Contract farming agrements for 2020 season

[jon9000]

Has anyone worked many of these out? Values must be well down on last year

 

[Brisel]

Not yet, but yes! A crop of spring wheat at 2.5 t/ac instead of a 3.5 t/ac winter wheat is never going to have the same gross margin even with lower production costs. By the time you've had to rework the land in spring 2020 & then have a late 2020 harvest it has compromised 2021's crop too. Been ok for osr establishment this autumn though & lots of black grass has been knocked out, so not all bad unless you buggered up your soils a year ago.

 

[teslacoils]

Lots of fallow never good.

 

[4course]

Lots of fallow never good.

fallow grass has been one of our best paying crops

 

[snarling bee]

Our yields held up, so with good wheat prices I'm hoping they won't look too bad. No break crops and good spring barley contract, I'm hopeful. Not got the calculator out yet though. TBH 2021 looks worse atm.

 

[farmerfred86]

Despite the difficult weather its mostly sugar beet and the following cereal thats letting the side down. (beet was consistently our best GM until recently) Winter beans were a total disaster but very unusual.
Both crops do not disappear following one bad year though. CFA results will certainly be down.

 

[Lincsman]

Lots of fallow never good.

My fallow guaranteed a profit.

 

[teslacoils]

My fallow guaranteed a profit.

On a CFA? Fallow for me was a loss. Zero income for me. Fixed costs the same, or good as.

 

[glasshouse]

Thats when contract farming agreements get interesting. Who will carry the loss?

 

[Brisel]

Thats when contract farming agreements get interesting. Who will carry the loss?

That depends on the structure of the agreement. The contractor normally gets paid first e.g. £80-100/acre despite costs of £140. Then the farmer gets their charge of about the same. Then split the rest between them. The contractor has the first loss but it is limited.

 

[glasshouse]

That depends on the structure of the agreement. The contractor normally gets paid first e.g. £80-100/acre despite costs of £140. Then the farmer gets their charge of about the same. Then split the rest between them. The contractor has the first loss but it is limited.

I thought the “farmer” took the risk?
What a croc

 

[teslacoils]

Thats when contract farming agreements get interesting. Who will carry the loss?

On a fallow? Depends on the agreement. Typically there is an agreement that "planned" fallow will be avoided. Unplanned fallow is likely to drop out of the agreed arable area - so "farmer" will get bps minus any ad hoc costs, which I expect will be a fair bit less than the "farmers charge" (definitely not rent). Contractor will end up with staff and gear to pay for with no crop.

"Farmer" stands the risk for a bad crop, of which this year there were many. 0.5t osr crops etc the full paper loss is faced by the farmer. Contractor still gets paid.

 

[Brisel]

I thought the “farmer” took the risk?
What a croc

Not all of it.

 

[Flat 10]

The one’s I’ve seen loss is shared in the same proportion as profit. Seems ‘fair’ to me

 

[glasshouse]

But then the contractor gets terminated

 

[Flat 10]

But then the contractor gets terminated

I hope I won’t. Not saying that it couldn’t be done better but I don’t see reliable people queuing up to take them round here.

 

[glasshouse]

Not yet, but yes! A crop of spring wheat at 2.5 t/ac instead of a 3.5 t/ac winter wheat is never going to have the same gross margin even with lower production costs. By the time you've had to rework the land in spring 2020 & then have a late 2020 harvest it has compromised 2021's crop too. Been ok for osr establishment this autumn though & lots of black grass has been knocked out, so not all bad unless you buggered up your soils a year ago.

2.5t of sp wheat @£200 will pay rather better than 3.5 @£140

 

[teslacoils]

The one’s I’ve seen loss is shared in the same proportion as profit. Seems ‘fair’ to me

Not sure. That would make the "farmer" not taking the risk, which may put them on shaky ground. I'm not a solicitor or accountant though.

 

[Surgery]

Plenty come and gone around here on that game , leave Em too it , be happy with what you got.

 

[ajd132]

Should be okay On the whole. Our worse performing farm won’t have much divvy if any, difficult farm but we are working on it. One farm will be rolling in it with 3/4 of the area in 6.8t/ha spring milling wheat. We didn’t bugger up our soils last year and have got drilled up with decent crops this year. I think the whole soil health drive we have been on for a while is starting to show merit.