Almost 60% of English cereal farms are not producing £100 of output for every £100 of input, according to farm business consultants, Andersons.
Growers should not rely on higher commodity prices to lift profitability and must do more to control fixed costs, the firm’s Francis Mordaunt said at Cereals 2007 yesterday (13 June).
“We’re in quite profitable times, but businesses need to be thinking strategically about the future. There is still a lot of room for improvement.”
He acknowledged that some growers may be unable to improve profitability sufficiently and in such cases, it may be more appropriate to leave the industry, he said.
Labour and machinery still offered the greatest scope for reducing fixed costs, while variable costs, such as seed, fertiliser and sprays had been cut significantly over recent years, he noted.
“Higher prices tend to hide underlying issues, such as fixed costs and falling single payments,” added his colleague, Sebastian Graff-Baker. He also urged growers considering taking on more land to think carefully.
“Without financial clarity, there is a danger that the anticipation of surplus profit makes farmers take on land that is less profitable than it may appear.”
Return to Cereals 2007 homepage