Call for farmers to revisit budgets

Farmers and farmer/contractors are being urged to revisit budgets in the light of the dramatic effect continuing diesel price rises will have on bottom-line profitability.

Farm business consultant, Trevor Sheard, of Balfours, is urging all those running high-powered tractors and farm machinery to apply current fuel prices to their last year's usage to ensure, if as a contractor they are covering their costs, or as a farmer that each pass over a crop can be financially justified.

Says Shropshire based Mr Sheard: "We are finding that fuel alone can account for as much as £37/acre across a whole farm; a very significant figure when added to other costs.

"Today's average tractor drinks 40 litres per hour - at 50p per litre that is £20 per hour for fuel alone - before you add the cost of a man, repairs and depreciation. I am particularly concerned that farmers and farmers' sons, carrying out contracting work to justify the purchase of new machinery, simply will not cover their costs let alone make a margin.

"We are about to embark on the silage season and we are already seeing jobs being quoted for less fuel, with contractors agreeing to draw diesel on farm, arriving with a full tank and going away with a full-tank. That way it is in the hands of the customer to buy the diesel at the best price they can.

"I can see a time approaching when some jobs we take for granted will quite simply be too costly to carry out. I would urge all farmers to review each process and consider whether it is vital to the crops ultimate profitability. We are all guilty of liking big shiny tractors with ever larger wheels and weights to keep the front end on the ground. Perhaps we should begin to think just how much horsepower/fuel is used just to move them forward."

Trevor is also advising caution when purchasing new machinery.

"Slightly higher margins may encourage some to go out and "invest" in new machinery. However, with a 36 per cent increase in fuel prices in the last six months alone and no sign of let up, fuel efficiency has to be a high priority when planning re-investment," he adds.

* If you would like to discuss individual cases with Trevor call 01588 673314 or email trevorsheard@balfours.co.uk