26 March 1999

Triple whammy to force quick cuts on all fronts

Things cant go on as they

are at Rugley. Changes are

needed. And they are needed

soon. Tim Relf reports

RETURNS from each of the farms three main enterprises have collapsed.

Time and money are in short supply and costs need to be cut further. Cattle numbers have been reduced. But it hasnt been enough. The business has gone under the microscope again. And the sheep venture is the one where change is to be made.

The plan is to cut numbers by 25% in the commercial flock, says Alan Jackson. This decision has been taken in the face of tumbling returns, with gross margins falling by more than 50% between 1996 and 1998 (see table).

Current stocking rates are also unsustainable – a problem exacerbated by the drop in staffing levels, with full-time employees down to two. Employing another person is not an option. "The budgets just wouldnt add up," says Alan.

But everyone is at full stretch as it is. More than full stretch. "Im still the shepherd – but I dont have an assistant any more," says Alan. "Now, if Im busy elsewhere on the farm, the sheep dont get the attention they need."

Good part-time staff dont come cheap, either. Get someone with experience for a week at Easter and you dont get much change out of £500. And thats if you can get them at all. "Our seasonal peak is everyones seasonal peak."

The move will also allow stocking rates to be cut. Traditionally at well over 25/ha (10/acre) they are, says Alan, too high. "We had more than 2000 sheep on the place for most of last year."

This should speed the lambs growth rate allowing them to be sold earlier, having incurred lower costs. The final batch of last seasons crop has only left the farm earlier this month, making about £37 apiece.

Mortality rates should also come down. "Yes, weve been losing too many," acknowledges Alan. Desirable knock-on effects could also be felt in Rugleys pedigree flocks, with fewer animals meaning better health overall. "They are the first to suffer."

This change in policy marks a big shift from the high input, high output system which served the Jacksons so well when the industry was buoyant – back when finished lambs were pushing 300p/kg. That system even helped them to scoop the Meat and Livestock Commission Sheep Producer of the Year Award 1996/97.

The roots of the current overstocking problem partly date back to the BSE crisis, which forced cattle numbers to be cut, one implication of which was a drop in the grass and silage area. The 15ha (38 acres) of grass put to the plough in turn left less aftermath and winter grazing for the sheep. "BSE upset the whole balance of the farm."

Meanwhile grasskeep is needed this summer – and the search is now on. It wont come cheap, either – probably with a price tag of about £100/acre.

Fewer sheep will also mean more grazing for the cattle, hopefully boosting growth rates. "This enterprise has been overstocked, too. In a good year, weve got away with it. But last summer, because grass growth was bad, we were caught out."

The aim is to get 0.8kg daily liveweight gain at pasture, after seeing nearer 0.5kg last year. "Putting on kgs at grass is, after all, a lot cheaper than trying to do it in the winter."

Such cost control has become ever-more important in the wake of lower stock values. Three years ago, finished steers were worth £700 or £800. Now its nearer £500.

Adding to the misery has been the downturn in the arable fortune, partly a result of getting twice-the-average rainfall last year. "The 1997 harvest was bad. The one in 1998 was appalling," says Alan. Over this period the yield was down 2.5t/ha (1t/acre) on the 1991-1996 average, equating to 600t of grain. Even at £70/t, thats £42,000. "That money just disappeared."

Against this background, this latest review in policy was inevitable. But the big re-think really began after that fateful day in 1996 when BSE hit the headlines. Many options have been given thought since then. Diversification, for example. "But its not really possible on a tenanted farm."

Besides, diversification would need capital. And thats in short supply – the industry-wide crisis has knocked about £150,000 off the farms asset base in the last three years. "That was money we earned and paid tax on," says Alan. "Money that we built up over 30 years of hard work. Money that represented our pension."

At the same time, the nature of farming is changing beyond all recognition. Open-market prices have fallen, leaving subsidies accounting for a greater proportion of returns. In the cattle business, for example, beef special premium payments on a male animal can total nearly £200. "The ability to farm well is becoming less relevant."

&#8226 This is the last report from Rugley, FWs adopted farm in the North East for the last two years. Alan and Lorna would like to thank friends old and new for their support and positive comments. They wish all their farming friends success as the millennium approaches.

FARM FACTS

&#8226 A 280ha (690-acre) arable and grass unit in the north east, farmed by Alan and Lorna Jackson on a full agricultural tenancy from the Duke of Northumberland.

&#8226 Heavy land growing combinable crops and grass, 25% in the LFA.

&#8226 Continental cross beef cattle finished on semi-intensive system.

&#8226 British Milksheep producing prime lambs, plus small pedigree Suffolk and Texel enterprises.

&#8226 Two full-time employees, supplemented by casual labour.

Flock financial performance (£)

1998 1997 1996

Output 64.58 101.54 119.13

Feed &

Forage 17.52 22.45 21.99

Variable

Costs 26.82 37.16 34.86

GM/ewe 37.76 64.37 84.27

GM/ha 533.62 765.59 1030.79