A tough 2012 and prospects for 2013
Farming like any other business has to be profitable to survive in the global markets we are now trading in. As businessmen we take on a view on the commodities we are producing and if we see a price in the market that will show us a profit for the particular crop we are growing, given an average yield, most of us will sell to cover ourselves for a percentage of our crop. Bearing this in mind I thought it worse to sell 25% of my projected wheat tonnage, which looked tremendous in the field during May, for £150 per ton.
One particular grain trader suggested that I had undersold my tonnage and, in view of the large worldwide harvest expected, pushed me to double my cover. Fortunately I was wearing my cautious hat that day and I asked him how much of his salary he gambled with every year.
My father told me many years ago that I should never sell any produce until the crop was safely in the store. He has been proven correct for the last two seasons, as the price of cereals has risen by over 25% in both years. The volatility of world market prices due to global surplus and shortages, makes it difficult for farmers to market our crops now. In the event my 25% projected wheat yield burned out to be close to 50% in reality. This goes to show that in the farming industry, where weather has such an influence on crop yields and quality, you shouldn’t count your chickens before they hatch.
The yields of all my crops have been disappointing this year, largely due to the excess rainfall from the end of May through to the end Harvest in late September. The lack of sunshine throughout the late spring and summer has also had a significant impact.
The outlook for Combinable crops for 2013 harvests is favourable, with the USA wheat growing areas still in drought and world stocks at their lowest levels for a generation. Forward prices for UK wheats in November 2013 briefly reached £200/ton, but these high prices have not tempted me to sell even 5% of my crop. The wet autumn and early winter has prevented me from drilling 30% of my planned wheat area. Of the 70% growing in the field most has established well, although I have never had to control so many slugs before. The soggy ground has also prevented me from applying any herbicides to control the blackgrass weed.
The options available for Spring cropping my remaining land are quite limited. Spring Barley seed has already been supplied to drill following sugar beet. I cannot envisage doing any spring drilling before early April at present, and can only budget for an expected yield of 2 tons an acre from this crop.
The soil has been badly damaged removing the sugar beet crop which the plough has only partially restored. The remaining uncropped land is so wet at the moment that I am reluctant to purchase any seed to drill.
The livestock enterprise on the farm has been scaled back over the last year for a variety of reasons. Whilst I fervently believe that a Grade 3 farm like mine at Poolham lends closely to carry cattle, as grass grows well on the farm, there are too many risks and too much work involved to justify keeping a suckler herd here any more. Even though the deadweight price for beef has improved from 200 pence/kg in 2007 to 350 pence/kg today there is still no sign of a profit to be made. Costs have spiralled in feed and machinery .
Perhaps the most important reason however is the influence of politicians both locally, nationally and from Europe. Although I have not as yet fallen foul of the rules imposed by Europe on Cattle producers here in the UK, the penalties for any indiscretion are severe .
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Weather for Market Rasen
Sunday 19 May 2013
Temperature: 11 C to 17 C
Wind Speed: 13 mph
Wind direction: North west
Temperature: 10 C to 19 C
Wind Speed: 14 mph
Wind direction: North