1 September 1995

CAUTIOUS TO COURAGEOUS

PLANS RANGED FROM

The 1995 Farm Planner of the Year was Julian Perowne, who has just finished a BSc (Hons) course in agricultural business management at Wye College, University of London. David Cousins explains what made his development plan stand out. The competition is organised by the Institute of Agricultural Management and sponsored by Farmplan Computer Systems and FARMERS WEEKLY, with support from Midland Bank

WHAT would you do with NFU deputy president Ben Gills mixed farm in Yorkshire to ensure its profitability for the next five years? That was the task we gave the finalists in this years Farm Planner of the Year competition.

They responded by producing a mass of tables and projections and bound them into weighty volumes that hit the judges desks with a meaty thump. In fact most bank managers would probably find them much too long, reckons the Midland Banks Steve Ellwood, one of the judges. But, when the detail is stripped away, there are two basic approaches to the future of the farm – the cautious and the courageous.

Competition winner Julian Perowne, who has just finished a three-year degree course in agricultural business management at Wye College, took the cautious path.

He made only modest changes to the crop and livestock mix, moving 10ha (25 acres) from grass to arable and reducing the North Country Mule sheep flock from 245 to 145. With crop prices running high it makes sense to maximise the enterprise with the highest gross margin, he reasons.

At the same time, he foresaw a lot more work being done for other farmers through the local Ridings Machinery Ring. The ring increased its turnover by 72% in 1994, turnover/member increased by 31% and it is constantly looking for more suppliers of services. There is particular demand for tractor/trailers and drivers throughout the potato and sugar beet season.

Increased activity on behalf of the ring has the twin advantages of bringing in ex-farm income and safeguarding the jobs of the two employed men.

The jobs angle is an important one, since one of Ben Gills conditions for whatever changes were suggested was that the two farm men should be kept. In hard economic terms having that sort of workforce on a farm of this size is extravagant but Ben Gills NFU work means he puts in little labour to the farm.

Moreover, making a man redundant is not something to be undertaken lightly and Ben Gill (like most farmers) says laying off the men would be an absolutely last resort. Nor would it be a very good message to the industry, he admits, for the deputy president of the NFU to be seen making his own farm men redundant.

Though impressed with his overall strategy, the judges disagreed with some of Julian Perownes proposals. His plan to cut the sheep numbers to 145, for instance, made the enterprise hardly worth bothering with, points out Steve Ellwood. But his was definitely a workable set of proposals.

"He made changes to the farm in a dozen minor ways that added up to a useful improvement in its running and efficiency," says Ian Howie. "His plan was just plain realistic."

But while Julian Perowne adopted a cautious approach to the farms development, other finalists took a more courageous tack. Rebecca Webber, who has just finished a two-year City and Guilds course in business farm management at Dorset College of Agriculture, was the most radical of the lot.

She suggests that the best thing the farm could do to maintain its profitability over the next five years would be to sell the machinery, make the two men redundant and get a contractor in to do the work.

One man would be employed on a casual basis to look after the sheep and keep an eye on the farm when Mr Gill is away. He could live on the farm in the cottage, which would be let to him on an assured shorthold tenancy. Part of the grain store could be rented out, as it is too big for what is required by the farm.

Rebecca Webbers proposals plainly run counter to Ben Gills condition that the two men be kept. But it neatly illustrates a problem for thousands of farmers in the 100 to 140ha (250 to 300-acre) size band, which is how to find the money to reinvest and how to continue justifying the employment of farm staff.

"Farms of this size are caught in a nutcracker," comments John Haigh. "It doesnt matter whether it is two employees that are involved or whether it is a father and son running the farm on their own. It is still several incomes that are coming out of the business and there is often an urgent need to increase revenue from outside sources."

Rebecca Webbers plan was based on a fairly pessimistic reading of grain price prospects for the next five years, comments Ian Howie and John Haigh. She predicted grain prices at £94/t for Year 1 (95/96) dropping to £85/t from Year 3 onwards.

In the light of current prices the figures look low, they add. But since current high prices are based on the weakness of the £ rather than any improvement to the structure of the industry, her forecasts may ultimately prove to be near the mark.

Her plan, though radical, was an impressive attempt to cope with the inevitable decline in prices that will eventually hit farming, concluded the judges. "Rebecca was on the right line," commented Ian Howie. "She nearly did it but she should have presented comparative data to support and justify the arguments for the line she took in her forward-looking plan."