Not all that encouraging
ON OUR FARMS
EASTON LODGE
Not all that encouraging
Table 1:Overhead costs (£)
2001 2000 1999 1998
Labour 42,180 45,229 49,360 51,154
Power/machinery 68,395 66,777 68,212 64,796
Property 5,356 7,092 6,964 8,280
Administration 8,397 9,422 11,867 16,043
Rent/finance 28,000 28,000 28,000 29,288
Total 152,328 156,520 164,403 169,561
Misc revenue 11,977 12,253 13,712 19,827
Net fixed costs 140,351 144,267 150,691 149,734
Costs/ha 580 596 623 619
Cost/acre 235 241 252 250
Table 2:Machinery repair costs (£)
2001 2000 1999 1998 1997
Vehicles 2,771 1,150 1,464 2,845 4,133
Tractors/Combines 7,179 4,945 8,274 4,400 3,169
Field machinery 2,401 3,119 2,430 1,976 2,209
Other machinery 432 1638 1022 2761 686
Total 12,783 10,852 13,190 11,982 10,197
Costs/ha 52.82 44.84 54.50 49.51 42.14
Costs/acre 21.38 18.15 22.06 20.04 17.06
Table 3: Vehicle and tractor repair costs (£)
2001 2000 1999 1998 1997
Land Rover 2,771 1,150 1,410 2,217 2,820
Fendt 395 662 580 3,233 1,247 1,188
Fendt 312 4,318 2,952 2,992 1,195 1,076
Ford 6610 206 543 106 164 279
Ford 7740 388 29 — — —
JCB 530 Loadall 566 475 1,066 1,563 504
THE profit and loss report relating to our year end Nov 30, 2001 has been on the corner of my desk since before Christmas.
Our self-employed accounts secretary Meg Cowap has skilfully steered it into my In tray with the minimum of fuss along with several other reports from the Farm Business Manager software which keeps me briefed on a regular basis of income and expenditure.
For the fifth year running it does not make encouraging reading, the arable accounts will again show a net farm income well below £20,000, before private drawings (last year the figure was just under £12,000).
All our figures will be winging their way to accountants Deloitte and Touche in the next few days for them to prepare their annual report and financial statements. Those will be published as a feature article later on this year. Meanwhile, it is interesting to pick out some of the facts and figures within the arable overhead costs.
The comparative overhead costs for the past four years appear in Table 1. The figures for 2001 indicate a downward trend with labour costs trimmed by nearly 7% on the previous year. Regular labour consists of farm foreman David Cham, who is paid a salary, and a sandwich year student paid at AWB rates plus overtime.
Two students overlap for two months at harvest and we also employ casual labour for hand roguing within seed crops and carting straw bales. It is the casual labour that has been reduced along with students overtime plus a significant 30% drop in secretarial costs since our secretary Heather Shead retired to work part-time and reduced her hours to about eight each week.
By far the largest cost in the overheads is always the power and machinery and its frustrating that despite determined efforts we have seen a rise in this figure over the previous years by nearly 2.5%.
Machinery repair costs for vehicles, tractors, combine, field and other machinery increased by nearly 18% (Table 2). The main causes of this rise was an expensive 72,000 mile service on the Land Rover Discovery costing more than £1500 and a huge bill for the Fendt 312 when it returned to the dealers workshop for a hydraulic pump failure costing nearly £3300. For individual tractor and vehicle repair costs, see Table 3.
Electricity and fuel costs rose by more than £700. or 6% compared with the previous year and contract charges by 5.5%.
Depreciation, currently running at £24,240, is down by 4% basically because we have spent little on new equipment in the past year.
The upshot being that the labour, power and machinery costs for Easton Lodge, which agricultural accounts use as a yardstick for their clients, are currently running at £457/ha (£185/acre) compared with £463/ha (£187.45) for the previous year.
Property costs have been well contained but then when you allocate little or nothing in this part of the budget thats hardly surprising. Within this figure we have incurred nearly £1000 for an electrician for general faults and repairs, and £1285 for a plumber for improvements to the shower and bathroom in staff accommodation. We have also upgraded the central heating in another property but that figure has been capitalised and added to the figure for depreciation.
Administration costs have also been reduced by just over £1000 across the board by attention to detail and cost-cutting.
The total for all the above amounts to £152,328, a saving of more than £4000 on the previous year.
The figure for miscellaneous revenue will not appear in the gross margin and I prefer to net it off against the overhead costs since in order to win this additional income some extra costs have to be incurred.
This income consists of contracting, rents received and receipts from farm visits by visiting groups from abroad. The net figure is still in excess of £140,000 or £580/ha (£235/acre) and difficult to sustain under present output levels.
The solution is to cut hard and deep with the surgeons knife or continue our quest for more land over which to spread our costs. *
Returning to the vehicle and tractor repair costs (table 3) I have identified our Land Rover, four tractors and the JCB 530 teleporter and compared last years figures to the previous four years.
The Discovery, our second to date, seemed to have been storing up problems which came to light at 72,000 miles. The list included cam shaft drive belt and idler pulleys, water pump gasket, oils separator, alternator, silencers, prop shaft universal joint, brake pad and discs, front differential pinion seal, shock absorber bushes and fuel lift pump. All this for a vehicle which is serviced by the dealer every 6,000 miles!
On the tractor front the Fendt 395 systems tractor had a dealers 1000 hour service in August 2000 and did not therefore need one last year. And had it not been for the hub seals on the front drive would have had a relatively trouble-free year.
The Fendt 312 had a dealers 1000-hour service last year but far and away our worst experience was when the drive coupling sheared on the comfort shift pump in the hydraulics. Added to that was the discovery of swarf in the transmission and the fitters search for the cause. This involved splitting the tractor both at the clutch and the gearbox, removing the PTO clutch as well as an examination of the gearbox and removal of the drop box. All that at a labour cost of £2512 and parts at £797. At the end of the day no reason was ever found for the excessive swarf.
It was my decision to investigate on advice from the dealer that excessive swarf was present, perhaps I should have negotiated a "no-win, no-fee" agreement. Other costs incurred were a new hydraulic arm on the left of the cross shaft. This has without doubt been an expensive tractor to maintain.