Members of HGCA’s Monitor Farm group near Colchester are to start benchmarking their costs of production as a first step to improving profitability.
Around 35 farmers and members of the agricultural industry attended a talk on the topic at a Monitor Farm meeting hosted by local farmer Tom Bradshaw at John Owen Barn in Fordham last week (14 January). The decision to start benchmarking was endorsed by a report published at this year’s Oxford Farming Conference, which showed that the nations with the highest farm productivity such as Germany and New Zealand also had the highest levels of benchmarking.
Tim Isaac, HGCA Regional Manager said: “If you don’t measure your costs you can’t manage them. When it comes to setting your marketing strategy and protecting your farm’s profitability, it’s vital to know where you’re starting from, and benchmarking allows farmers to do that.
“Our own research shows that only around 10% of arable farmers calculate their costs of production, but we’ve seen from our own Monitor Farm programmes and from other countries that benchmarking can really help improve attention to detail and therefore positively impact on farm profitability.”
Only a few of the farmers involved in the Colchester group currently do any benchmarking, although many will now start by using HGCA’s CropBench+ programme as part of the Monitor Farm scheme. This will enable them to accurately calculate costs of production and identify areas for improvement.
Of the farmers present, their estimated cost of production for first wheat ranged from £70/t to £140/t, with most falling around the £115/t mark. On the same day, wheat futures prices were £133/t for Nov ’15 and £138/t for Nov ’16.
During the Monitor Farm meeting, farm business consultant Jay Wootton also presented on business resilience, suggesting that attention to detail is the key to ensuring a farm business’s viability.
Mr Wootton said: “Make sure that you look at what you’re spending as a percentage of gross output. The thing that makes the most difference between the top and bottom quartiles in terms of farm performance is attention to detail across the three main areas of output, direct costs and indirect costs.”
All arable farmers are welcome to use HGCA’s confidential, web-based benchmarking system, CropBench+, which is available at cropbenchplus.org.uk. Members of HGCA’s Arable Business or Monitor Farm groups who benchmark using CropBench+ can compare their costs anonymously to identify common issues for discussion at further meetings.
Update from Colchester Monitor Farm reads:
– Extremes of weather are increasingly determining farm management policies
– 715mm rain in 2014
– Continuing to explore use of cover crops, such as vetch and oats, costing £25-£80/ha.
– Ordered a Cross Slot drill which is seen as being the main part of the jigsaw in allowing the successful integration of cover crops with cash and the anticipated benefits in soil health and fertility.
The next meeting at HGCA’s Colchester Monitor Farm is on 11 February and is combined with a Milling Wheat Breakfast event. For more information or to attend the event, go to hgca.com/events.