Shropshire Star

Farm budgeting – it’s that time of year again

The end of another tax year is looming with many farm businesses preparing to finalise their accounts for the 2017/18 financial year.

Published
Chris Jones is involved in land-based education, training, and mentoring .

This to me is always an exciting time when you can finalise your business performance and see how you have done and then identifying what you can do better to improve. This year-on-year improvement or being willing to make improvements and adjust the way you operate is what makes good farming businesses even better.

There has never been a more appropriate time to make your business as efficient and effective as possible as Brexit draws nearer and the uncertainty of external factors is on our minds. There is not much individuals can do about external factors, but what individuals can do something about is to plan and budget and prepare your farm business well for the coming year. Hardships will be reduced if your business is efficient and effective as possible.

Planning for the coming year is always difficult, trying to work out and calculate what the price of wheat or milk will be and how much will it cost for seed or concentrates. These are all questions you must ask yourself and if only you had a crystal ball will you know the answer, but an educated guess using your experience and your knowledge of the business will get you closer in making better decisions. It's decisions you must make in order to put a plan together and it’s this plan that will guide you through the coming year.

A good starting point is knowing your performance and what you can realistically achieve, whether this is tonnes per hectare or litres per cow or whatever. Prices of commodities is a difficult one to estimate but start with what you averaged last year making adjustments for increases or decreases in size of operation and then using your experience and knowledge for any other adjustments.

I was talking to some sheep farmers last year and I asked them for their lambing percentage and as you can imagine I did not get a percentage figure. What I did get was all the issues sheep farmers have to deal with. When somebody cannot give me an answer then I think it’s because they don’t know the answer or are worried to share this information.

We should never be worried about sharing information as sharing information is a way of confirming your performance.

For those of you who are sheep farmers, to calculate a true lambing percentage take the number of lambs you sold or kept for breeding in one season and divide this figure by the number of ewes put to the ram and then multiply by 100. So if I sold 150 lambs and did not keep any for breeding and divided this figure by the total number of ewes I put to the ram, say 100, I would get a lambing percentage of 150.

The lambing percentage takes into consideration the whole year cycle of a sheep and if calculated accurately will give you some valuable information to make a better decision for your budgets.

Chris Jones is involved in land-based education, training, and mentoring