Efficient machinery use helps co-operating farmers save cash

Big joint-venture arable farming groups saw establishment and harvest costs fall last year, despite serious increases in the cost of fertiliser and fuel.

Speaking at the Joint Venture Farming Group’s annual conference this week, rural business consultant Jamie Gwatkin said the businesses that benchmarked their data within the group had seen their harvest and establishment costs for growing wheat actually fall from £157/ha (£64/acre) to just under £155/ha (£63/acre). Oilseed rape costs fell from £142/ha (£57/ha) to £130/ha (£52./acre). He said this was mainly due to more efficient use of machinery.

Meanwhile, the gap between the top and bottom-performing groups saw establishment and harvest costs for oilseed rape widen to 34%, or £37/ha (£15/acre). On wheat it was 17%, equivalent to £24/ha (£10/acre).

Although wheat prices had more than doubled since last year, Mr Gwatkin said the big joint-venture businesses had seen many other costs rise, too. Clearest had been the punitive effects of red diesel price hikes, which meant that farmers should now budget at 50p/litre, compared with just 26p/litre in 2005, Mr Gwatkin said. “Machinery costs are up – that’s mainly driven by fuel – but admin and finance costs are also up compared with 2006”

But the joint-venture groups had been able to achieve big cost savings in diesel usage – up to £17,000 a year in one case – by more efficient use of combine harvesters and other machinery.

And the higher cost of diesel had begun to alter conventional contracting or contract-farming agreements, Mr Gwatkin said. “Don’t underestimate the figures involved if a contractor wants the farmer to supply the diesel to run his combine.”

Managing higher input costs within the joint venture groups had led them to reappraise the case for hiring a combine over owning one, he said. “We’re also looking at cultivation techniques and individual machines to reduce fuel useage.”

The 16 groups contributing data to the Joint Venture Farming Group, now in its third year of collecting precise farm management information, account for more than 23,000ha (57,000 acres), of which nearly 75% is in wheat or oilseed rape.

Farmers should also begin preparing budgets on a “£/t produced” basis rather than just measuring costs or income per acre, Mr Gwatkin said. “For instance, in 2007, wheat yields were down – 12% on average across the group – so while output per acre was up, costs per tonne were actually higher.”

For more information or to obtain some free benchmark data from within the Joint Venture Farming Group, visit www.jvfg.co.uk