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Cutting costs as commodity prices ease could help protect net farm income 10-point plan to maintain arable margins

Arable growers are being advised to consider savings – with commodity prices easing back from last year’s highs despite steep input costs.

Economic pressures, supply concerns and wider environmental issues are combining to give farm expenditure even greater significance, say experts. And the latest farm budgets now look quite different to those of a year ago.

A ten-point checklist devised by Tim Isaac, associate partner with consultants Ceres Rural, aims to help growers mitigate the impact of uncertainty – based on the firm’s experience of analysing numerous sets of farm accounts.

As well as helping to maintain margins, cost savings can also help reduce greenhouse gas emissions, says Mr Isaac.

“The quest for net zero is not going to go away and a carbon audit before and after you make any changes will allow you to track any progress.”

1 Seed

Home-saving as much of your seed as possible will save money and guarantee supply, says Mr Isaac, even if it requires more planning at harvest.

2     Fertiliser

Timing of purchases is critical with the big increase in prices. But the practical part of reducing fertiliser costs is how much to apply. Soil, tissue and grain tests can inform the optimum application rate while everything should be done to maximise utilisation by the crop. Increasing the use of legumes and organic manures in the rotation will reduce reliance on vulnerable bagged supplies.

3 Sprays

Each sprayer pass involves fuel, chemical, wearing parts and labour costs, so every application should be questioned. Make use of thresholds and forecasting, resistant varieties and weather tools to calculate the risk and return of each treatment and reduce the number of applications.

4 Agronomy

Tailored, technical and robust agronomy is key to saving costs, with independent advice usually resulting in a lower spend.

Question every decision and discuss alternative options – many growers find becoming BASIS and FACTS qualified is a good investment.

5 Labour

Pressures on the labour market are making it difficult to save money unless you are obviously overstaffed. Make it a priority to recruit and retain the best staff and consider collaboration with neighbours to gain expertise and help spread costs.

6    Machinery

This is often where the biggest savings can be made –  there is an average range of £200/ha between the best and worst performers. Experience shows a tendency to carry too much spare for a tricky year, so matching capacity to cropped area is a good place to start.

Another easy win is reducing cultivation intensity – providing it is done carefully and doesn’t impact yields – while accessing grants can help to offset the cost of no-till kit.

7 Property and energy

Make farm buildings and houses as energy efficient as possible, both to save heat and power costs and increase their value.

High energy prices mean renewable energy could be worthwhile. Most systems provide a good payback and allow you to sell any surplus to others.

8 Administration

Put your insurance out to tender at least every three years to attract the best deal, rather than simply renewing it.

Review insured values every year to make sure they accurately reflect replacement costs.

9 Rent

Rising costs and falling BPS payments mean that rent reviews should be considered on tenanted land, as the best farmers will be in a strong position to negotiate better deals.

10  Finance

The age of cheap money is over. Whether it’s hire purchase, an overdraft or a longer-term loan, shop around for the best rates and restructure or move any debt to keep finance costs to a minimum.