4 April 1997

ADAS predicts root crop gross margins

THE dilution effect of yield on variable costs is strikingly illustrated in the latest ADAS crop centres gross margin figures for root crops.

The data, compiled by ADAS consultants and set out in Februarys Business Focus, gives instant estimates of average margins for harvest 1997 for all likely combinations of output and unit price.

Fixed costs aside, growers could spend as little as £20, but as much as £45, growing a tonne of Saturna crisping potatoes. Each tonne of this seasons sugar beet crops will require inputs costing from less than £6 to more than £15, depending on yield.

Unit cost of production is an increasingly important factor, especially in volatile markets, says Notts-based business management adviser Andrew Fraser. "Growers of processing potatoes on light land without sufficient irrigation for decent yields have really got to keep a close eye on all costs – particularly as contract prices are lower than in 1996."

This years figures allow for agrochemical price changes in line with projected market rates. Nitrogen and phosphate fertiliser prices are assumed to have risen 7.7% and 5.3% respectively, but the cost of potash and sodium is almost unchanged from 1996.

Inclusion of Russett Burbank instead of Record, which is becoming outclassed, reflects market moves in chipping varieties and a greater reliance on Saturna for crisping, says Mr Fraser.

Lower seed costs for Saturna and maincrop ware may well offset the hike in agchem costs, he adds.

ADAS reckons beet growing costs will be 10.3% up on 1996, and strawed carrot producers will have to spend 9% more, mainly because of higher seed prices.

The inclusion of figures for dry bulb onion production reflects growing interest in alternative crops for light soils with irrigation, it adds.