Milk price increase is slow to filter through

Better milk prices will take some time to be felt at Thornton Grange Farm, while monthly costs continue to rise. Wendy Short reports

The long-awaited new parlour is expected to be up and running by the end of November, and Peter Chapman is hoping that the outdated Fullwood 16:16 will last until the switchover.

Costs have yet to be finalised, but it is expected that the total bill will exceed the £80,000 estimate. This is mainly due to the increased cost of raw materials since the project began last autumn.

It will take some time before business finances start to improve significantly as a result of the milk price increase. The rolling average at Thornton Grange has risen from 17.65p/litre in August to 18.3p/litre – a difference of just over 0.5p/litre. This is not enough to offset burgeoning costs, Mr Chapman says.

Scrutiny

The electricity bill was the first to come under scrutiny, in preparation for the herd size increase from 160 to 200 head. Considerable savings have been made through shopping around for a new supplier.

Having come to the end of a three-year contract with Scottish Power, which was charging £550 a month for electricity for the farmhouse and business combined, Mr Chapman found that a similarly priced, long-term arrangement was no longer available.

The company’s new offer of a one-year deal at £850 a month was turned down, and Mr Chapman has recently signed up with British Gas, which will charge £650 a month. The exercise has proved that time spent surfing the internet to find an alternative supplier was justified, particularly as the new Fullwood 24:24 will require greater quantities of hot water for washing down.

While variable costs continue to suffer upward pressure, Mr Chapman is reluctant to move away from his partial TMR system and has managed to keep fixed costs relatively controlled.

Time-efficient

With only one full-time member of staff, he finds it more time-efficient to market his home-produced feed wheat himself. The current rise in grain prices has reaffirmed his decision.

The remaining wheat has gone into trader Grainco’s short pool, which gives an average of the price for loads sold between the beginning of October and the end of December. Mr Chapman is hoping for around £130/t for his crop of feed-quality Einstein and Alchemy. This compares with an average £90/t in 2006.

“Yields were about 3.1t/acre this season,” he says. “Last year’s Einstein and Napier averaged 3.9t/acre, but 2007 has been a difficult year.”

With an eye on rising oil prices, Mr Chapman has begun to look at ways of cutting fuel costs within the arable enterprises, and has tentatively explored abandoning the plough and bringing in a contractor with a direct drill.

Plough

Traditionally, he has used a plough, power harrow and drill system, as previous attempts at direct drilling grass after wheat were unsuccessful. With hindsight, it was felt that too much trash remained on the surface, attracting slugs and affecting establishment rates.

“I was thinking about trying the direct drill on a small percentage of grassland again, but I have been put off because I have had more problems with slugs than ever before.

“To reduce potential problems, I could spray off excess trash and apply slug pellets, but I have concluded that the extra expense would probably wipe out any potential fuel savings. Min-till is another option, but I would need to get a contractor in. The loss of flexibility would be an issue and again, I am not convinced there are any significant savings to be made.”

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