23 June 1995

Subsidies arrive at last

but tax bill curtails plans

Support payments may have arrived, but increased tax demands mean maximising sales returns will be of paramount importance this season. Bob Davies reports

RECEIPT of delayed support payment cheques totalling more than £20,000 has eased financial pressure on Owen and Anwen Jones.

The money included £7400 in Hill Livestock Compensatory Allowances, £6300 in 1993 Sheep Annual Premium on the 270 extra quota units allocated from the national reserve, and £6600 for 1994. Another £715 was Beef Special Premium Scheme payment on 18 male cattle.

"Getting the cash was very important because the only income from sales over the last month was £1680 from four steers sold with blue cards," said Mr Jones. "These went through Sarn Market, where they do not weigh store cattle, but I guess they averaged around 370kg."

The partners are budgeting to sell around 1000 lambs before the end of the year for an average of £25/head.

Some will go as soon as they are big enough to produce lightweight carcasses for southern European markets. Strong demand, especially from Greece, pushed up the price offered by one local exporter in the second week of June to 250p/kg deadweight. But a test weighing at Bronmiod showed that very few would be ready before the end of the month.

"The picture may change because we have plenty of grass and the lambs are growing fast. Market prices are proving to be hard to predict this year, and sales will have to be planned very carefully if we are to get our £25/lamb target."

Any additional income will be very welcome to pay steeply increased tax demands. Mr Joness accountant has warned him that the books show he underpaid tax for 1993-94 by £3000. When the estimated profit for 1994-95 is adjusted accordingly, and revaluations made following an Inland Revenue review are taken into account, he expects to have to pay an extra £6000 in tax this year.

This, and the cost of rebuilding Bronmiod farmhouse, means that the Joneses cannot afford to make an offer on the small farm that is sandwiched between their two units, which be being sold by private treaty.

The tax bill also means that the farms main tractor will have to be kept for another year. The Zetor has just had its six-monthly service, and Mr Jones would like to replace it with a slightly more powerful machine, for handling the high density chopped silage bales he feels compelled to make following the increase in the price of wrapping plastic.

"But the exchange would cost at least £14,000, so Ill have to make my silage a bit drier and lighter this year."

First-cut silage will be taken from 10ha (25 acre) in the first week of July, and another 10ha should be ready a fortnight later.

The arrival of subsidy cheques has also allowed the clutch to be replaced in the farm van. But the aged stock lorry that was awaiting repair is to be scrapped and not replaced in the short term. "There is now so much hassle and expense involved in operating a lorry that it is more economic to pay someone to take stock to market."

Bronmiods sheep flock is looking well and has fully recovered from the difficult winter and spring conditions. Shearing, costing 50p/ewe, should be completed by this weekend (Jun 24) and dipping is planned to start in two weeks time.

For the first time an OP chemical will not be used for the main summer dip. To avoid the prolonged exposure to OP droplets that is inevitable when the farms inadequate bath is used, Mr Jones decided to buy 25 litres of Robust, which was recently licensed for scab control. This cost £700, and he estimates a charge of over 30p/ewe, compared with 10 to 15p/ewe for an OP chemical.

The first four calves of the year were born without complications, and all the cows are looking very fit. With stock requiring little routine attention, farm worker Gerallt Jones has been able to spend the equivalent of a full week knapsack spraying grassland weeds, especially nettles and thistles, with a broad spectrum herbicide.

The tractor mounted sprayer was used to put gramoxone on the 1.2ha (3 acres) used to grow fodder turnips last year. The area will be reseeded direct. The plan is to get more lambs off early so no roots will be sown for feeding next winter.

Having completed his IACS forms on time, there is no urgent paperwork to do, but time must be found to prepare for an imminent VAT inspection.

Mr Jones also has to decide whether to lease or buy the 500 quota units he needs to stock his land at the optimum level. With so few deals reported to date he is reluctant to begin making serious inquiries. Regulations dictate that plenty of Welsh LFA quota that has been leased for the last three years has to be offered for sale. He is willing to pay up to £15/unit. Above that level he will lease. &#42