What separates the best and worst-performing East Anglian farms?
PUBLISHED: 09:41 07 February 2020 | UPDATED: 09:54 07 February 2020
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The gulf between the best and worst-performing East Anglian farms proves why cost control and data analysis are so important for businesses battling to adapt to a changing policy landscape.
That was one of the messages from a series of spring seminars hosted by rural agency Brown and Co in Wymondham, Holt and King's Lynn this week.
Experts briefed Norfolk farmers on topics including diversification projects, share farming agreements, rural development grants and how to take advantage of the government's environmentally-focused new farming policies, as the UK leaves the EU and the subsidies of its Common Agricultural Policy.
Agricultural business consultant Henry Treloar illustrated the importance of focusing on production costs in this evolving business climate.
He said benchmarking studies across East Anglia had shown the average cost of production for wheat in 2018 was £96.10 per tonne for the top 25pc of farms - but £149.9 per tonne for the bottom 25pc.
"The average wheat price in 2018 was £164, so the top performers were pocketing nearly £70 net margin," he said. "For the bottom 25pc it was more like £15.
"Roll forward to 2019 and your best performers are producing wheat for £86 per tonne, and the bottom 25pc at £127 per tonne. The average [wheat] price for this year was £147, so that's £61 per tonne margin for the top performers, but only £20 per tonne for the bottom 25pc.
"It shows the best the best performers are utilising their equipment more efficiently and if you think of the difference an extra £10-20 per tonne can make to your rent and finance and leaving some for reinvestment, it goes a long way.
"Especially for a business with a 10-tonne-per-hectare crop like wheat, it can make a sizeable contribution to the bottom line."
READ MORE: How can Norfolk farmers succeed without EU subsidies?
The meeting also heard that the environmental focus of emerging farm policies could bring added revenue opportunities for farmers - and not just on marginal land.
Although the new Environmental Land Management Scheme (ELMS) - which will replace the EU's subsidies as the are phased out after Brexit - is still being designed, current agri-environment schemes show the financial value of creating wildlife measures on farms.
Agri-environmental consultant Lottie Hill outlined the payment rates for current Countryside Stewardship options including cover crops at £114 per hectare, wild bird seed mix at £640 per hectare, and in-field grass strips at £557 per hectare.
"Stewardship is not just for those tiny marginal areas of land," she said. "They are really starting to work as part of your crop rotation."
Another cost-saving measure was identified in farms' machinery fleets.
One of the guest speakers was Carl Pitelen from machinery firm Ben Burgess FarmSight, who said modern tractors and harvesters were gathering huge volumes of data on yields, fields, machine performance and fuel efficiency - but both the machinery and their operators needed to be "optimised" to ensure they are running at their full potential.