Better prices help overcome tricky harvest

The partners of HBH Farming are upbeat about prospects for 2010/11, despite a disappointing harvest and rising costs. Paul Spackman discovers why

The recent boom in cereal prices is welcome news for Guy Hildred and Edward Bishop. Yields across the 2500ha (6000 acres) of combinable cropping that make up HBH Farming have been below par this harvest (see box right) and, like so many farmers, they’re facing higher costs for 2010/11.

“Costs are rising, but not as much as the price of the product,” says Mr Hildred. “On balance we’re pleased with yields considering the weather we’ve had and, with prices where they are, it won’t be a bad year financially.”

August saw 34mm more rainfall than the combined total that fell between April and July, and it was the dry weather earlier in the year that did the damage to yields. Crops on the light Thames Valley gravels were worst affected, with wheats coming in at 5.4t/ha (2.2t/acre), whereas those on heavier land yielded closer to normal at up to 9.2t/ha (3.75t/acre). Spring beans were described as “terrible” at less than 2.5t/ha (1t/acre), even on decent ground. “The crop looked very good earlier in the year, so it’s entirely down to the weather,” Mr Hildred says.

But while yields are down, prices are up considerably and both partners are keeping a close eye on commodity markets given the recent dramatic price increases. Around three-quarters of Mr Bishop’s 2010 crop has been sold, leaving 1200t still to go. “We’ve been watching things closely for a while, but it’s only really in the last month that we’ve been selling anything,” he says. “We can probably afford to sit on what’s left for a while to try and spread the risk a bit.”

With drilling just getting under way, Mr Bishop has already committed four loads of next year’s Group 2 Soissons wheat at a premium of £25/t over feed. All of HBH’s Cassata winter barley, grown on a two-year contract for Coors brewery, has also been sold forward through Openfield, for £135/t. The oilseed rape will again be sold for harvest movement through the United Oilseeds marketing pool.

Forward selling wheat is slightly trickier for Mr Hildred who grows a large area (about 60% of the total) of C1 seed for C2 multiplication. “Most seed companies are reluctant to offer forward contracts, so I can only fix the price of a small proportion of my wheat crop anyway,” he says. So far about 300t of wheat has been sold at £120/t for movement next October.

Both will stick with roughly the same varieties as last season, although Mr Hildred will drop Viscount in favour of the winter wheat variety Invicta. “We grew 300 acres of Viscount this year and it all chitted in the ear during August.”

Autumn spending

HBH’s fertiliser requirements for 2011 have been bought early this year – a decision that they are pleased with having watched prices climb steadily. “I think it’s a bit much for the fertiliser companies to put the price of fertiliser up so much when the price of gas is stationary or going down,” Mr Hildred remarks. “Two years ago they blamed the price of gas for price rises, yet this year it’s due to ‘market forces’ – sounds a bit like having your cake and eating it.”

While Mr Bishop opted for ammonium nitrate, Mr Hildred chose to reduce fertiliser costs by buying mainly urea, at around £230/t, or 50p/kg of nitrogen. This compares with ammonium nitrate at £208/t at the time, or 60p/kg of N. “Urea is cheaper than AN and even this year, which was theoretically a high-risk year for using urea, we didn’t have any problems with using it and a recent TAG trial confirms early application is safe. We have bought a bit of AN though, which will be used for the last top dressing on the wheats in April/May.”

The artificial nitrogen will again be supplemented with about 500 acres-worth of council green waste compost. “We’ll use it where we can, but it’s a bulky product, so we can’t cart it for miles for spreading,” Mr Hildred notes.

The pair also plan to buy a new self-propelled sprayer this autumn, replacing the seven-year-old 3000-litre Househam with a slightly larger 4000-litre model, fitted with satellite navigation and automatic boom shut-off. The £80,000 net cost of the machine will be spread over a three-year finance deal.

By increasing the sprayer capacity, Mr Hildred says they will be in a better position to move from the current 24m tramlines to 30m spacing in the future. “Currently we’re limited because we’re running a 4m [Väderstad] drill, together with another 6m [Horsch] one. Drilling capacity isn’t an issue as they’ll easily do 200-250 acres in a good day, but when that 4m drill expires, we will probably replace it with a bigger 6m version which will let us go up to 30m tramlines,” he says.

“Doing so would also help if we take on any extra land. We’re not chasing new acres, but we want the flexibility to increase our area relatively cheaply and easily should the opportunity arise. The capital cost of adding an extra 6m to the sprayer boom and buying a new drill is relatively small way to increase capacity.”

Livestock add interest

While the arable operations are the prime focus of HBH Farming, livestock provide a valuable addition. Mr Bishop’s flock of 1300 Suffolk mule-cross sheep make use of any grassland that comes with contracted arable land taken on by HBH and also provide a useful revenue stream.

Meanwhile, Mr Hildred is looking to expand his small intensive bull beef enterprise. Around 80 calves were finished on a barley-based ration last season, with prices averaging £900/head. He is looking to increase that head count by another 40 calves this year, with a view to finishing them next July/August.

“A lot depends on whether we can find a suitable feed ration. Beef cattle were a very good place to put £80/t barley last year, but feeding barley doesn’t look quite so attractive this year given prices are now up to £130/t. We made 40 acres-worth of grass silage in September, which we wouldn’t normally do, and we’ll probably look to combine this with some kind of meal.”

Mr Hildred’s only real concern with the beef herd is the potential for being fined a proportion of the single payment if any of the cattle ear tags are lost. “Any fine would be disproportionate to the size of the beef enterprise in relation to the rest of the business. That’s why we keep a complete spare set of tags just in case,” he says.

District heating

Biomass heating could be a potential new area for Mr Hildred to go into over the next couple of years. He is in discussions with the local council about selling a small 1.5-acre plot for building 22 low-cost houses. If permission is granted, he hopes to set up a biomass plant fuelled by straw and wood chip to provide heat for the houses. “We’ve offered the council the land for several years now, but recently there seems to have been a change of attitude as more people look for affordable housing.

“It’s at a very early stage and a lot depends on planning issues and what the government decides to do with the Renewable Heat Incentive next year.”