Realistic cost cuts vital, growers told
Realistic cost cuts vital, growers told
GROWERS must cut fixed costs further if they are to stay in business, according to ADAS at its arable conference last week.
Yield increases cannot make up the difference, and for some it may be better to bow out now, rather than hang on to the grim end.
"We have a fight on our hands to survive, and we have got to attack all fixed costs," said senior consultant John Bailey. "And I dont mean just paying lip service to cutting fixed costs – you have really got to get stuck in."
For a cereal-based farm, machinery costs should be no more than £150/ha (£61/acre) and labour £60-80/ha (£24-32/acre). On the same farm, 200ha/man (450 acres) is a minimum, he suggested.
"Tackling labour is an emotive issue, but you have got to have a plan," he said.
Cutting machinery costs may initially require some expense, as fewer, larger tractors are required. A large increase in output can be achieved with an extra 20 or 30hp for the main tractor, which should be doing a minimum of 750 hours/year.
"Growers have got to be realistic about what they can and cant achieve. It is a lot easier to cut costs by £100/ha than it is to increase yields by £100/ha," he said.
Machinery restraint needed
Growers must exercise more restraint when buying machinery, but be ruthless in getting rid of it, delegates were told.
Self-propelled sprayers may be fashionable, but at roughly twice the price of a trailed or tractor mounted unit, can the business afford to tie up the extra cash, asked senior mechanisation consultant, John Bailey.
"The cost/ha may not be much different but the crunch comes with replacement." A sprayer tractor can double up for corn-cart and other operations, he added.
Upgrading from 12m booms has increased many farms spraying costs, and is unnecessary up to 280ha (700 acres), he continued.
"The capital cost rises faster than the rate of work rises with wider booms. Thats especially so if the extra work-rate is not needed. A grower should be able to spray his main crop, usually wheat, in 25 hours."
Farm loaders are another frequent fixed cost trap, with expensive telescopic handlers being bought where a basic forklift would do. "Some only do 200 hours/year. That works out at about £40/hr fixed cost."
Holding on to "back-up" tractors can prove costly too. "Are they really needed? You can get hit with a big repair bill for a machine that does little work," he warned.
But once expensive machinery is on the farm, selling it too soon is a sin.
"Growers give away the cheap usage years by replacing machines too early. If you possibly can, stretch it from five to eight years – Most machinery is a lot better made than it was."