Set-aside pointer
Units join forces to hammer overheads
Merging the power and
labour resources of two
neighbouring farms can help
slash overhead costs.
Charles Abel finds out how
two Beds farms are reaping
the rewards of putting that
theory into practice
HOW would you like to knock £62/ha off your machinery and labour costs? Or does £84/ha sound more attractive? For two Beds farms those savings are already a reality.
"It started last harvest when we decided to sell our separate combines and invest in a single, new, larger machine to cut the whole 1400 acres of combinable crops we grow between us," explains Chris Jones.
He farms 329ha (812 acres) of combinable crops at Northfield Farm, Clophill, Beds, and established the combine share with the Davies family farming partnership, which farms 243ha (600 acres) of arable alongside two pig units and 750 sheep at nearby Home Farm, Haynes.
With an output of 250-300t a day the new Claas 450 Lexion made short work of harvest, slashing combining costs to just £35/ha (£14/acre). The move benefited corn carting too, releasing a tractor, trailer and a man on each farm.
"At first it felt like a big shift in the way we worked, but within 48 hours it was running more smoothly than operating our old system," says Andrew Davies.
By Christmas both parties felt a wholesale move into sharing all machinery and labour could work. The result, the Hayhill Farming Company, is a joint-venture limited company, with equal shareholdings, a director from each farm and a management committee comprising all those involved in farming the two farms.
All equipment was pooled and valued by a third party. Loan capital is provided on a per hectare basis including rotational set-aside.
Much of the arable kit at Haynes was due for replacement, so was subsequently sold off. At Northfield Farm a major re-equipping had taken place three years earlier. "I admit it meant I was over mechanised, but this arrangement means we can now cover both farms without having to invest in a lot of new equipment," says Mr Jones.
Hayhills JCB Fastrac plus Landquip 24m, 2000-litre demount sprayer and Amazone ZAM 24m spreader now looks after all crop inputs. Establishment mainly uses Simba discs and a 4m Freeflow drill, although a third of the land at Haynes will still be ploughed.
Machinery replacement policy is 5-6 years for the combine and 5000 hours for tractors.
Labour costs have also fallen. Mr Jones went to a one-man system three years ago when the bigger equipment arrived. An imminent retirement at Haynes, plus the loss of three staff during the pig crisis, has also cut costs.
The only full-time labour now required for the joint arable operation is Graham Keen. A company secretary is employed who also looks after all the crop recording and book-keeping. One extra is hired at harvest. Any further labour demands are met by Mr Jones, Andrew or Randolph Davies.
Costs are charged back to the individual farms on a simple total cost divided by total area basis.
Thanks to careful planning competition for equipment is not a problem. "It is very different from working with a contractor," notes Mr Jones. "We are in this together, so we have a united approach. But you do need to have the equipment capable of doing the work in hand."
"We look at the work that needs doing during the season, to set priorities," adds Andrew Davies. "Rape swathing is an example. We ensure crops are swathed to give us a sequence of crops for combining."
"We also look to spread drilling dates and varieties, to spread the workload for combining, spraying and spreading," adds Randolph Davies.
At Northfield Farm total savings are estimated at £62/ha (£25/acre). At Haynes the saving compared with re-equipping and continuing to work family labour very hard is estimated to be £84/ha (£34/acre).
So what of the future? "We would like to go further towards sharing agronomy advice, and input purchasing," notes Randolph Davies. But storage and marketing will be kept separate for now.
More land or more farmer participants are also keenly desired. "We could do up to 2000 acres easily without investing in further equipment," says Mr Jones. Still greater cost savings are clearly within reach, he believes. *
Key to success
Many planned mergers fail due to a fear of the unknown, lack of discipline and a lack of cash to equip the new business appropriately, claims Mr Jones.
"You do need to have a similar outlook – it is no good trying to force the merger through when there are differences of opinion. Hayhill is structured as a deadlock company – with no casting vote any differences of opinion have to be resolved.
"It is not just a case of stretching equipment across more acres either. You have to look at what the demands are and ensure you have the right equipment to deal with it. You cant afford to cut corners on crop management."
Good advice is also essential. "Bidwells were a great help and Taylor Vinter solicitors made life simple on the legal side," Mr Jones adds.
Plan your day at this important event
Driving down overheads is a goal for all arable farms and is a key issue which will be addressed by the "Plan Your Day" feature at Cereals 99, the national combinable crops event at Vine Farm, near Royston Herts on June 16 and 17.
"How many years have we banged on about cutting overheads and yet so little has really been achieved," says Beds ADAS consultant David Parish, who advises at Haynes.
"This merger is a prime example of how two farms can make real inroads into overheads. So many farms are trying to acquire extra land to spread overheads. But too many people are paying too much for the privilege of doing that. Paying £100/acre for poor land where you cant realistically budget for more than 7t/ha really is not realistic.
"This power and labour merger shows there are alternative approaches that can bring substantial benefits."
• The Plan Your Day feature will be staffed by experts briefed to help you make the most of your visit to Cereals 99. Specialist will be on hand to address four key themes:
• Right strategy.
• Managed costs.
• Improving production.
• Better marketing.
Make the "Plan Your Day" feature your first port of call at Cereals 99 and make the most of your time at this important event.
Cropping benefits
A big benefit of the merger has been access to the latest, high-output equipment, notes Randolph Davies. "It has given us greater versatility, better equipment and faster workrates."
So far cropping has not changed in response to the merger, the simple wheat, wheat, rape rotations making for simple operations.
But the better depth control of the Freeflow drill means earlier drilling is now a realistic option at Haynes. "We want to go earlier, because we think we can now manipulate seed rate and canopy management to benefit from it and now we have the equipment which can help us achieve that," says Mr Davies.
Chance to see all the latest tackle in action
CULTIVATIONS and crop establishment lay the foundations for future crop profits, so why not make a date in your diary for this years key working machinery demo where you can see all the latest kit in action?
Cultivations 1999 takes place on Wed 15 Sept at Twinwoods Farm, Milton Ernest, Bedford, by kind permission of Bedfordia Farms.
Organised by the East of England Agricultural Society and run in conjunction with farmers weekly, the event offers a large area of cereal stubble for equipment to cultivate and drill.
The show is open from 9.30-3.30. Admission is £5, or free to EEAS members. *
One-stop lab for East Anglia growers
EAST Anglian farmers now have a new analytical laboratory to help check the characteristics of soil, plant and leaf tissue, water, grain and root crops.
Eastern Growers Laboratories, a part of Sands Agricultural Services, offers traditional services, plus state of the art inductively controlled plasma emission techniques, at its base in Swaffham, Norfolk.
Nutrient content, trace elements, heavy metals and quality factors can all be tested. "We want to be the one-stop laboratory service for our customers across East Anglia," says lab services manager, Barry Dore. *
Set-aside pointer
AGENDA2000 proposals setting the basic set-aside rate at 10% do not necessarily mean that that will be the rate impoosed by the commission, warns Banks Agriculture.
"Rates will still be used as a mangement tool to control production, and growers should not assume 10% is the requirement for 99/00 crops until an announcement is made between June and September," says director, Richard Whitlock. *