Optimising Cost of Production on Farm
John Barrett of Ditchingham Farms – Sentry Ltd has won our Best In Field Award for Optimisation 2020, having shown the most significant reduction in cost of production for the past two years. We sat down with John (via zoom) to talk through how he's achieved this and if he has plans to bring those costs lower.
Tell us about yourself.
I'm a Director of Sentry Limited, BASIS and FACTs trained.
Tell us about the farm.
We're in South Norfolk, farming 1300 hectares with seven separate landowners involved. The soil is predominantly Beccles clay with a band of light land.
How long have you been using YAGRO's services?
We started using YAGRO for fuel purchasing three years ago, and we are now using that across all Sentry farms. I started using YAGRO Analytics when it launched in September.
Your cost of production for oilseed rape has decreased by 9% each year for the past two years, and your winter wheat production costs have been reduced at similar levels for the past few years. That's a significant saving to the business. Would you be willing to shed some light on how you achieved this?
It's reacting to the market. We need to control the cost of production so it doesn’t exceed the output price. Its budgeting and planning to then allow ourselves the opportunity to make a margin on the crop. It's a question of challenging each operation, be it a herbicide or fungicide to find any potential alternatives that might cost less but have benefits — managing our costs dependant on achievable output.
Is that continuous monitoring throughout the season?
It's more monitoring each of the agronomist's decisions and challenging each one. We had an example this year where we were presented with three different products we could have used at three different prices £15, £20 and £25 – It's not always cost, my job is working out the return on investment for each one.
What if anything are you doing differently next year?
The challenge for 2021 harvest is we have a good crop of OSR coming through, its wall to wall and prices are good. But that doesn't mean we want to continually spend on it as we still want to make a good return. Nitrogen ratios are well known; chemical ratios are less known. That's where Analytics will be useful as we can use that historical data to look at ratios and see how they have affected crops and how we can adjust them to maximise return.
This year, we are growing a variety where we'll get the money back on the seed if the crop fails. It's a conventional variety, so the costs are relatively low. The OSR comes through KWS's Oilseed Establishment Partnership. We pay 50% of the seed costs upfront and pay the balance once the crop has established.
We are also doing variable-rate nitrogen applications this year on a risk share basis. It's suitable from an environmental viewpoint and also for maximising return.
We like the idea of risk-sharing options; it's beneficial for us to share those risks through the chain.
On risk then, are you selling forward? How are you marketing your crops?
We will sell quite a high percentage preharvest due to harvest pressure. Again, this year due to the dynamics of the rape in the ground, (there isn't a huge amount), it looks like the country we will be importing OSR, so we're not so worried about pricing just yet. Looking at the markets at present, it seems the right decision so far.
Where do you get your information when looking at UK OSR establishment figures and making judgments on the market?
Within Sentry, we have a couple of colleagues who speak to ADM weekly, they keep track of and closely follow the market. They convey that information around the team. In the company, we have 20 Managers, instead of each speaking to a trader a week, we focus on two experts. Alec Smith, part of our Sentry Business Solutions Team is one of those experts, and he collates all our Sentry data, what we are marketing and what's sold, disseminating that information around the team.
Does Sentry have internal spray programs, or do you follow external agronomy advice?
In South Norfolk we use Agrovista and have had the same agronomist for the past eight years. My Operations Manager Richard Canham is BASIS trained, and I'm FACTs and BASIS trained.
We have fungicide plans internally and have company meetings to go through programmes for each crop. Herbicides are more 'put on what's required'. With blackgrass, there is either cultural or chemical control.
Are you a black grass area?
Yes, and we use drilling dates to try and combat that. We always plan to drill late, and the past two years we've been pushed back even further due to the problematic Autumns. And that has absolutely helped reduce spend there. We have YAGRO Analytics to measure, with the late drilling, if a reduction of output outweighs the savings from the herbicide spend. A dry Spring can have as much impact as late drilling so over time looking at the cost of production is vital.
The number of chemicals in the armoury is reducing, by going that bit later, we then often don't need to apply a T0.
We've also changed wheat varieties to have more KWS Siskin and KWS Extase, both more resistant varieties, again helping reduce our fungicide spend.
We've planted 116 ha of KWS Rye for the first time this year. We also grew spring oats one year when the price was good but haven't grown it since. It's having the ability and flexibility to adapt to the market demands.
I take it rye is pricing well then if you are growing it?
It's currently £20 less per tonne than wheat. Its got a lot going for it as it grows well on light land and its drought-tolerant, helpful with our increasingly hotter dryer Springs. KWS have developed the variety to be higher-yielding, and the drought tolerance makes it fit for us this year.
Are you making adjustments on fixed cost elements too?
Yes, with the later drilling slot, it is wetter, shorter days and cooler; finding a drill that fits that system is a challenge. We've got a Horsch tine drill and a Triton on the south coast we're using for direct drilling in late October early November.
How do you manage the balance between cost and payback periods on new kit?
In South Norfolk we have seven landowners where we are collaborating, and we also move some kit around Suffolk and Cambridgeshire. A direct drill can be moved relatively quickly, and we also move a potato topper around, which helps manage costs.
Do you see that collaboration being more prevalent in the future?
We all have different skills, and we try to work with people to harness those skills. We collaborate across counties; we want to work more with our neighbours too. The more we can collaborate, the better. One of the key principles of ELMs looks to be more collaboration between Land Managers.
How are you adapting for farming post BPS?
With BPS going, it's crucial to adapt to the market. We don't know quite what ELMs will be, but Environmental Stewardship will be paid for from the money from BPS, and yes, we will integrate that into the farming business and look for opportunities through that. We've always farmed with subsidies behind us; we will adapt the company to the subsidy in front of us.
From a contractor's point of view, we need to be thinking about how we can collaborate with neighbours to maintain the area we are farming, working the right land and have marginal land used for other purposes. We're looking to grow food on less and growing environment on more, whilst keeping a cap on fixed costs.
Who do you credit for helping you reduce your costs?
I'm not a big fan of just looking for cost savings; I'm far more interested in optimising our returns.
Its been a company directive to have that focus, we've always focused on budgets, cashflows, continuous monitoring of costs and returns. We've always benchmarked our business through Sentry Business Solutions and will be looking to carry that on with YAGRO's Analytics software as the next step in that.
Congratulations to John on winning our Best in Field Optimisation award.