Management Matters: Spring expenditure under scrutiny

The 2009 crop is likely to be one of the most expensive for several years, prompting HBH Farming’s partners to scrutinise every purchase this spring. Paul Spackman reports

In about two month’s time the first combines are likely to be rolling in southern counties and, weather permitting, HBH Farming, in Oxfordshire, will be among the early starters.

The joint venture between neighbouring farmers Guy Hildred and Ed Bishop, plus partner Vaughan Williams, will have about 6500 acres of cereals, oilseed rape and pulses to cut across a range of soil types. After last year’s prolonged wash-out harvest – during which they received welcome help from neighbours to clear – they are keen not to get caught out this year. So, this spring they decided to replace one of the two Class Lexion 580 combines with a larger 600 model.

“We didn’t desperately need the extra capacity, but the deal we were offered was too good to refuse,” Mr Hildred says. “It’s on a service agreement and the monthly payments weren’t a lot different from what we were paying, so it made sense to upgrade.”

He reckons the two machines cutting wheat could easily produce over 150t grain/hour, but he expects the hourly average, including moving between fields, opening up headlands, etc, to be nearer 50t/hour. “We’ve just bought another second-hand trailer to cope with the bigger combine, but because we work across a number of different farms and don’t have any central storage, I expect we will have some logistical problems.”

The combine is not the only new purchase this spring. One of HBH’s 200hp John Deere tractors has just been replaced with a similar-sized Massey. “We generally replace one tractor every year,” says Mr Bishop. “We only have four tractors across 6500 arable acres, which isn’t that many, so they’re all worked pretty hard. Replacing one every year makes sure we keep the kit upgraded and avoids too many breakdowns. Like the combine, all tractors are on service agreements, so even if there is a problem, someone’s out to fix it pretty soon.

“As a joint venture farming this sort of area, our attitude is very much how we can keep tractors running – all the time one is standing idle, it’s still costing us money.”

Higher costs

Any savings that can be made will help overcome the expected 30-40% increase in production costs for the 2009 crop, says Mr Hildred. “Across HBH we buy something like 1000t of fertiliser each year, so that’s by far the biggest factor in the cost increase, along with last autumn’s diesel.”

After the price volatility both inputs experienced last year, he is even more cautious about buying them this season. “Normally, we’d buy all our fertiliser for summer delivery, but after talking to GrowHow I’m convinced buying everything in one go isn’t the right thing to do, any more than selling all your corn on one day is. Fertiliser is a commodity market and subject to the same volatility. I think for too long, farmers have been incredibly loyal and unadventurous in their fertiliser buying and now is the time to look at alternatives – whether that’s when you buy, or what you buy.”

Increasingly, both partners are looking at alternatives to ammonium nitrate and this year 2000t of green waste compost and 400t of Fibrophos and Cropcare concentrated PK fertiliser will be used across HBH. “I won’t have to buy any artificial P or K this year and expect we’ll use a similar tonnage [of compost and Fibrophos] next year,” says Mr Hildred.

Although the cost of Fibrophos is similar to artificial P and K fertiliser, an added advantage of using it is that the cost includes application, which eases the workload at harvest, adds Mr Bishop. “It’s one less thing to worry about doing. We’ve used it across the board this season and it’s the first year we haven’t had to put artificial P or K fertiliser on.”

Fuel buying

As well as fertiliser, this is normally the time of year to plan diesel purchases for the forthcoming harvest. For HBH fuel represents a massive outlay, even considering the price of red diesel has almost halved since its peak of 75p/litre last July. “We probably use at least 4000-5000 litres a day during peak harvest and it doesn’t really tail off until the autumn,” Mr Hildred says.

“We’ve slightly increased our capacity to store fuel this spring and probably have enough tanks across HBH to hold 50,000 litres. But even if these were all empty it still doesn’t seem possible to buy diesel forward. We’ve looked into doing it, but just can’t buy a large enough quantity to make it worthwhile.”

He acknowledges this is something of a mixed blessing, though, as buying large volumes forward presents a bigger issue for security.

Personal time

The formation of the HBH Farming joint venture six years ago may provide cost and efficiency savings. But for both partners, one of the biggest ongoing benefits is the amount of time it has freed up for doing other things.

“It’s a very important feature of HBH, that any of the staff can take a break and things will still get done, even at busy times,” Mr Bishop says. “Before we started the joint venture, I, like many other farmers, used to think I was a hero working 18 hours a day. But I’ve realised it doesn’t have to be that way and freeing up time to do other things is probably as, if not more, important than the financial benefits of HBH.”

Mr Bishop says good staff are essential to this flexibility and acknowledges HBH is lucky to have experienced local staff who know the farm and can be left to their own devices. “Most of us are aged 45-50, so it will be a good 10-15 years before we have to start thinking about replacements. And the beauty of HBH is that, as a company, it can go on farming indefinitely.”

Lambing went well

At Streatley Farm, lambing of the 1400 Suffolk mule-cross ewes went “very well” this spring, says Mr Bishop.

Lambing percentages were about 1.7 on the main ewes and one on the ewe lambs. All will be fattened on stubble turnips over the winter and sold as hoggets next February, unless the lamb price “rockets” over the next few months. “In which case we might be tempted to sell a few,” Mr Bishop says.

“We’ve got a full-time shepherd now, so we’re thinking of increasing sheep numbers to make the decision pay for itself. But by how many depends on the amount of grass we [HBH] get to farm, as well as the cost of replacements. Thame sale in August is one of the first and it will give us an idea of what the market’s doing, but we are thinking of keeping some lambs back as well.

“I’m confident that if we can keep concentrate costs down and feed only grass or stubble turnips, we can still get a decent return on the sheep.”