What happened to the lamb? A stop-start arable campaign (again)

2 April 2015

March came in like a lion and, according to the old saying, should go out like a lamb. So with calving due to start here, outside, on the 29 March, we were looking forward to some nice calm, dry weather.

No such luck and March went out more like a pride of lions, with sleet, snow and driving rain. Fortunately our cows are Highlanders so they found what shelter they could and just got on with it. Two thirds are now calved and no problems or assistance required to date.

Not so the arable growers in this area; with ploughed fields now waterlogged and no heat to help dry things out. Yet again we are experiencing a stop-start spring campaign, although in this area (Stirling), we are still waiting on the start. There is wide variation both across the country and within the regions, and as has been the pattern the last couple of years, the NE seems to have had the best of the weather with some growers already finished spring drilling. The further south and west you go, the wetter it’s been and there’s a fair bit of ploughing still to do in the later areas.

Overall, crops are probably a good week behind where we were last year but it’s still early for us and most crops have come out of the winter looking well. Disease carry-over seems to have been less than could have been expected and current disease levels don’t seem to reflect the high levels that were around in the autumn. That said, most growers are either applying or intending to apply T0’s.

There has been much media coverage recently surrounding the ex-farm price of potatoes and milk. There is no doubt that potato producers are having a dire time at the market place – the majority are specialist growers who have been operating in an unsupported sector and will be highly efficient, so unfortunately there is no quick fix for them, except hope that the balance of supply and demand sorts itself out as soon as possible.

Milk is perhaps slightly different, and in fact the media often quote market price against Cost of Production, rather than simply the sale price. So what is the Cost of Production (CoP) for a litre of milk? – the simple answer is that every single producer will have a different CoP unique to their business. Some businesses may share the same CoP, but the component make-up will be different – and the variation will be wide, reflecting the individuals business circumstances, financial structure and production efficiency.

Combinable crop prices have actually dropped further than the milk price, and producers have even less influence on market prices than milk producers, albeit the marketing structure for combinable crops is a bit more flexible than for milk.

So ensuring the gap between CoP and market price is as wide and positive as possible is even more crucial for cereal and oilseed growers. Whilst knowing your CoP is important, as it tells you if that crop is going to make a financial contribution to your business or not and is a useful guide in marketing decisions, it is knowing the component breakdown of your CoP and how your figures compare to others that is crucial. What is your depreciation or fuel cost? What is your nutrient cost? This allows you to identify areas which you could improve on by learning from others with the same aims and objectives as yourself, improving your cost control and/or production efficiency – benchmarking.

Benchmarking is likely one of the most beneficial exercise you will ever do from a business perspective – so once drilling is finished, make a start to benchmarking the 2015 harvest and see what a tonne of cereals or oilseeds is going to cost you to produce this year.

If you haven’t benchmarked before, get along to an AHDB Cereals & Oilseeds Monitor Farm or Arable Business Group and get started! Find out more.

Gavin Dick - Scotland

Gavin Dick - Scotland

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