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Regenerative agriculture data shows variable costs reduced by 18%

By on July 3, 2021 0

The latest results from the Groundswell benchmarking group show that everything is inferior in a regenerative farming system except the very large net margin.

Variable costs are 18% lower, while labor and machinery costs are down 32%, reports Gary Markham of Land Family Business, who heads the Groundswell Benchmarking group.

See also: What the 5 new winter barley varieties can offer farmers

However, so are crop yields and gross margins – with average production being 21% lower and gross margin down 24%.

Now in its fourth year, the group consists of 15 farms that have adopted the technique, with the results still showing huge variations.

Mr. Markham also compares conventional farming systems across the company’s customer base, so has a comparison.

Main conclusions for regenerative systems

  • Average production per hectare is 21% lower
  • Variable costs are 18% lower
  • Gross margin is 24% lower
  • Labor and machinery costs are 32% lower
  • Very similar net margin

Higher net margin

“What is important from the most recent harvest results of 2020 is that the net margin of regenerative agriculture after labor and machinery costs is higher,” confirms he.

“When you look at their farming operations alone, the Groundswell group hit £ 27 / ha, while those with conventional systems ended up with £ 7 / ha. ”

Mr Markham points out that the main cause of the unprofitability of arable farms is the cost of machinery, especially depreciation.

“Machine capital is the most important cost in the arable sector and it is something that needs to be addressed as BPS [Basic Payment Scheme] the cuts are starting to be felt, ”he says.

As a result, he developed a key performance indicator of machinery capital per ton of winter wheat, which he applied to conventional and regenerative farming systems.

Conventional vs regenerative agriculture

Conventional Regenerator
Variable costs £ 434 / ha £ 357 / ha
Machinery capital £ 794 / ha £ 546 / ha

Its results show that the Groundswell group achieved an average machine capital per tonne of £ 74, while the same indicator in a conventional system was £ 91.

“This difference has been around £ 20-30 / t for the last four harvests. This is a much better measure than the cost of production per tonne, which is no longer relevant.

In practice, this means that a 320 ha farm has £ 100,000 less capital linked to variable costs and machinery, he added.

Agricultural collaboration

Going forward, Markham suggests collaboration will be important for all farming businesses, regardless of the farming system used.

“The loss of the BPS will force collaboration – with farmers sharing machines, then sharing their crops, rather than contract farming. This will contribute as much to personal well-being as to financial efficiency. “

Case Study: Mike Purnell, Whitbread Farms

© Mike Purnell

Bedfordshire farm manager Mike Purnell, who has overseen a regenerative farming system for six years, does not accept that production must be lower.

After improving the soil on the 1,000 ha farm, his goal is to produce the same yields as before, but at a lower cost.

Wheat and rapeseed crops grown on the farm are already carbon negative – nitrogen use decreases as soil organic matter increases, organic fertilizers are tapped, and other techniques such as crops hedge and clover under the meadows are used.

Some inputs have been removed, others are reduced and fuel consumption has decreased, but he still aims to produce 9 t / ha with milling wheats, which are the backbone of an eight-year rotation.

He agrees, however, that it’s all too easy to pick up machinery on a farm, and while horsepower has been reduced, depreciation is still a threat, especially since he bought a new self-propelled sprayer this year.

Mr. Purnell finds the benchmarking very useful and emphasizes that a regenerative system must compare to the rest of the industry, which is why he sees any government funding as a supplement.

“The farm has to wash their face, so we’ve always budgeted without including the BPS,” he says.

“The discussions we have in the benchmarking group are as good as the numbers. We all learn and improve, with soils being the centerpiece. “

Case Study: Rob Raven, Suffolk

Rob raven

© Rob Raven

The numbers are only part of the story, says Rob Raven, a benchmarking participant for Groundswell, who began his no-till journey 15 years ago on his family farm of 625ha.

Now operating over 4,000 ha through contract farming and farm management services, he appreciates the support a benchmarking group can provide, as he continues to look for ways to improve.

Understanding why the numbers are high or low and what can be done to improve them is important, he says, because the system isn’t just about saving money.

“When you start out you wonder if you can make it work,” he admits. “Once you see savings of £ 100 / ha on fixed costs and an additional £ 100 / ha on variable costs, you know you’re on the right track. “

It was considered an oddity by its farming neighbors for a time, as its fields were different from theirs, and at the start of a crop’s life it could be difficult to identify what was being grown.

Wheat field

Wheat is a staple crop © Rob Raven

The hiring of an agronomist committed to his projects was a turning point, he recalls.

With inputs, Raven aims to apply only what he needs, where needed. “We have made great inroads and it continues. We deliberately underestimate nitrogen in order to reduce disease risk and save on fungicides. “

He also says he can now drill the farm in four to five days. There is no fixed rotation, but winter wheat is a mainstay and rapeseed is grown on a low risk and low cost basis.

Without coarse wheat, he also grows beans, flax seeds, spring and winter barley, and rye.

In the future, he hopes to make good use of collaboration to pool resources and generate further savings. “We have great discussions in our benchmark group meetings and everyone’s results are starting to improve. “

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