Farmer Focus: Time to get serious with cost of production

Well, it has happened. We have been cut free from the shackles of the European Union. Now what?

Our future, as always, is in our hands. Other than the security that the direct support payments give our suppliers and customers, I don’t really see a difference.

Haven’t we always attempted to be progressive, more productive, care for our environment and be good farmers?

See also: How Scottish grower hit winning spring barley yields with farmer network help

Payments have, without doubt, distorted supply chains and ensured that food was too cheap in the shops. The question is, will the market take up the slack?

It may do, but I doubt it will fully, mainly because most of the commodities we produce can be grown for less money elsewhere in the world.

A basic back-of-a-fag-packet calculation tells me that if the average UK wheat yield is 7t/ha, we need another £30/t for our world-class product to replace the loss of £210/ha BPS. Simple.

So if you can all do the same calculations for your wheat yields, as well as for all of your other crops, then let your grain merchant know. I’m sure they will pay up… Let’s see how far we get with that one.

My neighbour has just rightly pointed out that at least the support payments carry us through the challenges we face in the market and with the weather. This volatility has been the curse of farmers throughout time.

Supply chains

So, while not completely dismissing farmgate price rises, our next option is to go to our supply chains and see what they can do.

Using my simple maths again, it means we have to take half the cost out of our fertiliser and sprays to achieve the same result.

We mustn’t ever forget our overheads, of course. I’m sure all those tractors and that shiny kit doesn’t really cost that much to develop, make, market and service.

And as one kind gent at HM Treasury once told me, you farmers all pay far too much for labour and rent.

I would suggest that those shackles mentioned at the beginning were more like a good, strong anchor than anything more serious.

As with all fag packets these days, please don’t forget the very large on-pack health warnings.

So, for goodness sake, calculate some real cost of production and make sure you are ready for next year in our brave new world.