United they stand – to profit
25 February 2000
United they stand – to profit
A joint venture to help offset
dwindling profits on two East
Anglian arable farms has got
off to a promising start, as
Edward Long discovers
TWO big family farms in Suffolk have merged their arable interests to form a working partnership to cut costs and increase profit potential, helping to offset the effects of low commodity prices.
A new company, Arista Farm Partnership, has been set up to run the arable side of the two farms, which are owned by John Brown & Sons and Geo Gittus & Sons. It will operate separately from the two farming businesses, charging for work done.
Each will retain its separate identity for trading, but will benefit from increased scale for bulk buying, and management logistics. The partnership farms 2200ha (5500 acres), mostly within a five-mile radius south of Bury St Edmunds.
The soil varies from light, sandy loam to sticky, chalky boulder clay. Cropping for the season comprises 1400ha (3500 acres) of wheat and barley, 400ha (1000 acres) of oilseed rape, 120ha (300 acres) of sugar beet, and 80ha (200 acres) each of rye and winter beans.
"We would not have considered such a venture 10 years ago," says partner Chris Brown. "Both George Gittus and I thought up the idea of merging our interests separately, coincidentally at the same time.
"Faced with depressed grain prices due to the strong £, the BSE fiasco and Agenda 2000 reforms, I realised my costs had to be cut further. But there was little meat left on the bone so they had somehow to be spread more thinly."
Mr Brown was not keen to buy more land on a falling market, nor was he prepared to pay an unrealistic rent. Then Mr Gittus revealed he was facing the same problems. Both families had helped each other out for years, so felt a joint venture to increase efficiency might be the way forward.
"My aim is to produce wheat profitably and changes were needed if this was to be achieved in the tough economic climate ahead," says Mr Gittus.
"I could not believe it when Chris phoned, as I was on the point of picking up the phone to call him." Later ADAS was called in and mechanisation specialist John Bailey showed there was scope to cut fixed costs by one-third, from £300 (£121) to £200/ha (£81/acre). Of this, £140/ha (£57/acre) is attributed to mechanisation, the rest to labour.
Mr Bailey confirmed the decision to release capital and completely modernise the machinery fleet was right, by selling existing equipment and replacing it with new kit bought on hire purchase.
Although Arista Farm Partner-ship was formed last spring, existing equipment has been used to test the theory.
Now both families are confident of the success of the new venture almost everything owned by the two co-operators, with a total depreciated value of about £350,000, has gone under the hammer (see p36).
Neither of the individual arable systems has had to change much. Mr Browns policy has been to grow the maximum yield of wheat as cheaply as possible using barn-filling varieties. Mr Gittus has also aimed for high yields from feeding types, as wheat is needed for pig rations.
"If we can cut our fixed costs by £100/ha and trim our variables a bit more with savings from bulk buying we can, with an 8.75t/ha wheat crop, save £12/t. This will allow us to ride out the existing period of low prices and be in a better position to face any further reductions. By realising capital locked up in existing machinery we can share a dividend of around £350,000 and enjoy the bonus of having new zero-timed equipment to take us into the new millennium," says Mr Brown. *
Chris Brown (left) and George Gittus… Facing up to the tough economic climate.
Machinery fleet gears up to tackle cultivation costs
The new fleet will comprise two Class Lexion 480 combines with 9.15m (30ft) wide cutterbars, two 410hp Claas 95E rubber-tracked crawler tractors supported by three John Deere tractors in the 120-150hp range, plus two self-propelled Bateman sprayers. Ancillary equipment will include a 6m Simba Solo with Cultipress, an 8m Simba Freeflow drill, two six-furrow ploughs, a few trailers and little else.
After the re-equipping, a switch will be made to a minimum tillage system across 70% of the total area.
It is expected that at least 1200ha (3000 acres) will be disced and subsoiled with the Simba Solo next autumn, and to drill the whole area with the single 8m machine. The aim is to get wheat established in just 47 minutes/ha (19 minutes/acre). "Cultivation costs, currently between £80 and £85/acre, will be reduced to around £50, and we hope establishment costs will fall from £30/acre to £15," says Mr Brown.
Both families regard skilled labour as the key to the success of the new venture. The current workforce on the combined unit comprises eight tractor drivers which, on paper, is too many for the degree of mechanisation. But both partners are involved with other farming activities which will help soak up surplus labour during non-peak periods.
The Gittus family has a major pig enterprise with the progeny from 2000 sows finished at 90kg. There is also a number of let commercial units in redundant farm buildings. The Browns have a business supplying fen soils and surface dressings to golf courses and other amenity outlets, peat for the horticultural industry and sands and gravels for specialist uses.