20 September 1996

Spuds disappoint after two years of worthwhile profit

Falling potato and milk prices have focused the Lees minds on costs at Dowrich. Philip Clarke reports

AFTER two years of healthy profits, potatoes look like becoming the "poor relation" of the three main enterprises at Dowrich.

Lifting of the first 6.5ha (16 acres) of Estima got under way last week, yielding about 37t/ha (15t/acre). But with a high percentage of "smalls" and "mids", and with national potato prices slipping below £60/t, Anthony Lee believes the crop will do well to break even.

At current rates, output is forecast at £2225/ha (£900/acre). But this is not enough to cover estimated growing costs, which include £717/ha (£290/acre) for seed, £420/ha (£170/acre) for sprays, £74/ha (£30/acre) for fertilisers and £1060/ha (£430/acre) for miscellaneous items such as contracting, haulage, grading, bags and PMB levy.

This brings total costs to £2270/ha (£920/acre), much the same as last year. There have been savings in fertilisers, however, as soil analysis by Cambridge-based research body CUPGRA in the spring revealed zero requirement for P and K.

Anthony blames the disappointing yield and sample size seen so far on poor establishment during a cold, damp April, followed by a hot, dry summer. "The field was dying on its feet by early August," he says.

To minimise the losses, these potatoes have been put into a covered clamp and will be graded back hard before they are released to local co-op, Banjo Potatoes. Middle brother Roger is currently converting an old stone separator in the workshop for the job.

"Given the depressed state of the potato market it makes little sense to be paying for haulage and grading on anything but the highest value fraction of the crop," says Anthony. The outgrades will be kept on farm to be used as stock feed.

The remaining area of Estima has now been desiccated with sulphuric acid applied by local contractor, Agrichemicals Southwest, for a fee of £89/ha (£36/acre). That just leaves the Pentland Dell to do.

Anthony is more optimistic about yield prospects for these later-drilled crops. But, with most of the maincrop soon to hit the market nationally, he has not ruled out the possibility of further price falls.

Declining returns is also the story for the dairy side of the business, after Milk Marques announcement of a 1p/litre cut in its base price from October.

The Lees are relieved that the 0.7p/litre winter seasonality discount is being waived until March, which should limit the effect of the fall to just 0.4p/litre over the next six months.

The blow of lower prices is also being softened by adjustments to Milk Marques haulage charges, announced at this weeks Dairy Farming Event. This is designed to reward the more efficient members and should benefit the Lees by another 0.5p/litre. "Our milk cheque should not, therefore, suffer for the next six months, but we must get ready to take a hit next spring," says Anthony.

At least current margins are looking buoyant, with Dowrich moving into the top 10% of Genus costed herds in the area.

August results put the 12-month rolling margin over purchased feed at 22.9p/litre based on a milk price of 26.49p/litre. Constituent levels came to 4.31% for butterfat and 3.47% for protein, with the herd achieving 2597 litres of milk from forage.

Average annual yield is running at 5850 litres, considerably less than the 6387 litres recorded by other herds in the area. But with quota the limiting factor, the policy has always been to go for maximum margin a litre rather than maximum margin a cow.

The quota situation is giving some cause for concern, however, despite the recent purchase of another 13,000 litres at 63p/litre. With 32 more cows being milked than this time last year, output is running about 5% ahead of target. This compares with the 1% threshold the Lees are now anticipating for Milk Marque.

The aim, therefore, is to take up to 30 cows out of production, drying off barreners and selecting out other animals that could jeopardise milk quality.

This will also help spread fodder supplies and reduce dependence on purchased feed. With concentrates currently costing the business £130/t – up £23 on last year – this is seen as an essential action as the Lees prepare for the squeeze on margins that will inevitably be felt next spring.


FARM FACTS


&#8226 A 235ha (580-acre) family farm in mid-Devon, run by Anthony Lee, his father Michael and his brothers, Roger and Christopher.

&#8226 Dairy herd of 252 Holstein Friesians averaging 5800 litres a year.

&#8226 Outdoor pigs reared from 220 sows.

&#8226 Potatoes grown on the farm and on rented land.

&#8226 Strong emphasis on co-operative marketing.

Lifting the first crop of Estima is dusty work at Dowrich in Devon.