Super pool sets very competitive pace on profits

19 July 2002

Super pool sets very competitive pace on profits

Pooling labour and machinery to spread overhead costs

across more acres in an effort to boost farm profits has

been widely promoted as a way of combating arable

farmings many ills. Amanda Dunn reports on its success

FOUR years ago, Edward Darling achieved average results at Greys, his 240ha (600 acre) tenanted farm in Essex. Today, he reaps economic returns £212.50/ha (£86/acre) ahead of similar units, achieving the best ever physical performance from his farm, and sitting poised to benefit from the combined buying power of about 10,000ha (25,000 acres).

"When we set up Therfield Combined Farming Company in 1998 there were a number of farmers that had created joint ventures and everyone was very pleased with what they had done," he says.

"But as far as our situation was concerned, this wasnt the end point. It was just the beginning of a relentless drive to improve both financial and physical farm performance."

Figures for the Combined Farming Company highlight a three year average benefit of £212.48/ha (£85.99/acre) over contemporaries, according to accountant Peter Homent of Hardcastle Burton, which acts for over 160 farms and estates, analysing accounts on a database sorted by both land and cropping type.

"We took two light land CFC figures, Edwards and one other, and compared them to the database average for their cropping and land type. The history for both farms showed they had previously only achieved average physical and financial performance for their land type."

The effect of the CFC approach to farming has been striking. "When we added labour and machinery savings to gross margin benefits we could see a three year average benefit of £85.99/acre over their contemporaries," says Mr Homent.

The addition of a fourth farmer member means further cost benefits are also anticipated. A 20% reduction in existing machinery and labour costs is expected as farmers weeklys 2002 eastern barometer farmer Peter Wombwell is introduced into Therfield CFC, which will help spread costs across a further 323ha (800 acres), says Mr Darling.

The addition of more labour and equipment means Therfield CFC can now confidently tender for contracting work and also benefit from this extra income.

"The intention is to increase the area of land worked beyond 2000 acres. We will increase home set-aside acreage as and when we take on extra contract farming agreements. This means well benefit from extra contracting income without uneconomic machinery investment."

Yield figures for the farm highlight extremes of performance with three year average yields across all varieties of 10.2t/ha (4.13t/acre) for wheat, 7.1t/ha (2.87t/acre) barley and 7.6t/ha (3.07t/acre) oats. "Wed never seen a 4t/acre wheat crop at Greys before 1999, now we average it," he says.

Improved timeliness and the ability to challenge each others decision-making are the two primary factors for this dramatic increase in physical performance, says Mr Darling.

However, barley and oat areas would be better as set-aside if labour and machinery costs can be offloaded, adds Mr Darling.

The establishment of eight other joint venture companies across the country using the Combined Farming Company structure now means there is buying power from a total of 10,000ha (25,000 acres).

Buying groups

"We currently have about 25,000 acres within the system. While we dont anticipate duplicating work carried out by local buying groups, we do hope to reap benefits with machinery purchasing equivalent to that enjoyed by a typical machinery dealership."

To date, there are nine CFCs using 11 combines and 30 tractors.

As to the future, it is Mr Darlings intention to continue to expand CFCs portfolio by the addition of four new companies next year, to find a means of introducing single farms into the system and to encourage high calibre and challenging debate between members. &#42

The Combined Farming Company formula offers more than just a power and labour merger, says founder Edward Darling. Group buying, timely applications, more contract work and new management thinking all help boost profits – by as much as £200/ha, he says.

Harvest year 1999 2000 2001

CFC Average CFC Average CFC Average

Gross margin 612.80 526.32 538.67 462.07 533.73 469.49

Difference 86.48 76.60 64.24

Three-year average 75.76

Labour & mach after 182.85 336.05 210.03 353.35 227.33 340.99recouped labour

Difference 153.20 143.31 113.66

Three-year average 136.72

Total improvement 212.48

&#8226 £212/ha margin boost.

&#8226 Nine Combined Farming Companies on 10,000ha (25,000 acres).

&#8226 11 combines, 30 tractors.

&#8226 Group buying discounts, management benefits.

&#8226 Therfield Combined Farming Company is: Edward Darling – 242ha (600 acres); John King – 161ha (400 acres); Andrew Keam – 121ha (300 acres); and Peter Wombwell – 323ha (800 acres).

See more