Arable News

  • Written by: Farmers Guide
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Benchmarking costs of production

Members of HGCAs Monitor Farm group near Colchester are to startbenchmarking their costs of production as a first step to improvingprofitability.

Around 35 farmers and members of the agriculturalindustry attended a talk on the topic at a Monitor Farm meeting hosted by localfarmer Tom Bradshaw at John Owen Barn in Fordham in mid January.

The decision to start benchmarking was endorsed by areport published at this years Oxford Farming Conference, which showed thatthe nations with the highest farm productivity such as Germany and New Zealandalso had the highest levels of benchmarking.

Tim Isaac, HGCA Regional Manager said: If you dontmeasure your costs you cant manage them. When it comes to setting yourmarketing strategy and protecting your farms profitability, its vital to knowwhere youre starting from, and benchmarking allows farmers to do that.

Our own research shows that only around 10% of arablefarmers calculate their costs of production, but weve seen from our ownMonitor Farm programmes and from other countries that benchmarking can reallyhelp improve attention to detail and therefore positively impact on farmprofitability.

Only a few of the farmers involved in the Colchestergroup currently do any benchmarking, although many will now start by using HGCAsCropBench+ programme as part of the Monitor Farm scheme. This will enable themto accurately calculate costs of production and identify areas for improvement.

Of the farmers present, their estimated cost ofproduction for first wheat ranged from 70/t to 140/t, with most fallingaround the 115/t mark.

On the same day, wheat futures prices were 133/t forNov 15 and 138/t for Nov 16.

During the Monitor Farm meeting, farm businessconsultant Jay Wootton also presented on business resilience, suggesting thatattention to detail is the key to ensuring a farm businesss viability.

Mr Wootton said: Make sure that you look at whatyoure spending as a percentage of gross output. The thing that makes the mostdifference between the top and bottom quartiles in terms of farm performance isattention to detail across the three main areas of output, direct costs andindirect costs.

All arable farmers are welcome to use HGCAsconfidential, web-based benchmarking system, CropBench+, which is available at cropbenchplus.org.uk.

Members of HGCAs Arable Business or Monitor Farmgroups who benchmark using CropBench+ can compare their costs anonymously toidentify common issues for discussion at further meetings.

 

 


  • Written by: Farmers Guide
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