New figures from agri-business firm Bidwells reveal the extent to which rising commodities prices last year boosted farm incomes.
Results from their 2007 harvest contract farming survey showed a 48% increase in net profitability across 26,305ha (65,000 acres), from £324/ha (£131/acre) to £479/ha (£194/acre).
Average return to the farmer was £309/ha (£125/acre), compared with £236/ha (£96/acre) in 2006 and a five-year rolling average of £247/ha (£100/acre).
But things had changed dramatically in the past few months. “There’s still the potential to make a good profit, but things are now a lot harder on the input side,” Bidwells’ David Cousins said. “Input prices are really refocusing people again and it is vital growers understand their cost of production and look at ways of managing risk.”
Products with options built in to let farmers lock into a minimum price and benefit from higher prices were becoming more widely available and he expected more growers to go down this route in future. “It’s not always a case of going to the big firms, but if you are using smaller companies, look at their track record, financial record and corporate governance.”
* Bidwells is looking for UK and western European farmers keen to take on and manage about 150,000 acres of farmland in central and eastern Europe. Most units will be about 1000-1200ha, although some could be larger, the firm’s Richard Warburton said.
“We are working with a number of funds, some of whom are engaging in operational farming through joint ventures and contract farming, and some of whom wish to let land to third-party tenants. Returns on working capital can be in excess of 50% of UK levels.”