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With Brexit on the way, farmers must learn to focus on profit rather than yield

As farmers face the prospect of losing a big chunk of support from Government, they should work towards increasing profit, not yield, says Jon Birchall, director of agribusiness at Carter Jonas.

Changes to the Basic Payment Scheme (BPS) will exert inevitable financial pressures on farmers and the broader agricultural community.

 

The demise of underperforming and unmodernised businesses is expected to be rapid, particularly without the support of guaranteed Government income.

 

However, for those businesses examining how to withstand the tumult of BPS withdrawal, there will be an increasing emphasis on the value of financial margins, as opposed to physical measures of performance such as yield.

 

The Basic Payment Scheme has historically masked poor financial performance.

 

Revenues

 

To maximise revenues from farming businesses, it is important to make an objective evaluation of a farm’s potential.

 

For example, in the instance of an arable farmer, planting crops where they will produce a positive margin, while precluding poor land from swallowing investment, is sound business sense.

 

But the assessment of land, its calibre and nuances isn’t always simple, and it would be glib to presume this were the case.

 

There is nothing wrong with producing the maximum yield possible, but the trick is matching inputs to productive areas to obtain the most profitable return on investment.

 

This is where advances in farming technology can reap optimum rewards.

 

Technology

 

The application of technology to advance the usefulness of data and improve operations is – and will continue to be – transformative.

 

While many have yield-mapping farming equipment at their disposal, it is my experience that most are yet to capitalise on the full extent of its benefits.

 

Using geospatial (GIS) technology, it is now possible to extrapolate data from historic yield maps and production costs in a single platform to create a net margin per hectare analysis.

 

A detailed map uses a traffic light system to highlight zones which are underperforming (in red), overperforming (in green), or average (in orange), and is accurate to just 10m 2.

 

Understanding

 

Such a tool can aid understanding of what is going on in a field, where the problems are, how they might be addressed, and how this information can be harnessed for an effective strategy.

 

With such insights in place, I hope we see the end of fields filled with a single crop – so often this is neither beneficial to the environment nor the farmer.

 

Instead, I propose that fields would be mixed use, with perhaps a 16-metre stewardship margin adjacent to a hedge, with a three-metre sacrificial strip adjacent to that for the machinery to turn on, minimising the area exposed for compaction.

 

Other stewardship options could be located on regions of a field which have underperformed consistently, and which are beyond improvement.

 

Mindset

 

Even though it may require a shift in mindset, it is my view that yield per hectare should take second place – it’s profit per hectare that counts.

 

Agritech is about helping clients to achieve the best possible financial results as well as improving the landscape and protecting the quality of our land for the future.

 

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.


Jon can be reached to discuss these issues further at jon.birchall@carterjonas.co.uk


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