How to shock-proof your business

27 January 2015

This is the time of year for multiple meetings, conferences and events with growers often having the choice of three or four in their area which are relevant to their businesses. Those of us in the industry responsible for organising events need to get a lot cleverer, with some joined up thinking, to ensure we get the right messages across in as effective and efficient way as possible – for the producers, not the organisers!

We had a series of such meetings over the last two weeks in Scotland, in partnership with SRUC, where we attempted to update growers with what was happening as well as, hopefully, planting some ideas for the coming growing season.

As I got towards the end of each day, I found myself contemplating what the audience would have got out of the day, apart from a free lunch and an excuse to keep out of the weather!

However, we all have to operate in a rapidly changing business environment. Last year we had record yields and great harvest conditions – but so did everybody else in the world and we suffered the consequences with price levels that, for many, are below cost of production.

Input costs are just as volatile, although fortunately they seem to be favourably volatile at the moment, especially if you look at fuel – I was quoted a bit below 40p/litre for heating oil a couple of weeks ago.

At the same time, the Single Farm Payment, which has helped to insulate us from much of the volatility in the past, has dropped by around 20% for most growers, as well as greening requirements forcing changes in cropping plans – although that might be a good thing after what I’ve heard on the state of our soils at these events.

So what can you do about it? How can you shockproof your business to ensure its resilience going forward?

It’s all about acquiring knowledge; increasing your capacity to make better informed decisions about your business.

You need to know what your cost of production is; you need to know what the market fundamentals are and what’s driving your prices; you need to know what the current research output is and how it might impact or benefit your business; you need to know what the implications of new regulations will be on your business – not just what they are.

That’s what these meetings are all about – it’s giving you the opportunity to glean that knowledge from a range of researchers, specialists and even local growers.

Some of what you hear will not be relevant to you individually, although collectively, I would hope it is relevant. So individually you need to be formulating key messages from the presentations you hear and take them home to contemplate how you can implement them to improve your bottom line.

So sit down and write up your key messages when you get home and then action them.

Some examples of take home messages that I picked up from these meetings are:

  • For fungicide programmes look at margin over cost, not just price of the product
  • T1’s are crucial
  • Consider use of illicitors for ramularia
  • 2015 will be high risk for light leaf spot so be prepared
  • Keep an eye on Olympus as a potential new malting variety
  • Pay attention to combine settings to minimise risk of skinning
  • Stick to recommended rates and thresholds to minimise risk of resistance in pest and weed control
  • Integrated pest management – give the good guys a chance by putting in some wildflower strips
  • Global market is on a knife edge – watch for opportunities if there is an upset
  • Potential for good malting premiums in 2015
  • Know your costs – secure your margin
  • Catch / cover crops can capture up to 100kg N/ha
  • Could you consider growing Ahiflower?
  • Look after your soil OM
  • Rotation, rotation, rotation
  • Attention to detail is crucial
  • And finally, always carry your soil porosity and aeration determination equipment with you.

The jargon around these meetings is ‘knowledge transfer’ – specialists and researchers transferring some of their knowledge across to you.

The next stage is ‘knowledge exchange’ – where like-minded farmers take today’s ideas and messages and put it into practice and exchange or share the experience and results with other farmers in, for example, Monitor Farm projects or Arable Business Groups. Knowledge exchange and the Monitor Farm programme is a very powerful vehicle for learning – it’s hands on and real.

Volatility, sustainability, resilience are all buzz words that you will hear bandied about by consultants, marketing agents, government bodies, supermarkets,  and even salesmen are getting in on the act  – but what do they actually mean? What have they got to do with your business? Call it what you like, but most farm business owners just want a successful business which gives them a reasonable lifestyle and something to hopefully leave for the next generation.

To do that in the current business environment, and more so going forward, you as business managers must drive your business forward through informed business decisions rather than “we’ve aye done it that way”.

Gavin Dick - Scotland

Gavin Dick - Scotland

AHDB Cereals & Oilseeds Manager (Scotland). Previously a business specialist with SAC, working to broaden farmers’ business management skills.