Cereal farmers...how long will you carry on??
- Thread starter Bossfarmer
- Start date
- Location
- Moreton-in-Marsh, Glos
I am sure that we all try to keep both variable and fixed costs down and are always looking to keep lowering them as much as we can.
But the bottom line is that the biggest influences there are as to how profitable a year we have will depend on 2 things and usually in this order:
1. Sale price
2. Yield
High yielding years such as '14 and '15 often turn out to not the most profitable because the sale price falls away. Not because of what happens here in the UK, but because the whole world seems to have had a high yield as well.
2011 was a dry year and the East of the UK suffered due to the drought. But here (West Midlands) we had a very high yields and thanks to Mr Putin banning wheat exports, a very high sale price.
That aside, we tend to make our highest profits in (low to?) average yielding years.
Everybody pushing for ever higher and higher yields means only one thing - Sale prices dropping!
Another thing that worries me is that whenever sale prices come under pressure, everybody tries to jump from feed wheat into milling. Milling costs more to grow and yields are lower. Too much milling on the market and the premium drops away. Then the mills look for any excuse to make a claim or reject loads. Meanwhile, it has still cost you more than feed to grow, you now have to sell for feed and you get a redirection charge. All of a sudden, how worthwhile was it to go for milling?
One way round it is if you farm close enough to a feed mill that you can deliver your feed wheat to. Often they will take your crop at up to 16.5% with a claim that is far lower than you can dry it for and at the same time you have increased your sale price by the delivery fee, by delivering during a slack time of the year. It's a no brainer!
But the bottom line is that the biggest influences there are as to how profitable a year we have will depend on 2 things and usually in this order:
1. Sale price
2. Yield
High yielding years such as '14 and '15 often turn out to not the most profitable because the sale price falls away. Not because of what happens here in the UK, but because the whole world seems to have had a high yield as well.
2011 was a dry year and the East of the UK suffered due to the drought. But here (West Midlands) we had a very high yields and thanks to Mr Putin banning wheat exports, a very high sale price.
That aside, we tend to make our highest profits in (low to?) average yielding years.
Everybody pushing for ever higher and higher yields means only one thing - Sale prices dropping!
Another thing that worries me is that whenever sale prices come under pressure, everybody tries to jump from feed wheat into milling. Milling costs more to grow and yields are lower. Too much milling on the market and the premium drops away. Then the mills look for any excuse to make a claim or reject loads. Meanwhile, it has still cost you more than feed to grow, you now have to sell for feed and you get a redirection charge. All of a sudden, how worthwhile was it to go for milling?
One way round it is if you farm close enough to a feed mill that you can deliver your feed wheat to. Often they will take your crop at up to 16.5% with a claim that is far lower than you can dry it for and at the same time you have increased your sale price by the delivery fee, by delivering during a slack time of the year. It's a no brainer!
Pieces_of_Eight
Member
Direct marketing & retail of combinable crops as part of a JV/cooperative diversification project between growers would make an interesting Nuffield... 
If you could sell it for 10x the margin, would would only need to grow 2.5k tons
its just a different business, if I wanted to be a mill owner and retailer I would, however I choose to farm
you are correct but everyone can't have a USP and the bigger things get the harder it becomes to do
Is that why I do your fencing? [emoji6]
I borrow his tackle and I've stolen some of his techniques then do the fencing myself, this must make me super efficient!!Yes
Far simpler to pay you and have your big kit for a day than to bugger about myself for a week.
Nowt to with him being your brother or owt like....
Steevo
Member
- Location
- Gloucestershire