Establishing a risk spectrum for our arable enterprise
It’s been a busy few weeks and far too long since my last post. On the non-arable side of the business, we have successfully completed an extension to our broiler chicken site, and as I write this we are preparing the sheds to receive their second crop. On the arable side, March and April were generally very kind to us and we completed all of our spring drilling, potato planting and early spray operations in excellent conditions. As we move into May, all the crops are looking good but the number of spraying days seems to be reducing.
As I wrote in my previous post, I am using the first twelve months of my time as a Monitor Farmer to review our arable rotation in detail. Challenging markets have forced us to re-think whether we are making the best use of the land resource we have available. Just north of Newport in Shropshire, our soils are generally light (loamy sands / sandy loams) which has definite advantages in terms of available operation days and early emergence but it also means that we do not achieve huge yields from our cereal crops. In addition to this, we felt that all of our crops, and the ways we sold them, were in a similar position on the risk spectrum; the amount of secure, low risk income we had from our arable enterprise was minimal. The impact of this is, of course, that we have a limited ability to predict our profitability each year and therefore a limited ability to plan for the future.
We are now thinking trying to establish a risk spectrum for our arable enterprise. At one end of the spectrum, we have the opportunity to rent some land out to specialist growers (salads, vegetables, fruit etc.); no risk, guaranteed income. At the other end of the spectrum, we can grow high value cereals, pulses and potatoes out of contract, with the hope that if we meet the quality specifications and time our sales correctly we can make a good margin. With this section of the rotation, there is of course the risk that we do not achieve the quality we are after, in which case we will have spent extra money for no additional return. Somewhere in the middle, there is the opportunity to grow crops which either have lower quality specifications or a more guaranteed market; potatoes on contract, wheat sold into pools or seed milling wheat crops where high levels of germination are required but there is less focus on proteins or Hagbergs. Outside of the traditional food crops that we have always grown, we are also starting to look at non-food crops, which will be the focus of my next Monitor Farm meeting on 20 May – I haven’t established where these fall on the spectrum yet!
Will crops like miscanthus feature in the future?
The most important point is that we need to keep our arable rotation in balance. We hope that we are already achieving an agronomic balance and diversification by rotating our crops as we do, but it is equally important that we keep a financial and a risk balance in mind as well.
We are hoping to have made our final decision on the 2015-16 rotation within the next three to four weeks, so I will provide the full details for your scrutiny in my next post!