Now farming tries just-in-time ethic
By Tim Relf
JUST-IN-TIME management has come to farming.
So says Ian Smith, managing director of Midland Shires Farmers, the largest agricultural supply co-op in the UK. The concept, widely seen in industry, has spread since the BSE crisis struck.
"Farmers are buying dairy and beef compounds, for example, on a hand-to-mouth basis. Forward cover is down about one-third on last year."
Steady – or in some cases, falling – raw material prices have left no incentive for farmers to forward contract this season, he says. Last year the £30 increase in the cost of some products between September and April, benefited those on fixed-price contracts.
Economies in compound usage have been reflected in milk production, says Mr Smith. And national output could end the milk year under quota, representing a "waste and a loss of potential income".
Among the "discretionary" purchases most affected has been grass seed, sales of which have dropped by about 20%, according to Mr Smith.
"Some jobs, however, such as crop protection, cannot be delayed." And spending on machinery – although badly hit in the early months of the BSE crisis – has subsequently recovered.
Lower grain values have also encouraged farmers to tighten their belts, suggests Mr Smith. The weaker market has prompted some to delay selling corn which has meant there is less spare storage space. And this has also contributed to the later fertiliser purchases.
But applying the just-in-time method to fertiliser highlights some of its potential problems, says Mr Smith. "It increases uncertainty and can leave the farmer unable to get the product he wants at the price he wants."