Joint Venture Farming Group warns of expensive year ahead

Big joint-venture arable farming groups have been advised to look for further savings this year with winter wheat prices expected to hover around £95/t.

Rural business consultant Jamie Gwatkin said farmers could expect a “tricky” year and they should seek further reductions in costs.

Speaking after revealing the business results for the 2009 harvest for the Joint Venture Farming Group (JVFG) at its annual meeting in Greetham, Leicestershire, Mr Gwatkin said the results were encouraging for some members, especially those who made cuts, but he warned of tougher times ahead.

“In financial terms, there was a cost-saving because people did their work more efficiently,” he said. “But we found the overall cost of growing the crop was higher because the yields were down.

“Although people are managing to cut their costs, they still have to look at the cost per tonne because it is not going down as fast as we are anticipating at the moment.

“The key message is that farmers have to look for further savings. When you are looking at £95/t for wheat, it’s going to be a very tricky year if prices do not go up.”

Looking ahead to the 2010 harvest, Mr Gwatkin said members should focus on getting a cost structure of just over £100/acre (£250/ha), as achieved in the 2009 harvest results.

The results were recorded using data submitted from eight member groups, covering 11,392ha (28,150 acres), of which 70% is wheat and oilseed rape.

Year on year, harvest and establishment costs for growing wheat fell 7.68% to £169.56/ha (£68.62/acre), oilseed rape operations fell 2.8% to £144.24/ha (£58.37/acre) and winter beans fell 6% to £149.87/ha (£60.65/acre). Mr Gwatkin said the reductions mainly came from reduction in fuel prices and increasing work rates.

Labour costs plunged 21.4% to £51.90/ha; machinery costs rose 1.44% to £161.10/ha (£65/acre); combine running costs rose 1.94% to £43.05/ha (£17.40/acre) and main tractor running costs rose 7.40% to £12.39/ha (£5/acre).

Pelham Farming Company in Hertfordshire made a £13,000 saving by hiring a Massey Ferguson 8480 tractor and selling its 325hp John Deere 8520 tractor.

In 2009, JVFG increased its total membership to 20 groups after changing its criteria to welcome large non-collaborative farming businesses.

Members submit benchmarking data monthly via the JVFG website. Results are collated into reports and coded using a traffic light system which allows members to compare ideas to make savings.

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