Velcourt chief warns on arable margins

10 February 1998

Velcourt chief warns on arable margins

REVALUATION of Sterling is causing the cash crisis in arable farming,
says Velcourts chief executive James Townshend.

“Further currency
distortions are a risk if the UK stays outside EMU. We cant guess
where the value of Sterling will finish up,” he said.

More effective management of arable businesses is essential if growers
are to weather the more difficult times that lie ahead, he warned.

Doing nothing was no longer an option if growers were to maintain
margins.

Average yield, price and cost information based on the
28,000ha (69,000 acres) of land farmed by Velcourt, suggested that if
subsidies disappeared after 2004, wheat gross margins would fall to
less than £380/ha (£153/acre). That figure allowed for an average yield
of 9t/ha (3.64t/acre) compared with 7.3t/ha (3t/acre) last year, said
Mr Townshend.

The industry needs to use technologies to drive down costs and increase
profits.

“We must see a reduction in the cost on inputs. My company is
already buying nitrogen fertiliser £30/t cheaper than last year. Other
costs including land, rent and machinery must also fall. And we must
learn to use fewer, better trained employees,” stressed Mr Townshend.