BPC gives growers the benchmark
Potato growers have been advised to make use of a powerful benchmarking tool from the British Potato Council (BPC) to ensure sound financial decisions are made during planning.
An updated version of the potato enterprise costing and benchmarking CD, compatible with Windows Vista and XP, will be posted this month to registered growers who have attended a BPC workshop. The revised comparative data reflects cost rises over the last eighteen months, such as variable costs which have risen by 10% and electricity specifically by 20 - 30%.
Phil Bradshaw, supply chain manager for the BPC says: "More than 600 growers have already attended workshops, which advise on understanding production costs and lead to analysis and discussion of business improvement."
The user-friendly software enables you to organise your costs in a simple way. Growers are shown how to enter their own farm costs, cropping and account data into the model. There are two entry methods; the automatic route gives you a quick overview of your business, then more data can be entered manually to provide more detailed analysis.
Once the CD is loaded onto the business machine, you select your farm size 40ha, 41-100 ha and 101 ha +. Then you can enter data for your sector or multiple sectors, split by processing, ware, salad and seed crops. "Your results are then compared with industry-comparable data and highlighted green if costs are okay, amber if they require attention or red if they look critical," explains Mr Bradshaw.
The data has been updated in the latest version by industry consultation and experience provided by Jay Wootton of Andersons and Richard Warburton of Bidwells. Production information can be compared to a detailed financial breakdown of costs with confidentiality safeguards in place.
Mr Bradshaw says: "It enables growers to compare their potato crop confidentially both with other enterprises on their farm, and with production costs and business performance of the sector average, minimum, maximum and top 25%. By understanding costs growers will be able to identify their business strengths and weaknesses and improve their efficiency and profitability."
Richard Warburton of Bidwells said: "Most growers we deal with have a good appreciation of their variable costs such as seed and fertiliser. Fixed costs are less well understood and findings vary more widely than variable costs."
Jay Wootton says: "Knowing your production costs enables you to improve your crop marketing. In addition to reviewing your own costs, you have the option to submit your data confidentially online to the secure site Prime Numbers. This allows you to track your performance against your peers in similar or the same markets. You can compare your data to specific groups. For example if you are a member of a supply group you are able to analyse your costs and returns against the group average."
"Farmers have lots of choice with prices strong in other sectors. Understanding costs allows growers to analyse risk and opportunity and make well-calculated decisions for return on investment, capital investment and land commitment. A full appreciation of your production costs puts you in strong position to make these critical strategic decisions," says Mr Warburton.
A further strength of software is that you can use your actual data and enter new scenarios. For example putting different cost models into next year's contract lets you see how it would compare to the results received for the current or previous year's crops.
Interested growers or supply groups should contact Phil Bradshaw at the BPC on 07776 492274 for further information.
