Colchester: HGCA monitor farm decides to benchmark production costs
- Credit: Archant
An Essex farm selected by the Home Grown Cereals Authority (HGCA) last year as part of a new nationwide scheme to help farmers improve their performance is set to focus on its costs.
Members of HGCA’s Monitor Farm group near Colchester are to start benchmarking their costs of production as a first step to improving profitability.
Around 35 farmers and members of the agricultural industry attended a talk on the topic at a Monitor Farm meeting hosted by Colchester farmer Tom Bradshaw at John Owen Barn in Fordham last week.
The decision to start benchmarking was endorsed by a report published at this year’s Oxford Farming Conference, which showed that the nations with the highest farm productivity such as Germany and New Zealand also had the highest levels of benchmarking.
HGCA regional manager Tim Isaac said: “If you don’t measure your costs you can’t manage them. When it comes to setting your marketing strategy and protecting your farm’s profitability, it’s vital to know where you’re starting from, and benchmarking allows farmers to do that.
“Our own research shows that only around 10% of arable farmers calculate their costs of production, but we’ve seen from our own Monitor Farm programmes and from other countries that benchmarking can really help improve attention to detail and therefore positively impact on farm profitability.”
Only a few of the farmers involved in the Colchester group currently do any benchmarking, although many will now start by using HGCA’s CropBench+ programme as part of the Monitor Farm scheme. This will enable them to accurately calculate costs of production and identify areas for improvement.
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Of the farmers present, their estimated cost of production for first wheat ranged from £70/tonne to £140/t, with most falling around the £115/t mark.
On the same day, wheat futures prices were £133/t for Nov 2015 and £138/t for Nov 2016.
During the Monitor Farm meeting, farm business consultant Jay Wootton stressed the importance of business resilience, suggesting that attention to detail is the key to ensuring a farm business’s viability.
Mr Wootton said: “Make sure that you look at what you’re spending as a percentage of gross output. The thing that makes the most difference between the top and bottom quartiles in terms of farm performance is attention to detail across the three main areas of output, direct costs and indirect costs.”
All arable farmers are welcome to use HGCA’s confidential, web-based benchmarking system, CropBench+, which is available at cropbenchplus.org.uk.
Members of HGCA’s Arable Business or Monitor Farm groups who benchmark using CropBench+ can compare their costs anonymously to identify common issues for discussion at further meetings.
The next meeting at HGCA’s Colchester Monitor Farm is on February 11 and is combined with a Milling Wheat Breakfast event. For more information or to attend the event, go to hgca.com/events.
HGCA is the cereals and oilseeds division of the Agriculture and Horticulture Development Board (AHDB). It funds research, knowledge transfer, marketing, export and promotional activities for the cereals and oilseeds sector in the UK.