Use some help to reduce your machine costs
By Peter Hill
FARMS that dont use a contractor or some other form of outside help, should take a hard look at their fixed costs – they are probably higher than they could be, believes Simon Mountjoy, Brown & Co farm business consultant.
"Unless they use an agricultural contractor sometime during the year, their fixed costs are probably too high," he says. "Its not an admission of failure to use a contractor; its an opportunity to reduce costs and use the money better elsewhere."
Simon Mountjoys role as farm business consultant is to advise on ways in which landowners and tenants can maintain and improve the financial standing of their businesses. He finds all too often that not enough attention is paid to labour and machinery costs, which today invariably account for the larger proportion of production costs.
"Variable costs still tend to receive greater attention and, though machinery costs have come under closer scrutiny in recent years, theyre still not being tackled as hard as they could be in many cases," says Mr Mountjoy.
Planning for peaks
"Its a matter of planning for replacement and peak workloads, and deciding when it is more cost-effective to bring in support instead of tying up capital in farm-owned equipment."
Many farmers have had to do this anyway as falling prices and slackening support have caused belts to be tightened. These pressures may have eased a little, but they will return.
The key to making good use of contractors is to plan ahead and make a committment, Mr Mountjoy says.
"Get locked into a contractors work schedule – thats the way to get the best service – and give him the confidence to invest in his own business."
That has to be better than leaving it to the last minute and settling for whoever has spare capacity; yet this is often the way contractors are still taken on. Mr Mountjoy also advises caution against screwing the last pound out of the deal.
"Contracting is more competitive than ever so market forces will take care of rates in general," he suggests.
"Its more important to get the right service from someone with the right equipment who will do a professional job. And thats usually worth a little extra." *