Increased prices/Increased Optimism

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News article

Increased price/Increased optimism?

January 2011

rural consultancy news

With futures prices providing favourable marketing opportunities for harvest 2011 and current crop at record levels, Fisher German are more optimistic for 2011 than in previous years.

However, it does not take long for costs to accelerate upwards and farmers should be mindful that whilst commodity prices have moved up quickly, costs are indeed following and as such the cost of production (COP) will be increasing compared to last year. 
 
One such cost is nitrogen fertiliser with prices increasing from £200/tonne edging now towards £300/tonne in what has only been a six month period.  Phosphate and potash prices are also showing similar trends and are becoming very expensive, particularly if land requires more than just a maintenance application.  Due to this increased volatility in both commodity prices and inputs, COP budgets need to be one of the first things that every farm business undertakes.
 
COP is important as once calculated it can be used to assess both cropping and marketing decisions for the future.  Each farming business has a different level of COP with wide variations for feed wheat being seen when analysing farming businesses.
 
In addition to COP, farmers should be assessing how the recent rise in diesel fuel may be affecting their machinery costs per acre/hectare, particularly if they undertake contracting work for others, as a rise from 40p per litre to 70p per litre can be the difference between making or losing money on certain operations.
 
Fisher German can help farmers with COP calculations, machinery costs and a range of other business advice to enable farming businesses to make the most of enhanced commodity prices whilst being as cost efficient as possible. For further information contact James Goodson 01636 642507 or visit www.fishergerman.co.uk
 
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