There is more scope to reduce fixed costs rather than variable costs on arable farms without affecting profitability, delegates at the Ulster Arable Society’s conference at Greenmount were told on Tuesday.

CAFRE senior crops adviser Robin Bolton said that figures from 2014 CAFRE benchmarking show that overhead or fixed costs on combinable crop enterprises (cereals and oilseed rape) equate to £293 per acre or 66% of total production costs. He said that there was little evidence to suggest that increasing acres of cereals grown was effective in spreading fixed costs.

“When you take on more acres then there will be more travel costs due to fuel, labour, depreciation and repairs. If expanding, it is important to look at the distance from the farmyard or the possibility of using a satellite yard near the new land,” Bolton added.

He said that costs, grain prices and yield were the main factors affecting profitability.

Although farmers can look at supply contracts and futures markets, Bolton said that prices are ultimately underpinned by global markets outside of farmers’ control.

He highlighted the importance of yield by stating that spring barley yielding 2.2t/acre costs £145/t to produce whereas yields of 1.5t/acre increase cost of production to £216/t. Likewise, increasing yield to three tonnes per acre lowers costs to £108/t. The average combinable crop yield across the 55 benchmarking farm businesses was 2.5t/acre but ranged from 1.3t/acre to 4.1t/acre.

Listen to an interview with AHDB Cereal and Oilseed chair Paul temple at the arable conference in our podcast below: