The outlook for UK farm profitability in 2018 is brighter than it has been for some years according to projected figures in the new John Nix Pocketbook for Farm Management.
The budgeting figures in the latest, 2018 Edition, shows returns for most farming sectors at their highest levels for four years.
For example, the gross margin for feed wheat, for an average producer reaches £744 per hectare (£300 per acre), up about 12 percent on last year’s budgeted figure. This is based on a feed wheat price of £140 per tonne which is roughly where November 2018 ex-farm prices currently sit. Winter oilseed rape is also at a high of £662 per hectare using 3.5 tonnes per hectare, the highest margin since 2014.
In the livestock sector, the outlook is equally positive, with dairy budgets up above the 2016 and 2017 years with all-year-round calving herds averaging a gross margin of over £1,000 per cow, levels not seen since 2015. For beef, autumn lowland suckler herds are seen generating £200 per cow head, again figures not achieved for many years. Sheep gross margins return a strong set of results from lowland and upland lambing as well as rearing and finishing.
Author Graham Redman reminds users that these figures are for the ‘average farmer’. Most farmers who use the Pocketbook, he says tend to be above average performers, so may want to use the ‘high’ performance figures for their own comparative calculations, adding substantially to the gross margin. Remember, though, he points out, that the biggest difference between top and bottom farmers is often the overheads and these are more difficult to measure; one way is using guidance in the Pocketbook.
Indeed, the changes to the overheads for 2018 are relatively minor, suggesting that the overall outlook for profit next year is greater than for 2016 or 2017. Mr. Redman warns that it is easy for rising overheads to erode any additional gain from gross margins and the need to keep tight control of them is as important as ever.
Mr Redman points out that 2018 might be the last year of trading in a completely open market with our largest customer, the EU, and farm economics might be quite different after then. The impacts of Brexit so far have been positive on farming, because the pound has weakened, raising the price of UK farm goods, but we don’t know what will happen in the future. He suggests now is the best time to plan for change by making the farm business ever-more resilient, something the Pocketbook can help with.
The new-look cover for 2018, depicting agriculture in numbers is created by a local artist and the contents retain the highest level of rigour as always expected in the ‘bible’ of farm management. The new layout for gross margins implemented last year has been a huge success with many people preferring the greater detail and clarity.
Visit www.thepocketbook.co.uk to download the Contents and a selection of example pages. You can buy your copy online or phone 01664 564 508. The paperback Pocketbook costs £25.50 +P&P and the electronic ePocketbook at £22.00 +VAT.