Benchmarking – 2017 harvest

29 May 2018

An early indication from clients’ year-end accounts We are currently preparing 2017 harvest gross margin accounts for our arable clients. An early indication of how the 2017 harvest compares with 2016 harvest, drawn from clients’ year-end accounts, is summarised below:

 Benchmarking Table 1

 Taking the overhead costs of a typical, mainly arable client: 

Benchmarking Table 2 for 2017 Harvest

 Key trends:

  • Early indications show lower barley yields but significant improvements in wheat and oilseed rape yields. This, coupled with higher prices, has resulted in improved margins, especially for the average arable farm. Figures analysed to date show average oilseed rape prices including oil premiums are £332 per ton, but we may see this average price drop as market prices slide.
  • We have seen savings across all variable costs resulting in better than expected arable gross margins. The average gross margin across the cropped arable area shows an improvement of over £100 per acre, nearly a 38% increase. 
  • Labour, machinery and power costs have increased but this may be due to different farming techniques being adopted. Those using minimum tillage systems have lower fuel and labour costs, often offset by higher depreciation costs as new machinery is bought. To counter this, some farmers are receiving significant grant contributions towards new machinery.
  • Rents payable have remained largely static but finance costs are increasing albeit from a low base cost.
  • Other income has on average increased by 10% over the previous year. There appears to be less reliance on subsidies as farmers increasingly find other opportunities to increase non-farming income. Most of the old stewardship schemes have come to an end, with little uptake for new projects, probably due to Brexit concerns.
  • The 2017 harvest looks to have been a better year for management profit, but there is still little in reserve to carry forward after taking into account drawings, taxation and capital repayment costs on kit.