Income data shows need for expansion

14 June 2002

Income data shows need for expansion

A CLOSER look at Easton Lodges financial performance shows why John Lambkin is keen to expand the area he farms.

Since 1997, farm income has averaged just £10,700, or £44/ha (£18/acre), and shows no sign of improving (see graph).

"We have done just about all we can to optimise performance at Easton Lodge. On the output side, we have gone about as far as we can. We all know wheat can do over 15t/ha in theory, but not in practice, especially on our brashy soils."

The crop takes about half the farmed area, and has averaged about 8.8t/ha (3.6t/acre) over the past five years. Drought in the critical May/June period is the most limiting factor.

A switch from mainly milling wheats to feed varieties has been contemplated, but farm trials show insufficient yield advantage to outweigh the higher price that quality wheats achieve. Since 1997, Mr Lambkin has made an average of £82/t.

Other crops – winter barley for malting, vining peas for seed, oilseed rape and sugar beet – have also benefited from good husbandry. Mr Lambkin belongs to an agronomy group to ensure he makes best use of inputs.

He is also a member of a buying group. As a result, variable costs have been kept in check. The five-year average for wheat is £216/ha (£87/acre) and £177/ha (£72/acre) for oilseed rape. But significant savings are now almost impossible to achieve, without the risk of compromising yield and quality.

Overall, gross margins are proving difficult to maintain.

Fixed costs remain stubbornly high. But Mr Lambkin believes that expanding the area will make a marked difference.

"We have gone through all overheads time and again, trying to pare them as much as possible. But we are still over-geared – on paper, we have too much labour and machinery for the area we farm."

Total costs have fallen from almost £680/ha (£275/acre) in 1997 to £620/ha (£251/acre) in 2001. That is still almost 13% higher than Nixs Farm Management Pocketbook figure for a mainly cereals farm of equivalent size.

Apart from Mr Lambkin, there are two other people employed on the arable unit – farm foreman David Cham and a sandwich-year student who spends 50% of his time on the pig unit. Another student is taken on during the peak harvest/autumn cultivation period.

"This looks like a bit of a luxury. But we have to move a lot of muck and slurry out of the pig unit and cart about 300t of straw during the summer. And, while we are keen to take on students, most are completely green."

The labour bill last year amounted to just over £41,000, or £171/ha (£69/acre), about 10% higher than the Nix figure.

But power and machinery costs, at £275/ha (£111/acre), are about 40% higher than that benchmark. This is because Easton Lodge, in theory, has bigger kit than needed.

"Every farm needs a tractor, a drill, a plough, discs, a sprayer and other bits and pieces, and we hire in a combine. While we dont have the biggest machines, most of those that can cope with 600 acres can equally well do a thousand," says Mr Lambkin. "And our two main tractors are just 120hp and 115hp, so we are not over-horsepowered." &#42

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