Farm contracts tackle uncertainty

Contract farming agreements are likely to become more commonplace, according to a farm consultant.

At a farmers’business meeting in Huntingtower last week farmers said more contract agreements will be made in a bid to combat uncertainty in the agricultural sector.

The farmers met at Huntingtower Hotel on Thursday to look at measuring and monitoring efficiency, improving performance and government support for enterprises such as battery storage, tourism holiday lets and hutting.

Stephen Whiteford, farm consultant with Strutt and Parker, said well managed agreements were providing better farmer and contractor returns in Scotland, compared to those in the south-east of England.

The data gathered for the 2017 harvest showed farmer and contractor total returns of £353/ha and £367/ha respectively.

He said:“Whilst we are less clear on the direction of travel of future agri-policy north of the border, it is quite possible that contract farming agreements will become a more prevalent option for landowners and potential contractors alike as we move towards the post-Brexit era.

“Certainly, in respect of income, if the farmer is able to achieve returns in the region of £320/ha and above that ought to compare very favourably with the alternative of letting arable land. It has the added advantage of being tax-efficient.

“A well-structured farming agreement offers a means of maintaining agricultural activity for the landowner at the same time as maintaining access to potential rural development opportunities.

“For contractors it offers a means of spreading fixed costs and increasing output, offering interesting opportunities for expansion.”

After the briefing farming consultant Harriet Ross also urged farmers to consider carbon audits.

She said:“We believe carbon audits bring considerable benefits when reviewing a business and demand for them is definitely rising.

“While they are not compulsory at the moment, there is often a link between low carbon footprints and efficient, profitable enterprises and audits can highlight things that could make a big difference in running a farm.

“They highlight elements of a business that might not necessarily be at the forefront of farmers’minds, for example, a breakdown of the fuel used across a farmer’s business lines or the volume of fertiliser used on the fields.

“In some cases we see farmers using more and more fertiliser but failing to achieve a corresponding yield.

“A carbon audit will map all this and deliver a mitigation plan, signposting possibilities such as agri-environment schemes and soil analysis that will help improve efficiency and carbon footprint.

“Farmers are often surprised by the results and sometimes relatively straightforward solutions, particularly if they carry one out year after year.

“Additionally, given the increasing focus placed on the environmental obligations of farmers, carbon audits may well prove an ever more useful and important tool moving forwards.

“As such, we believe there are benefits to be had in getting ahead of the curve and potentially securing a competitive advantage.”