NIadvice after awful harvest
By Andrew Swallow
FOCUS on fixed costs is the message to growers in Northern Ireland after the worst harvest since 1985. But as a grower who runs a tighter ship than many points out, it is easier said than done.
"Fixed costs are where the big savings can be made," says Reid Coleman, senior development advisor with the Department of Agriculture Northern Ireland. Growers will have to take tough decisions on overheads to survive."
Top of his hit-list is rent. Annual "conacre" lets, soon to be fixed between many growers and land owners, must be driven down, in light of a £175/ha (£70/acre) slump in returns from cereals this year.
That point is echoed by Graham Furey, who grows 130ha (320acres) of crops near Killyleagh, Co Down. "Conacre rents are the biggest opportunity for us to cut costs. Over half our crops are grown on conacre. We have to cut £40/acre off the top price we paid last year."
Locally growers are talking of a £173/ha (£70/acre) maximum. In practice that could be hard to maintain as competition drives the value up, he says. Greater use of contractors is also advised by Mr Coleman. For those reluctant to give up the independence and timeliness of ownership, sharing machines or implements between a number of holdings may be an alternative, he suggests.
Growers contemplating contractor use should contract out a whole operation and sell the farm equipment, rather than use contractors as a top-up service. A level of commitment to the contractor by the grower is required to obtain good service, he maintains.
"For example, the biggest cereal grower in Northern Ireland, with 7-800 acres, has all his ploughing and all his combining done by contractor."
Mr Fureys experience reinforces that. He has all his ploughing done by contractor, and says his commitment meant the contractor could invest in new equipment and make a better job. However, he still has his own combine.
"It is a personal thing. Having grown the crop for nearly twelve months, I like to have the satisfaction of harvesting it." And the cost of his 12-year-old Massey 565 combine is minimal, having been bought for £6000 three or four years ago, he adds.
When planning, Mr Coleman urges growers to allow for re-investment. But Mr Furey considers that a tall order. "Our returns this year are too low to put anything aside for re-investment. We re-invested heavily in 96-97."
Finance on two new tractors bought then are putting extra pressure on his business. "Our overdraft is getting serious. The leases have two and a half years to run, and if neither cattle or cereals pick up we could have trouble. Our major hope is for a weaker pound.
"As we are, I reckon we can hold with the machinery we have for three years. With old kit, we would probably have had to pack up by now anyway," he concludes. *