Spirits lift as SFP cheque arrives

At last, the majority of Colin and Graeme Smith’s single farm payment has arrived.

But the brothers are in no hurry to spend it.

“We’ll probably keep it as a cash reserve for the moment,” says Colin.

“We can’t really see that we can farm without it, but we also know we need to look ahead to when it’s gone.”

The brothers’ SPS cheque was delayed when the Scottish Executive’s computer failed to reconcile their application due to a mapping error of just 0.8ha.

But now the 55,300 payment – about 75% of their total claim – is in the bank.

Many farmers in Scotland had feared the executive’s decision to publish all SPS payments on its website would lead to an unfavourable reaction from the press and the public.

But only the business’s trading name is given, not an address.

This does of course mean that nearby farmers, who recognise that name, can see what their neighbours have received.

“As you can imagine, there’s been quite a bit of banter,” says Colin.

The 2005 single payment claim will be left intact for as long as it can be, but Colin and Graeme know they will need to replace some farm vehicles this year.

“Next year, we’re hoping to conserve at least half of the payment in a separate account, and leave it alone.”

But other Scottish farmers’ trading accounts look very different, just a few weeks after payments arrived.

“We’ve heard some pretty horrendous stories – that some have spent it already and had to go back to the bank to extend the overdraft.

“And some folk still haven’t received their payments, so there will be people who have had to face borrowing to pay bills,” says Graeme.

Colin and Graeme have been watching Aberdeen & Northern Marts’ recent auctions of single payment entitlements with interest.

“In the short term, at least, it looks a reasonably safe investment, with standard entitlements selling for about 2.5 times their value and 1.2 times for set-aside entitlements,” says Graeme.

“But what will they be worth in 2012? You might only get 45% of the original payment.”

The brothers are also know that support from single farm payments will, eventually, some to an end.

“When it does go, we can only look to reduce costs, but it’s hard to see any further reductions we can make – we’re already down the very basic machinery we need.”

And other variable costs are only varying one way.

“Fertiliser is up about 57/t compared with 2003. And fuel is costing more. So unless we can run on fresh air…”

Conventional thinking says: If you can’t reduce costs, develop other income streams.

But it’s hard to find viable diversification opportunities given Towiemore’s rural location.

One idea that does tempt Colin and Graeme is waste recycling.

“At the moment, Dumfries is the only place in Scotland to recycle plastics like bale wrap or fertiliser bags.

But high start-up costs don’t make it too attractive.”

Winter has been kind so far – so kind, in fact, that it hasn’t really felt like winter at all.

“Usually, there’s at least a week or two of total white cover, but this year we’re still waiting for it.

The grass hasn’t really lost its green. And it’s getting greener now,” says Colin.

But there’s still plenty of time for conditions to change, particularly on some of the hill land that sits 1000ft higher than Towiemore itself.

“The Cheviot flock will go up there to lamb in May, so I hope we don’t get any snow early in the month,” says Graeme.

All other stock is now indoors, and the Simmental- and Limousin-cross heifers have made a start on calving.

Most will be sold with calves at foot from May onwards.

And Graeme has a good feeling about the trade they could meet.

“We have just sold 10 stores at Thainstone at about 130p/kg, with the best at 620 for a 440kg heifer.

And they’re getting dearer as we get nearer the spring grass.

“Last autumn, all the store buyers were muttering that the store cattle they’d bought in the spring were too dear.

But the way we’re going, it looks like values will go up again.

There just aren’t enough livestock in the countryside.”