Improving profitability is a must for Monitor Farmer Phil Meadley, so he’s needed to ask himself one of the trickiest questions in farming how do I get the most from my machinery?
Machinery costs are usually one the largest outgoings on arable farms, so any grower aiming to improve margins needs to take a close look and see where savings can be made. Philip Dunn, partner with Brown & Co agricultural consultancy, has taken a detailed look at machinery and labour costs at Grange Farm to give Phil Meadley the facts to make an informed decision.
The overall picture is that the cost of production in the UK is very high by global standards so farmers have no other option but to try and become more efficient, explains Mr. Dunn. Land, labour and machinery prices are all relatively high in the UK which means that the cost of production can quickly escalate to unsustainable levels without careful management.
As a general rule, if machinery isn’t used very often it is probably costing the farmer a lot for every hour or hectare done.
To understand the cost of machinery, it is vital to know what the standing cost of each piece of kit is: this is the depreciation in value (around 10-15% per year), repair costs, insurance and the lost interest from not having the money to invest somewhere else. Using a machine more often means that this standing cost is spread across more field operations so the cost of each operation comes down.
Farmers need to be willing to consider the alternative options to owning kit such as hiring,part ownership or using a contractor only once you know how much you are currently paying can you decide if the alternative options offer better value.
However, the cost is only one of the considerations. The Meadleys farm has invested heavily in machinery for a 240ha farm, which pushes up the cost but means field operations can be very timely. The Meadleys production system focuses on pushing up yields by good attention to agronomic details having the piece of machinery in the shed means they can time field work to perfection.
One example of this is the hedge-cutting equipment: the cost of this was calculated at over60/hr whereas a contractor would charge in the region of 30/hr. But forPhilip Meadley, sorting out hedges promptly after harvest before moving on to cultivation means that all his drilling can be completed to plan.
Across the farm, there are a whole series of decisions to make around machinery usage and the farming system as a whole. Philip Dunn explains more: Look at the whole business with an open mind and think about what can be changed because changes in machinery and labour will have a big impact on the overall profitability.Any change to the system or a new piece of machinery will have knock on effects in other parts of the business some positive, some negative.
With this in mind, Phil Meadley is investigating changes to his system to reduce the cost of primary cultivation and spread workloads more evenly throughout the year.
We are looking to invest in a strip-till drill to cut the amount of primary cultivation equipment needed and complete establishment with fewer passes. One field has been sown to test the strip-till drill so the results at harvest2016 will be very interesting. We will also sow 90ha of spring barley this year as well as some cover crops we hope this can spread workload and improve soil structure, says Phil Meadley. We will also try a direct-drill approach this spring by establishing spring barley into five different cover crop mixes currently over-wintering
Improving soil is a big target for us because it will make land easier to work and be better for travel, meaning that establishment costs are cut down even more. We would like to incorporate more straw to boost organic matter as long as the soil biology is right to break down the straw.
A strip-till drill will leave straw on the surface to decompose rather than sitting buried in the soil and decomposing slowly. Two other monitor farmers Julian Gold andDave Blacker are doing something along these lines and we would like to replicate that here.
Philip Huxtable Director of arable production at JSR farms shares Phil Meadleys view on the importance of soil structure for managing cultivation costs. The most important bit of kit is the spade. Being able to assess soil structure after harvest so you know what type of cultivation is needed is very important.Looking at each field, or even part field separately is a must. This attention to detail means you can increase productivity and prevent unnecessary expenditure.
Mr Huxtable is responsible for 4,000ha at 15 sites in East Yorkshire. When it comes to machinery his approach is to cut standing costs by using equipment as much as possible. On JSR farms we try to find kit that we can use on all land in all conditions. This reduces standing costs and means we get a lot of hours out of all our drills, explains Mr Huxtable.
The final word comes from farmer and contractor Andrew Gloag, farming heavy clay soil onTeesside. Timeliness is essential so he has invested in equipment to make sure he can be drilled up by the end of the first week October. To spread the cost of this machinery he also does contracting work.
Our costs are 170/acre for stubble to stubble production of combinable crops: this is less than the typical 200/acre Philip Dunn told us about today but it is still not really sustainable with the current wheat price, explains Andrew.Machinery must last longer and generate additional revenue through the year the seasonality of farming makes this tricky but you need to find a way.
Andrew has spread his costs by expanding the area he operates on to 1,500ha as well as doing contracting work.
The main thing to remember is that yield is still king so timeliness of field operations and soil structure are essential to maintain crop performance,concludes Andrew.
The next meeting at the Driffield Monitor Farm is on 26 January 2015. Visit cereals.ahdb.org.uk/driffield for more information.