Irrigation cost repaid in profit
Irrigation cost repaid in profit
LIGHT land farmers in the Eastern Counties looking to boost crop profitability, rental and capital values should consider irrigation, according to a recent report.
"In the current depressed agricultural economic climate farmers need to scrutinise every aspect of their business. Water is often overlooked," says William Edwards of consultants Brown and Co.
Construction is not cheap. "The approximate cost for obtaining an abstraction licence, constructing a reservoir and equipping a 607ha (1500-acre) farm to spray irrigate 324ha (800 acres) with a 20m gallon reservoir comes to about £250,000."
But the most expensive item – the reservoir – is vital, he advises. "Many new applications for abstraction licences will only be granted if the applicant plans to construct a reservoir, enabling winter abstraction to relieve peak summer demand. It also ensures a secure water supply and reduces the cost of abstraction."
Despite the cost, a farmer growing 81ha (200 acres) of potatoes on this example farm should cover the capital cost of irrigation in just over 13 years. Irrigation typically lifts potato yields by 2.3t/ha (0.9t/acre) per 25mm (1in), says Mr Edwards. At £150/t, this extra output is worth £345/ha (£140/acre). Even assuming a top end annual running cost of £45/acre inch, which includes finance charges and depreciation, that leaves a profit of £234/ha (£95/acre).
Alternatively, if the same area was rented to a potato grower each year, the extra annual increase in gross margin would amount to about £11,250 a year. This would pay for the irrigation capital cost in about 20 years.
Those looking to sell their farms could make a healthy profit. A light land farm worth £1000-1215/ha (£2500-£3000/acre) might fetch up to £200/ha (£500/acre) more if it is fully equipped for irrigation, says Mr Edwards. If that was the case, his example farm would be worth £400,000 more, leaving the vendor with a £150,000 profit. *
Irrigation costs
Liner (£)
Advertise and
obtain licence 2,000
Drill, line and test
borehole 15,000
Pumping station 20,000
Electricity supply 10,000
Reservoir design and
construction (inc liner) 140,000
Underground main and
overground pipes 30,000
Two irrigators 35,000
Total £252,000