1 March 1996

Profit from high-tech

BOOSTING crop production is the life blood of arable farming. While pressure on fixed costs can cut expenses, income is still needed to pay for overheads left after youve sold the farms machinery, laid off your staff, enlisted a contractor and expanded your cropped area.

Estimates suggest technological developments have added over 2% per year to crop output. That can go a long way towards offsetting rises in input costs and any future fall in crop prices.

Clearly, it is more important than ever to focus on new technology to maintain profits. So what developments can we look forward to?

Biotechnology has certainly arrived. Modified tomato purée hit supermarkets last month. Even with labelling, consumer resistance proved minimal. Next will be herbicide tolerant crops, then modified oilseed profiles and cereal quality.

Agrochemical scientists have not been slack either – a host of new products are waiting to emerge from the development pipeline.

Precision farming has a role too. It is already cutting fertiliser bills, directing cultivations and helping identify problem areas. In future it will tailor seed rates and sprays and maybe even aid quality harvesting.

Information supply is set to become more supportive. Modern approaches to disseminating data and advice will help farmers respond to crop problems this season, not next year after the lessons have been learned.

All of these aspects will help drive down the unit cost of production.

Some say why worry when todays profits are so good. But the facts speak for themselves. Todays good profits stem from:

&#8226 Sterlings devaluation.

&#8226 A rising world market as stocks tighten.

&#8226 Aid payments compensating for price cuts that never came.

The appliance of science and some rapid fixed cost restructuring have also helped.

Without wishing to be a prophet of doom, it is fair to say things can only get worse. If the UK economy starts moving sterling could strengthen, so inflating input prices, cutting aid payments and making exports harder. Aid payments are sure to fall in line with inflation, if not faster, and may even be capped at 200ha (500 acres).

As production completes its pendulum swing to catch up with increased demand the world market is set for a big fall. The return of US set-aside to cropping will see to that. As world market prices tumble we could see intervention coming into play, with its focus quality grain only.

It seems realistic to plan for possible bad times ahead. Even if they dont materialise at least youll be better placed than ever to profit from arable farming.

Exploit technology to cut your unit cost of production, growers are being urged. Without such a move profits could suffer significantly in the years ahead.