Nature provided optimal growing conditions in 2014

With the start of 2015 looming, thoughts turn to reflection of 2014 and whether we view it as a good or bad year?

Most of you will have recollections of the past 12 months of disastrous commodity prices, as well as the headache of the introduction on the new Basic Payment Scheme (BPS) due to take over from the Single Payment Scheme (SPS) in 2015.

However, for once the weather has predominately been on the favourable side this year, with Mother Nature providing optimal growing conditions, as well as good periods of weather for lambing and calving. Crops and livestock had a good start to the year, after a mild winter, allowing for the potential for a successful year. Ideal growing conditions throughout the Spring and Summer allowed for an early harvest and bumper yields on many farms. This lead to a few arable records being broken, with a new OSR and Wheat record of 6.14t/ha and 14.5t/ha respectively, as well as a new UK average wheat yield record, of 8.6t/ha.

The livestock sector was also able to join in the record breaking, with Carlisle mart hosting a new world record price for a Limousin heifer, sold at 125,000 gns. This year has also seen exceptional grass growth, which will have significantly reduced livestock feed bills. As a result livestock have been turned out earlier in Spring and, with a warm October, stock have been able to graze later in the year. Stock prices have fallen from the previous year, with beef prices being nearly 70p/kg/dw less in the summer compared to 2013, however the price has recovered to around 355p/kg/dw for the end of the year. Lamb prices have just recovered to around the same price for this time last year, but, for the majority of the year, have been around 20p/kg lighter than the previous year.

Unfortunately, arable prices suffered an even worse fate, with some cereal prices dipping under £100/t and OSR struggling to reach £240/t at harvest time. Potatoes took a massive dive in July, dropping in price by about £130/t. This has obviously left arable farmers income well below that which was budgeted for a year ago. As a result, cashflows will have been tight over the last few months and many of you will have been looking forward to December... and not just because Santa Claus is coming to town. SPS cheques have been rolling out and even the RPA have claimed their very own record, reporting that they have surpassed last year’s performance on SPS by making more payments than ever before on the first banking day of the payment window. This will be a huge boost to many cashflows, even though many will be receiving a slightly smaller payment than previous years. Unfortunately for many, particularly lowland farmers, smaller CAP subsidy payments will become a common trend in the future.

The introduction of the new Basic Payment Scheme (BPS) in January 2015 has been at the forefront of the farming press as there is a whole new subsidy system to understand. Unfortunately, DEFRA haven’t been breaking any records for releasing up to date information or keeping to schedule with their CAP Reform timetable. I fear there may be a mad rush in the beginning of the year as everyone will have to go through a new registration process, regardless of whether you have already been submitting your SPS forms online.

2015 looks set to be a challenging year. With the introduction of the new BPS I cannot emphasis enough how key it is to get everything in order as soon as possible. The new BPS application forms sound like they will require more detail and attention to each field. There will also be huge uncertainty of what the markets will do, with wheat futures hovering around the £140/t mark for July 2015. However, the key message to take going forward is to have a full understanding of the exact input costs for each enterprise. This will allow you to assess where improvements and savings can be made, as well as be prepared for opportunities that may arise.