How to make good farming decisions in a volatile environment

The Willett family thinks strong collaboration, open communication and solid calculations will stand them in good stead for the future.

The adage ‘you can’t improve what you don’t measure’ rings true for the Willetts who run the family farming business Howard and Daughter at Parklands Farm near Chelmsford.

Christy Willett and son Hew are responsible for all the decisions taken on the 475ha (1,170 acre) arable unit in Essex.

Together they work on the basis that an investment has to deliver a measurable benefit – be that to the bottom line or an improvement which makes the farm fitter for the future.

Hew and Christy Willett

For the past two years they have been using the AHDB’s Farmbench tool and associated discussion group to hone in on where the farm outperforms and underachieves in comparison to similar businesses.

Fifth-generation Hew has been especially interested in the potential of the tool since he returned to the farm four years ago.

He says Farmbench has improved his ability to see the enterprise’s strengths and weaknesses.

“I had done some crude analysis but Farmbench is the next step to furthering my knowledge about where we’re making money, or potentially losing it,” Hew said.

“It has really helped us – me in particular – grasp the areas to improve on so we can put a plan in place over the next ten years and identify where we want to be going forward.”

Driving change

Christy says one of the first discoveries she made was that her insurance costs were in good shape.

At a Farmbench discussion group meeting she was able to explain to other farmers how the farm has been able to achieve that.

Christy said: “This is the first year we’ve been a part of the group which means we sit down once a year with local farmers and go through where people are doing well and where people are spending more money than others.

“We took the view that it wasn’t necessarily going to be anonymous. It could have been but in our group, we’ve decided to be open.”

Meanwhile Hew has analysed the profile of the machinery on the farm.

In the past 12 months the farm has sold four different pieces of kit after seeing the cost depreciation was having on the business.

Hew said: “They were sitting in the yard losing money year on year. Now they’ve gone. We’ve got the money from them which we can invest in different things.”

By looking at the true cost of depreciation he now has a plan in place for how he will ensure the farm has enough power to suit the operation.

Christy says benchmarking is a step forward from her time at agricultural college when gross margins were the dominant figures.

She says that, nearly 40 years on, there is a requirement for her to look deeper into the business.

“Going back to the 1980s, it was much easier to make money out of farming,” she explains.

“The costs of growing a crop were probably well under half of what they are today.

“Everything’s turned on its head and we really have to be looking in much more detail.”

Christy has sold wheat at £80/tonne, £250/tonne and everything in between.

She says price volatility needs to be managed as best as possible using the decision-making tools at farmers’ disposal.

Weed burden

Grassweed pressure on the unit is a major focus and is the next area where Farmbench will play a role in finding solutions.

Christy said cultural control of weeds will drive more of a focus on soil improvement and every decision and change in practice needs to be costed and justified.

Hew adds: “If we want to change cultivation strategy or inputs we could run that information through Farmbench and see the financial impact of what we are doing to try and improve that soil health.

“I’m not going to do something on the farm unless it’s making me money or, more importantly, losing me money.”

The benefit of being prepared to be agile was evident in 2018 when the weather threw everything it had at the farm.

When the so-called Beast from the East hit in April it left Hew and Christy with a difficult decision to make about whether it was too late to drill spring beans.

Rather than following the traditional route and put a crop in the ground regardless, they looked at the weather and the predicted yield and decided to put a cover crop of Phacelia in.

Christy said: “It flowered, was full of insect life and it’s improving the soil.

“Okay we haven’t made money on that land but our costs have been lower than the margin of a poor bean crop and the land should be in good condition going forward.”

The example shows how farm businesses can move and adapt accordingly if they have a good understanding of their margins and profitability.

Hew added: “Farmbench means we can make decisions to improve our bottom line across the whole business, not just for one crop in one year, but for all crops throughout the whole course of rotation. That’s six, seven, even eight years.”

Christy says working with a sound understanding of the numbers keeps the farm sharp.

“I know I’ve been guilty of taking my eye off that ball, especially when you feel you’ve got labour you want to keep gainfully employed so it might make you do things that you’ve traditionally always done.

“But actually you should take the view that you should be much more flexible.”

Preparing for the future

The adaptability the farm has been able to display over the past 12 months is something both Hew and Christy think will be an important quality as the family looks towards Brexit.

Recently they began the process of reintroducing livestock to the farm with the purchase of 50 ewe lambs.

Arable operations will continue to be the main focus but establishing the flock is another example of how the farm is moving forward with new ideas.

Hew said: “I’m really looking forward to coming out of the EU. I think change is good.

“There’s going to be a big shake up and those people who can adapt and make the most of it will flourish.”

Whatever Brexit means for the farm, he sees Farmbench continuing to play a role.

“There may be land that comes up for rent or contract farming agreements to go for and I don’t want to be making those decisions without having a full financial plan in place, and know exactly what my costs are likely to be.

“How can I put in a bid for rent or an agreement without knowing exactly how much it’s costing me?

“We’ll definitely be carrying on using it for the foreseeable future. It’s a fantastic tool.”