Head to head to find best way to profits
Making money is far from
easy at current prices. But
there are more ways than
one of skinning a cat, as
Andrew Swallow found when
he visited Northumberland
in early February for a
head-to-head meeting with
growers Peter Hogg and
ONE is a farm manager, the other an owner-occupier. Ones wheat yield last year was 11.4t/ha, the others 7.2t/ha. Ones costs are computer calculated, the others are scribbled out on scrap paper.
At first sight there appears to be little in common between the way Matthew Hanson, of Rock Farms near Alnwick and Peter Hogg, of Causey Park, do business.
But as Matthew puts it, there are more ways than one of skinning a cat, and both men are struggling to achieve the same goal; make a reasonable return.
Dig a little deeper, and one finds more similarities between these two Northumberland farmers.
Both do their own agronomy. Both shop around for chemicals. Both are using marketing pools to spread their risk on a large proportion of their grain sales. Both home-save seed. Both have adopted reduced tillage, but neither has bought brand-new kit. Both are making machinery go further and last longer.
And the end result is perhaps the most important similarity of all. Both are keeping their heads above water and have no plans to quit in the current crisis.
Peters policy, as regular readers of FWs arable Farmer Focus column will know, is, by his own admission, cheap and cheerful. The average age of the tractor fleet is 14 years, and last years spend on winter wheat sprays was a miserly £50/ha.
Add in home-cleaned, home-saved, seed and a modest £35/ha on fertiliser – FYM maintains phosphate and potash levels – and total variable costs come to a miserly £98/ha.
In contrast, 15 miles up the A1 at Rock Farms, farm manager Matthew Hanson spent £123/ha on wheat sprays and a total £257/ha in variable costs. But with yields hitting 11.4t/ha last year, and a predicted average sale price of £73/t, gross margin will be an impressive £830/ha.
However, while the machinery at Rock is far from extravagant, costs appear considerably higher than for Mr Hoggs fully depreciated fleet of Fords.
"Most of our tractors are ancient," he says. The two ploughing tractors, both 150hp Ford TW20s, old enough to pop into the pub at the end of the road for a pint. They certainly drink enough diesel."
Annual running costs are estimated at £16,000, including the farms second-hand Class Dominator 108 combine and about £4000 on fuel.
Add in £16,000 of labour costs and spread the total across his 210ha of heavy clay arable land and that makes £152/ha. But no account is taken for Mr Hoggs or his brothers time.
"Most of our time is spent on the livestock and other work. The arable is just the odd blitz here and there."
Rock Farms computer-calculated operational costs on wheat in 1999 were not that much higher, at £228/ha, including labour and Mr Hansons time. Fewer machines do more hours and even here the average age of the tractors is seven years old. Key to keeping costs down at Rock was a rationalisation of the tractor fleet in 1997, says Mr Hanson. "We sold four tractors when I arrived here," he says.
Now a Case Magnum and John Deere 7700 – both 1993 models boosted to 180hp – are the main draft tractors used, with a 1997 Case Maxxum and 1991 John Deere 3350 in support plus a 1987 Massey 290 loader tractor.
Both men are wary of hi-tech modern machinery, especially in the second-hand market. With times as tough as they are, dealership repairs have to be avoided wherever possible, they say.
"All the electronics make them user unserviceable," says Mr Hogg.
His vision of the future, for the short-term at least, is to batten down the hatches.
"We have just got to keep control of costs and keep the job together until things get better. Without the IACS cheque we would be making a thumping loss."
That is echoed by Mr Hanson. But, with all his wheat drilled, he is a little more optimistic about returns for next year.
"Everything is under water down south, so maybe we will see £80/t this year. I have got every sympathy for them down there, but that is good news for us for once. At that we can make a reasonable return and start to re-invest," he says. *
Hogg versus Hanson
Land: 420ha Heavy clay. 574ha Clay-loam.
Arable: 210ha 475ha
Tractors: 6 (ave 14 yrs old) 4 (ave 7yrs old)
Power: 585hp plus "runabouts" 565hp plus loader.
Hp/ha: 1.39 0.98
Staff: 4 + brother 4 on arable
2000 wht yld 7.2t/ha 11.4t/ha
Comparing costs and crop performance… Northumberland growers Matthew Hanson (left) and Peter Hogg met in early February to discuss their systems. Both found they had taken many similar measures to cut production costs despite running very different farming businesses.
Matthew Hanson is a career farm manager, who joined Sentry Farming after leaving Newcastle University with a degree in Agriculture in 1990 and moved to Rock Farms in 1997. Peter Hogg is a born and bred Northumberland farmer, running Causey Park in partnership with his brother. After going to college at Harper Adams he returned to the farm in 1971 and has "been banging in fence posts" ever since, he says.
HOGG & HANSON
• Contrasting approach to common goal.
• Cheap and cheerful v High input/output.
• Owner occupier v professional manager.
• Yet many common strategies and savings.
• And both in profit – just.