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CONTRACT FARMING AGREEMENTS 2018 HARVEST RESULTS

The weather conditions post 2018 harvest, including the Beast from the East and a prolonged dry spell on the lead up to harvest, meant it was unsurprising that many CFA financial forecasts looked poor compared to the pre-harvest budget. Fortunately, as time went on, many 2018 Divisible Surplus results exceeded not only the pre-harvest forecast but also the original budget.

Typically across East Anglia yields were down compared to budget, particularly in spring crops. However an increase in price, especially for spring barley, saw many farmers receive an average price well over the £200/t mark. Sugar beet was not so fortunate, with the contract price fixed and lower to budget yields equating to lower returns for most CFAs.

A substantial number of CFAs benefited from extra income through straw sales in the form of swath or baled straw. The vast majority of CFAs, which typically chopped most of the straw on the farm, capitalised on the high demand for straw and consequently high prices. This, in turn, supported overall crop incomes where yield was a limiting factor.

Although the pre-harvest dry period hindered yields, it did assist with cost savings. Most contract farms benefited from low disease pressure in the dry period, which led to a significant saving on chemicals. Another significant saving caused by the weather was that of crop drying costs, with the majority of CFAs having little to no drying costs at all. Further to this, those CFAs which purchased fertiliser early in season also saw noteworthy savings.

These factors all contributed to a successful 2018 harvest year, with many CFAs reaching the top tier of the Divisible Surplus calculation. Although in terms of yield the 2018 Harvest did not break many records, many CFAs across East Anglia saw record financial results, welcomed by both Farmers and Contractors alike.

With such a dry summer, contractors were able to start and finish harvest earlier than normal which allowed for timely cultivations and establishment of the 2019 crop. Many CFAs are now seeing the benefit of this as the 2019 harvest slowly progresses around sporadic and localised rainfall.

Obviously many farmers have different types of Contract Farming Agreement, some of which may have been arrange a number of years ago. If you are currently in an agreement, and would like to review it to ensure all terms are benefitting both parties, please contact your local Brown&Co office.