Year’s ups and downs

OUR FINANCIAL year end falls on Nov 30, so in the run-up to Christmas we usually spend long hours in the farm office tidying loose ends and following up debtors and creditors.

Freelance farm secretary Meg Cowap, who spends two days each month driving the computer and the Farmplan Business Manager software, has plenty of experience in handling accountants. But even she had to use all her skills and experience in sorting out this year-end to satisfy our in-house accountants.

This was the first year of the contract farming agreement with the William Scott Abbot Trust at Sacrewell Lodge. It was created to replace the original farm business tenancy in order to protect the single farm payment this year.

Having gone to some lengths to amalgamate the two farms as an integrated business in 2002, we reversed the process a year later to ensure the trust was back in the driving seat to receive its historic payments.

Clearly, that was the correct decision financially. But, coming at the end of the year, it has caused complications when trying to arrive at the overall profit and loss of the combined business.

Rather than delve deeper into this snake pit, I will let our accountants and auditors Deloitte & Touche attempt to square the books in due course, which will make a feature article in our Business Section this spring.

That does not prevent me from drawing off reports highlighting our overhead costs and the attached tables show a comparison between the years 2003 and 2004.

Table 3 covers fixed costs for the combined farms in terms of labour, power and machinery, property, administration and rent. To arrive at a net figure, I have deducted a sum for miscellaneous income consisting of rents received, receipts for contract work and potato income from sub-letting and irrigation.

The figures show interesting variances between the years with labour, rent and finance costs coming down, but significant increases in power and machinery, property and administration costs. The bottom line is an increase of 8%, but nonetheless, an improvement of 13% on the stand-alone figure for Easton Lodge in 2002.

The largest increase has been in the power and machinery costs, which are broken down in Table 4. Repairs, including small additions not capitalised, have risen by 19%.

Fuel, lubricants and electricity are up by a massive 52% due to higher costs of diesel and increased use of energy compared with 2003 to harvest, dry and condition the grain. The costs of seed-bed preparation also increased.

Closer examination of the machinery repair costs in Table 1 shows a reduction in the tractor and combine heading, but increases in all the others.

The large increase in the field machinery costs are explained by the purchase of four low profile tyres and wheels for our 15t grain trailer, very expensive seal kits for the rams on our Kverneland plough, more than 400 for a 5m length of hose for our Ferrag/Accord drill and a big repair to our Kuhn power harrow involving the lid off and replacement gears.