Cereal farmers...how long will you carry on??

[sleepy]

Cost cutting is a whole industry in its own right.

Yes, a vicious circle that ultimately ends in no one making any money at all.
Better to have a unique selling point and keep your prices up.

 

[Jim Bullock]

Reading this thread I can't help but think if all the effort that is channelled into reducing costs as much as possible, was instead piped into selling the end product for as much money as possible, farmers in general would be a lot better off.
What other industry spends the whole time wondering how cheaply they can produce something?[/QUOTE]

I totally agree with you, but having spent twenty + years looking for a means of adding value to our limited output ( off 700 acres), we have concluded that the best course of action is to devise a farming system that produces a niche product at the least possible cost, which takes little time to produce and process as possible, freeing us up to spend time on other enterprises which actually make money. I am determined to actually make money farming.It might even mean going organic but I will do it !!!

 

[unlacedgecko]

Yes, a vicious circle that ultimately ends in no one making any money at all.
Better to have a unique selling point and keep your prices up.

Not everyone can have a USP. Everyone can cut costs as much as possible.

 

[TelesnaAg]

I would tend to calculate it a touch different so it applies across many pursuits as 1 acre of arable very different to 1 acre of veggies...or flower growing

capital as a percentage of turn over (Can go over 100% - so you may have 500K worth of kit to turn over 400k of product = 125%)

labour cost as a percentage of turn over (should always be under 100%) So 100K of labour for 1 million in turn over is 10%

Can then apply to profit but there's a few more factors to consider and alot more variable...another thread which i think has started...

You can use to compare to fellow grain growers, then compare to say a veggie grower to see where you sit compared to there operation.

1 man operations - does that include anyone to come pick you up from the field when needed etc? or if using contractors say for harvest - then that is charged at a premium so it is not normalized against people harvesting there own crop...etc...so i would put any contract cost into the labour column...then you compare you doing most stuff and using a contractor against different size operations using full time help.

So rather than forum bash each other to death about what and what isn't efficient....put some numbers to it and produce some data...then compare actual data...just a thought!!! See where you sit compared to others not only in arable but compared to other pursuits...other sizes same pursuit.

Ant...

 

[Clive]

Reading this thread I can't help but think if all the effort that is channelled into reducing costs as much as possible, was instead piped into selling the end product for as much money as possible, farmers in general would be a lot better off.
What other industry spends the whole time wondering how cheaply they can produce something?

this is true and at smaller scale without doubt the smart thing to do. At scale though you can't get away from simply being a commodity producer with zero direct influence over price you sell at beyond a sharp focus on markets

That's said there are posibles like milling wheats vs feed and seed crops etc all of which I have done to try maximise potential output vs basic commodities

 

[Clive]

Maybe I didn't explain myself very well. Of course if there are easy 'wins' to reduce your costs you should take them, but most of the time it's far easier to put your prices up and justify it with some new feature (that may actually increase your costs slightly).

In a farming situation, you could spends years fine tuning an arable operation to get your cop down to 80/ton.
Or you could invest in some bagging machine, and sell 20kg bags of grain to smallholders for £1000/ton. You won't then give a flying fudge if your cop is 80/ton or 180/ton.

as a commodity producer you cant put up your price (beyond the bounds of my last post) you can control costs though

you can only change what you have control of

 

[Brisel]

Reading this thread I can't help but think if all the effort that is channelled into reducing costs as much as possible, was instead piped into selling the end product for as much money as possible, farmers in general would be a lot better off.
What other industry spends the whole time wondering how cheaply they can produce something?

Marketing is another whole topic that comes up occasionally. Most of us are committed to producing a commodity like feed wheat, milling wheat, malting barley, HOLL osr etc. The Combinables Price Tracker & other threads have shown how different the marketing strategies are. Shaving a few quid off costs here & there pales into insignificance when the grain markets move by 25% as they have for the last 2 years. £25/t on wheat @ 3.5 t/acre = £87.50/acre which blows away an additional £10/acre on an extra old tractor in the yard!

All this is before you start moving away from a mass produced commodity produced on least cost basis towards a unique product like Chase vodka from potatoes. Farmers are generally crap at marketing - someone will always buy our goods (at a price) since the marketing boards post WW2 e.g. MMB.

