Plan now for spring cashflow squeeze, growers warned
The squeeze for arable farms could come next spring © Tim Scrivener Arable farmers should start to budget now for a potential cashflow squeeze next spring as the result of lower income from 2020 crop sales.
Graham Redman, author of the John Nix Pocketbook for Farm Management, said farmers should forecast costs for the 2021 crop and compare that to projected income from this year’s lower-yielding harvest.
“If you are going to have to have a few months of extended credit then approaching finance providers now is a good idea,” he said.
“We have had the bad weather but the implications of that still have to be worked through.”
See also: The big question: Drill wheat early or late this autumn?
The 2021 pocketbook, which is released this month, forecasts a slender margin of just £15/ha for the average combinable cropping farm next season before rent and finance.
With rent, finance and labour costs deducted but estimates for support payments and diversification added in, this improves to a business profit of £104/ha.
The best-performing farms, which enjoy the highest yields and keep costs under control, are forecast to make a business profit of £335/ha.
Mr Redman said growers would be hoping the 2021 crop was a bounteous one, with good prices to match, to help recover from this year’s challenging season and set businesses up well for the forecast cuts to the Basic Payment Scheme in England from next year.