For a smaller scale arable operation, cost of production figures can be high, but using AHDB’s Farmbench service, Pembrokeshire’s newest monitor farmer has cut his costs without cutting yields.
Alice Dyer reports...
Tom Rees, of Dudwell Farm, Haverfordwest, Pembrokeshire, first began using the AHDB Farmbench service as a member of the Cardiff monitor farm group three years ago.
And when the opening for a new monitor farm came up, he saw an opportunity to help the arable sector in his area, while further scrutinising his business.
Part of AHDB’s Farm Excellence Programme, monitor farms bring together groups of farmers looking to improve their businesses by sharing performance information and best practice around a network of host farms, through the Farmbench tool.
Mr Rees said: “I had been quite involved with the Cardiff monitor farm group, although it was the best part of two hours from me.
“I started benchmarking with the group and got loads out of it. It was a really good way of measuring and monitoring what we were doing, and I made some big changes to our business on the back of it.”
Farmbench allowed Mr Rees to develop a better understanding of his cost of production by comparing his costings to regional and national data across the sector.
He said: “I wanted to have the monitor farm in Pembrokeshire because there are some really strong arable businesses here, but we are a long way from where the main arable activities go on.
“Since, we have had some really good speakers come to the farm and lots of new ideas being generated.”
Growing 180 hectares of wheat, oilseed rape, barley, oats and potatoes alongside his father on their mixed farm, Mr Rees said he has made some significant changes to his business since using the Farmbench service.
One of the biggest leaps was completely reassessing his agronomy programme, which saw variable costs for winter wheat falling from £280/ha in 2015, to £163/ha in 2017.
“If you are a small grower, having an agronomist is good because you have not got the time to do it yourself. But as we expanded, I could see I had to make savings in this area to continue to be profitable, so we moved to doing our agronomy ourselves and we have since saved a lot of money without any impact on yields.”
He also made the decision to move to liquid fertilisers, purchased through a buying group much earlier in the season.
“Beforehand we could not take fertiliser in until about now and I would have to sell some grain to make room for it. We now sell grain whenever we want and, this year, because I bought fertiliser in June, I have paid about 25 per cent less than if I had bought it in October, because it has gone up in price so much.
“Obviously this will not be the case every year, but Farmbench does make you more aware of different options.”
Benchmarking has also helped Mr Rees identify particular strengths in his business.
He said: “For a few years we have been home saving our own seed to ensure we stay black-grass-free and we could see through Farmbench how much of a difference that was making.”
The latest part of the programme saw a machinery review, assessing whether Mr Rees could cut on farm costs by making changes to his fleet.
He said: “We look quite over capacity in terms of machinery, but we have to be due to the high rainfall we get. We average 1,200mm/year.
“However, in actual terms of how much it is costing us, my father is very good in the workshop and all maintenance and servicing is done in-house.
“We buy all our tractors new, but machinery is bought second-hand and well-depreciated. This keeps costs down so we can afford to have slightly bigger machinery, rather than brand new smaller kit.”
Mr Rees’ self-propelled sprayer came up in the review and it was suggested a trailed sprayer might be better suited to his farm size.
He said: “I am considering this, but autumn and winter spraying with our rainfall is a big issue, so it is not something we are going to change immediately, but we may look at it again in the future.”
Mr Rees’ ability to maintain his own machinery was highlighted as a particular strength during the review, undertaken by Harry Henderson, AHDB knowledge exchange manager, cereals and oilseeds.
Mr Henderson said: “The business is running a pretty big 14-year-old combine at just £44/ha, including driver, fuel and depreciation.
“Tom’s real strength here is his ability to maintain all his farm equipment. You could argue his labour costs are high, but he uses family, so we are looking at an imputed labour cost, whereas if he mhad to pay to employ someone to replace him or his father, he might not get away with it.”
Assessments are carried out at each monitor farm around the country, evaluating all fixed and variable costs throughout the business for comparison with peers using Farmbench.
Mr Henderson said: “Farmbench allows growers to determine their cost of production, so they know what kind of prices they need to achieve per tonne mof wheat or head of lamb, for example.
“From there they can use it as a way of understanding how different aspects of the business are performing. It will allow them to identify if they are putting a lot of inputs into a crop of milling wheat, but only achieving feed wheat quality status, for example, or whether that rented land is actually turning a profit or if the home farm is paying for it.
“The more powerful aspect is being able to go to a benchmarking group to see where your neighbours and peers are against all of your costs.
“We often find variable costs fairly static, but fixed costs such as machinery and rent are getting away. It is a very powerful health check for your business.”
Overall, the use of Farmbench and monitor farm meetings has allowed Mr Rees to improve his business acumen and determine ways to make the farm work more efficiently.
Mr Rees added: “Before I started benchmarking, if someone asked what it cost per tonne to grow my wheat, I would just say £10 less than average to make me look good, but I really did not have a clue.
“Benchmarking is addictive. Once you start you begin to monitor everything. But if you do not cost yourself as a business it will never develop, so to have someone scrutinise me and ask ‘why are you doing this, or not doing that’ has been really valuable.”
The next step for Mr Rees is tackling his fixed costs and he hopes natural mexpansion is the answer.
He said: “Being black-grass-free, we get some good yields and its surprising we can get the cost of production in Pembrokeshire quite low, but the problem is we are mostly smaller scale farms, so it can be difficult to make good money.
“I have enough kit that I could double my acreage and have the same fixed costs, so scale is our limiting factor here. Over the next 10 years, my aim is to slowly expand as we take on new blocks of land.”