 

[Clive]

So rather than forum bash each other to death about what and what isn't efficient....put some numbers to it and produce some data...then compare actual data...just a thought!!! See where you sit compared to others not only in arable but compared to other pursuits...other sizes same pursuit.

Ant...

fixed cost structure is a commercially sensitive thing though if you are a contract farmer so its not a number you will ever see me discussing in public ! will talk about variable costs all day though !

 

[Bossfarmer]

Reading this thread I can't help but think if all the effort that is channelled into reducing costs as much as possible, was instead piped into selling the end product for as much money as possible, farmers in general would be a lot better off.
What other industry spends the whole time wondering how cheaply they can produce something?

right that's it, im putting my grain price up to £200/t this year they can take it or leave it ! lol

 

[4course]

could well be that fixed costs are more variable than variable and so more effort controlling them is time well spent

 

[Bossfarmer]

Maybe I didn't explain myself very well. Of course if there are easy 'wins' to reduce your costs you should take them, but most of the time it's far easier to put your prices up and justify it with some new feature (that may actually increase your costs slightly).

In a farming situation, you could spends years fine tuning an arable operation to get your cop down to 80/ton.
Or you could invest in some bagging machine, and sell 20kg bags of grain to smallholders for £1000/ton. You won't then give a flying fudge if your cop is 80/ton or 180/ton.

I think this is wishful thinking

 

[Bossfarmer]

fixed cost structure is a commercially sensitive thing though if you are a contract farmer so its not a number you will ever see me discussing in public ! will talk about variable costs all day though !

I think its just as important to compare fixed costs

 

[Bossfarmer]

if you don't want to share your own fixed costs at least put up some rough figures of what they should be

 

[Pieces_of_Eight]

In a farming situation, you could spends years fine tuning an arable operation to get your cop down to 80/ton.
Or you could invest in some bagging machine, and sell 20kg bags of grain to smallholders for £1000/ton. You won't then give a flying fudge if your cop is 80/ton or 180/ton.

If you are growing a commodity crop, there will always be somebody, somewhere who can produce it cheaper.

Bagging wheat/barley/oats/peas/beans on farm to sell direct is not as daft as it sounds, but will be a limited local market (with guaranteed profit margin).

On the down side, there will be a mountain of regulations/inspection/paperwork to deal with, which is why everyone isn't doing it.

The problem would be scaling the output big enough to cover the additional costs.

 

[4course]

I think its just as important to compare fixed costs

ive tried allocating fixed costs but with a mixed enterprise some non agricultural its almost impossible so it becomes a guesstimate albeit informed but not a lot of use when output varies so much , it becomes a figure to share out but how, so much/acre, so much/income stream, so much/labour unit etc the only way ive found is question everything

 

[MattR]

Or you could invest in some bagging machine, and sell 20kg bags of grain to smallholders for £1000/ton. You won't then give a flying fudge if your cop is 80/ton or 180/ton.

Not sure about £1000/ton.
On the internet a lot of that stuff is around £5-8 per bag. Even layers mash is as as cheap as £7. So you've got to grow, mill, mix, bag, market and distribute it for £350/ton. Not sure if it leaves a lot of room to make big profits?

 

[Clive]

I think its just as important to compare fixed costs

it's more important, variable costs are morte fixed that the so called fixed costs ! but I'm not comparing mine in public, it gives way to much away about my business to competitors and customers

 

[Clive]

Not sure about £1000/ton.
On the internet a lot of that stuff is around £5-8 per bag. Even layers mash is as as cheap as £7. So you've got to grow, mill, mix, bag, market and distribute it for £350/ton. Not sure if it leaves a lot of room to make big profits?

anyone want to come bag up 25k t of wheat, barley, beans, peas, OSR, linseed etc ? and find a customer for it on tinternet ?

 

[Pieces_of_Eight]

anyone want to come bag up 25k t of wheat, barley, beans, peas, OSR, linseed etc ? and find a customer for it on tinternet ?

I would if it were that simple.

All the hoops to jump through first relating to registering as a feed mill/processor before you can sell retail.

Then there will be insurance and assurance to deal with too.

 

[sleepy]

I would if it were that simple.

All the hoops to jump through first relating to registering as a feed mill/processor before you can sell retail.

Then there will be insurance and assurance to deal with too.

Yes, no one ever said it would be easy.
However, I doubt anyone who's ever diversified away from commodity production, would want to go back to it.