Loam Farm Figures

Ahead of the Cereals Event in Cambridgeshire on the 15^th and 16^th of June, Andersons have updated their Loam Farm arable model.  This shows the outlook for combinable cropping businesses remaining tough for the coming harvest and, potentially, the one after that too.

Loam Farm is a notional business, located in East Anglia, which has been running since 1991 and tracks the fortunes of arable farming.  It comprises a 600 hectare (1,480 acre) combinable crop farm running a simple rotation of milling wheat, WOSR, feed wheat, and spring beans.  Of the cropped area, 240 Ha are owned and 360 Ha rented on FBTs.  There is a working proprietor plus one full-time man and harvest casual. 

Loam Farm achieved good yields for harvest 2014.  Prices at the time were the lowest for 4 years but in hindsight were higher than anything since.  The 2015 harvest was marked by record yields which offset the poorer prices to a small extent.  The overall result for 2015 was a loss before the first Basic Payment (and last ELS payment).  This is typical of Farm Business Survey data which shows similar trends in its combinable crop farming systems.

The 2016 harvest year is not projected to return such high yields; with less-than-ideal growing conditions so far.  Most agronomists agree some yield will have been lost by now, so long-term average yields have been projected for Loam Farm.  Prices are forecast to remain flat and similar to the 2015 year – based on the current high grain stocks.  Loam Farm is budgeted to make an overall loss for the 2016 harvest year.  This is the first time since 1998 and 2000, when the farm was very close to break-even.  Whilst the farm make £10 per Ha overhead savings in 2016, this is not enough to restore profitability.  As spending has simply been postponed, overhead costs rise again in 2017.  The FBT on half of the rented land comes up for renewal in autumn 2016 (for the 2017 harvest year).  At present no change in the rental has been budgeted.  Market rent levels have been slow to adjust to the new profitability outlook, despite high land costs being one of the factors hitting profits on Loam Farm, and many businesses like it. 

For more information on the Loam Farm figures Andersons will be on Stand number 622.

The 2016 harvest year is not projected to return such high yields, with less than ideal spring growing conditions so far. Most agronomists agree some yield will have been lost by now so long term average yields have been projected. Prices are projected to remain flat and similar to the overall 2015 year, based on the high stocks already discussed (above). Loam Farm actually makes a loss in 2016/17. This is the first time since 1998 and 2000 when the farm was very close to break-even. The manager realises he needs to examine his overheads and has found £10/ha of overhead savings. This is only £6,000, not enough, considering the fall in many cost sectors, and is budgeted to return in 2017, on the basis the farm is slightly more profitable. Some of these costs are simply being postponed