Farmers have been reminded of the importance of taking a step back from the pressures of high inflation to review how best to make their farm businesses pay, at a debate held by the Future Farmers of Yorkshire at the Great Yorkshire Showground.
More than 160 guests joined the Future Farmers of Yorkshire, a thriving network of forward-thinking farmers, vets and other industry professionals supported by the Yorkshire Agricultural Society, for the group’s Autumn Debate, sponsored by AHDB (Agriculture and Horticulture Development Board) and HSBC UK Agriculture.
A panel of expert speakers discussed the topical issue of how best to Plough on Through High Inflation at a time of the highest inflation the country has seen for 40 years. For many Future Farmers, farming through steep inflation is something they have not experienced before.
Opening the Autumn Debate (on 1st December), Future Farmer Isobel Eames, who chaired the event and is AHDB’s Knowledge Exchange Manager for Cereals & Oilseeds said: “Most of us will be feeling the pinch in one way or another. In some sectors, it feels like full-blown knockout but we continue to farm in these conditions because we love and enjoy what we do.”
Panellist Mark Berrisford-Smith, Head of Economics at HSBC UK’s Commercial Banking business examined the economic climate, highlighting how the most recent parallels are with the 1970s, when the Arab-Israeli War profoundly inflated on oil prices, as opposed to today’s gas price increases caused by the Ukraine war.
Mark said: “The day that war (Ukraine) started, it was absolutely obvious what it would do to the global economy, it would slow growth and increase inflation and that is the world we are going to live in until the war finishes and until its consequences are dealt with, which will take time.”
Mark said there are however some positive signs for food producers. Commodity price inflation has eased since a peak earlier in the year. Mark said: “We are learning to live with this. And the same is true of food commodity prices, not all of them and not evenly, but they are coming down, so I am surprised that food price inflation in shops continues to accelerate.”
Yorkshire land agent Andrew Hardcastle, Director of Hardcastle Rural Surveyors explained how farmers could boost incomes, despite high inflation, by looking at how unprofitable areas of farms fit into emerging funding schemes as the Government introduces new policies to replace existing agricultural support payments.
Andrew advised “take a step back and look at areas of your business that are profitable, and focus on them, but the areas that aren’t working, look at how you make those work” by benchmarking and budgeting gross and net margins, and reviewing everything from feed and energy costs, to fertiliser, soil types and crop rotations. Andrew also suggested exploring different ways of doing things, from selling commodities forward, joining co-operatives or buying groups, and diversifying into different livestock and crop varieties.
Fifth generation farmer, and farm contractor and agronomist Matthew Nichols, 29, of Manor Farm near Stokesley shared lessons from his farm career to date. Matthew, who is Farmers Weekly’s Young Farmer of the Year, uses regenerative farming methods on his mixed farm, having switched to a zero-tillage system. His farm business operates across two holdings and totals 170 acres and consists of arable rotations and houses 9,000 B&B pigs a year. Matthew also works with third party graziers to bring other livestock onto the farm to graze crops.
Matthew said he took great confidence early in his career from working for a local contractor, while he channelled his focus into work following the loss of both his parents to cancer. Matthew went on to secure a tenancy agreement at the family farm with his late-grandfather, starting from scratch with no machinery, but making use of a five-figure overdraft facility to produce the farm’s first harvest. Despite “bumps in the road” since, Matthew is now operating on a larger scale with award-winning success.
Matthew said: “Having a handle on your costings is key to a successful business. Be able to see on paper roughly where you need to be and continue to update these when you have time to do so. Understanding your costs will give you much more confidence when trying to fix prices on inputs and outputs, for example, buying fertiliser and selling wheat.”
Charles Mills, farmer and Show Director of the Great Yorkshire Show at the Yorkshire Agricultural Society, shared his experiences, including working through periods of high inflation and interest rates during his 47 years in farming so far. Charles farms 550 acres of mostly arable land at Woolas Grange near York with his wife Jill and son James, where they also run a successful wedding venue following the renovation of one of the farm buildings.
Charles explained how, when returning to the farm aged 24 and going into business with his brother, they sought to manage their costs. Inflation was at 17 per cent and interest rates were over 16 per cent, but even so the brothers purchased a neighbouring farm.
At the time, Charles plotted the farm’s two-year cashflow which he admitted proved to be “so far out”. “With inflation as it was, I got it clearly wrong”, said Charles, though the brothers’ passion for farming and the efforts of a “great team” of farm workers helped them make a profit. Seizing chances to secure grant funding also reduced their reliance on borrowing.
Charles urged farmers not to get bogged down with worry about today’s financial climate, to look for opportunities and to be aware of the support around them. He said: “Just be aware of inflation, don’t worry about it, but be aware. Be in control of your own businesses. Look for opportunities, there will be so many and when they are there, take them.
Charles added: “Look, listen and learn. Work with a great team around you, whether that be family or agents. Work with people you can trust. And most important of all, do not suffer in silence. There are plenty of people to contact, so if anybody is struggling, please remember that you have friends, and the Yorkshire Agricultural Society is brilliant at listening.”