations were better than last year. Cereals are cheaper at the start than in the 2023 harvest.

Rapeseed is growing poorly and the price is down. Cereals were also great

Even with high yields, there is little left

There were better years, worse years. In agriculture we are trained to do this, and in every business such a phenomenon occurs. We need to have some surplus, because the economy has been characterized by low stability in recent years. In fact, better seasons were always followed by more difficult ones, not only in agriculture. The problem is that at the moment we cannot generate any margin from our plant production. Because even if the yields on some farms are good, the net income is still minimal at such low prices. Let's assume triticale, which produces great yields, even 9 t/ha. This means that our income is PLN 4,500-5,000 thousand per hectare. But the outlay is a minimum of PLN 4,000. Producing a ton of wheat also costs slightly less than the purchasing prices themselves. Let's assume that on a 50-hectare farm "purely" PLN 1,000 remains from each hectare. So the earnings are PLN 50,000 per year, PLN 4,166 net per month. It is known that this is not a high amount at the moment. There is no chance that a family on such a farm could survive on this income. Or it may be that with these costs and, at the same time, lower yields (as in many regions this year), there will be no income at all and the year will close at zero. And yet, in Polish conditions, a farm with an area of 50 ha is quite a large unit.

Lower cereal yields in Lower Silesia. It is also difficult to find wheat for consumption

Costs disconnected from reality

For the second year in a row, plant production is associated with costs that are completely disproportionate to prices. In 2022, the high costs of purchasing fertilizers (e.g. saltpetre was already valued at approximately PLN 3,000/t in the fall of 2021) were compensated by harvest prices. But later we saw an equally sloping trend. Means of production were becoming more expensive from month to month, and agricultural produce was declining almost until the harvest. At the moment, we have relative stability, but unfortunately prices have turned out extremely unfavorably. Because although fertilizers are cheaper than last year, the correlation is very unstable. At such prices, even with high yields, it is difficult to compete and develop the farm.

Of course, the situation of each farm is different. Some are more credited, others less. But farms based on rapeseed, cereals or corn do not have it easy. But what to sow then? The market reacts in such a way that as soon as a larger area of a given crop appears, prices immediately drop. So it's not like we're going to sow a niche crop and success is guaranteed.

Everything is even more surprising when it turns out that it is impossible to obtain high-quality goods locally. There are many signals from Lower Silesia and southern Greater Poland that wheat does not meet the parameters. The yields are usually not better, but rather worse than last year. So where are the price cuts coming from again? Poland is not a market that determines prices, but lower local harvests contribute to some increases. Meanwhile, we know that our fellow farmers in Germany and France are also having a difficult harvest, and these are large grain and rapeseed markets. Meanwhile, the situation on these markets seems to have no impact on the improvement of the situation. It's a pity that you can't hear on TV that cereals are extremely cheap. Many consumers blame farmers for bread prices. Meanwhile, the farmer has the smallest share of the price of bread. Besides, bread prices were constantly rising while cereals were getting cheaper. The situation is not even strange, but rather bizarre.