Tight control of costs will help ride the storm
Tight control of costs will help ride the storm
Tight control of fixed costs and attention to detail
throughout the farm business should help one Herts council
tenant ride out the current crisis. Amanda Dunn reports
COPING with cereal prices at their lowest level in living memory is no easy matter. But for one Herts council farm tenant the challenge is being met head-on.
Dennis Pettitt farms 130ha (320 acres) of grade III, medium soil over chalk at Haygate Farm, Bassingbourn, growing a range of combinable crops.
Machinery is largely bought second-hand, maintained on farm and where practical, nursed into old age. Minimum labour is employed, and input decisions are questioned and justified. Cost savings are made wherever possible and however small, and marketing is geared to minimise risks.
Capital invested in equipment is £360/ha (£146/acre) and depreciation just £84.90/ha (£34.36/acre).
"I started out as a tractor driver/mechanic and had to beg, borrow but not quite steal my way through," explains Mr Pettitt.
Much of the machinery is bought at farm sales, with Mr Pettitt studying sales catalogues and leaving bids when fieldwork takes priority. Maintenance is meticulously carried out on-farm to ensure longevity and resale value.
"Im prepared to travel to buy good, second-hand kit. The main light fieldwork tractor, a Ford 6810, was bought from a farm sale in Lincolnshire in 1993 with just under 1000 hours on it.
"My Gem mounted sprayer was bought in 1982 for £2600. At the time a new one would have been closer to £7000-8000," explains Mr Pettitt. A pick-up purchased at a car auction eight years ago for £1260, sold recently for £400.
"With todays technology, provided you look after kit, you can run it for several years," says Mr Pettitt.
On-farm maintenance is essential to keep costs down. "I dont want to pay someone else £30/hour, so we do all the maintenance ourselves," explains Mr Pettitt, whose spares and repairs total £28.42/ha (£11.50/acre).
"The last breakdown we had during a critical busy spell was 15 years ago, when we were lucky enough to be loaned a tractor by the dealer wed bought from."
Labour costs are also tightly controlled. "Were not in a ring fence. Some of the land is three or four miles away, so it does make harvest difficult. A local chap takes a week off work and helps me in the summer."
Contractors are employed for hedge-cutting and high clearance spraying, the family contributing at harvest and with bookkeeping to keep total labour costs at £9.93/ha (£4.02/acre).
Similar close attention is paid to inputs. "We buy in 50-60cwt of seed for each variety we want to look at, and home-save the rest," explains Mr Pettitt. "The savings arent as good as they were, particularly with royalties. But it is still something."
Fertiliser is shopped around for with harvest 2000 urea bought in post-Christmas at £88/t. "By sticking to 12m tramlines we can use cheaper urea and know it will still spread accurately," says Mr Pettitt.
Compounds are bought as straights and tailored to each field. Mr Pettitt takes soil samples himself to save costs and focus on problem areas. Whole farm analysis is carried out every four years.
"As tenants we have to keep the fields fairly clean, so we cant scrimp too much on chemicals. But if it isnt cost effective we wont do it," says Mr Pettitt. "Weve been using strobilurins for three years and carried out our own field trial. The difference was considerable. They certainly jacked up our yields and more than paid for themselves."
A local agronomist and chemical supplier is used, while price-checking with neighbours ensures rebates where appropriate.
At harvest, crops are left in the field to keep in-store drying to a minimum. "We have spare capacity with our combine so well normally leave it until its under 15% before cutting, then cool using grain spears. Last year, with it being so wet, we did have to cut at 16-16.5%."
Total fuel costs for 1998/99 equated to £10.08/ha (£4.08/acre).
Storage is in a combination of bins and flat-stores. "Ive just bought three 100t bins for £25. Well do all the groundwork ourselves and use a local contractor to help put them up, which will probably cost £1000 total for each bin, or £10/t storage."
Grain is loaded using a David Brown 995, bought for £3050 in 1984.
Once in store, care is taken to ensure marketing risks are minimised. "Nobody wants more for the grain than I do," stresses Mr Pettitt. Samples are taken from each trailer to ensure representative analysis and results compared between merchants.
"I like to see the grain in the barn and assess the quality before I try to market it. We grow for premiums and I sell where I feel comfortable. If there is a risk involved, then the premium has to be worthwhile."
Options, funds and pools are rejected in favour of home marketing throughout the year. "A set tonnage is sold each month. I might not always sell it at the top, but its spread throughout the year."
Each year comprehensive management accounts are produced, providing an invaluable benchmarking service by land type.
While Mr Pettitt is confident he will survive the current climate, he remains concerned about the future and provision for retirement. Legacy rents from the early 90s dont reflect todays returns, he says. *
Haygate overheads
£/ha (£/acre)
Capital in
equipment 360 (146)
Depreciation 84.90 (34.36)
Spares & repairs 28.42 (11.50)
Labour 9.93 (4.02)
Rigorous cost control leaves council tenant Dennis Pettitt confident about weathering farmings downturn. The three 100t grain bins will be installed for a total cost
of £10/t.
The Ford 7840, bought years ago, is the farms main heavy tractor.
HAYGATE FARM
• 130ha council tenancy.
• Grade III medium land over chalk.
• Rotation: osr, ww, ww, set-aside/peas, ww, ww, sb
• Second-hand machinery.
• Minimum external labour.
• 12m tramlines for cheap ferts.
• Price-check on chemicals.