BPC: growers must consider costs

The British Potato Council (BPC) is urging potato growers to carefully consider their costs before signing any new contracts, after it was revealed that the cost of growing a tonne of potatoes has risen by 35 per cent in the past three years.

Leicestershire-based Andersons The Farm Business Consultants has calculated that a combination of energy, fertiliser, labour and rent increases have pushed up costs for potato growers between 2004 and 2006 by more than 25 per cent on a cost-per-tonne basis.

In 2007 the average cost of production rose by a further 10-12 per cent. Andersons vegetable production specialist Jay Wootton said: "The 2007 rise is likely to be much higher. However, many farms negotiated forward prices for energy and fertiliser. The reality is likely to be nearer 15 per cent, with extreme cases at 20 per cent per tonne, depending on price exposure and the forward-deal obtained."

Andersons' figures also demonstrated a rise in farm labour costs of more than 12 per cent in the past three years.

The firm said the recent upsurge in land values, linked to demand from overseas buyers and rising commodity prices, has also seen a land-rent rise begin to take effect.

Both Andersons and the BPC emphasised that these rises made it more important than ever to understand the true cost of producing a tonne of potatoes.

Wootton said: "These significant rises mean it is vital to be realistic about how much it costs your specific farm to produce a tonne of potatoes, with an accurate idea of your farm's average yield, and how cost per tonne is affected by yield fluctuations.

"It is crucial to pinpoint the specific costs attributed to your potato enterprise, in order to appreciate the risk versus reward."

He added: "Difficult growing conditions over the past two seasons have hit yield. These, combined with climate change uncertainty, present a further risk to working capital.

"Growers need to allocate costs carefully to their potato enterprise. A true picture of costs is crucial before signing any forward-deal, to ensure the minimum return at least exceeds your production cost."

BPC supply chain manager Phil Bradshaw advised potato growers to use the BPC benchmark model to calculate the cost of production.

He said: "It can be easily utilised to project costs for the forthcoming season. A better understanding provides the knowledge to plan and ensure your business has a sustainable future. It will ensure you make the correct marketing decisions for your crop to make the most of your farm situation."

He also pointed out that, despite the rising costs, the overall market for growers looks promising.

"The commitment from Walkers and McCain to buy 100 per cent British crops shows positive support for the industry. Using the model and evaluating your cost profile will enable you to make the right decision at contract signing."

- For more information on the BPC benchmark model contract Phil Bradshaw on 07776 492274.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Sign up now
Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus

Read These Next

What challenges and opportunities lie in store for tomato growers?

What challenges and opportunities lie in store for tomato growers?

The British Tomato Growers Association (TGA) conference today (21 September) heard a range of perspectives on what changes lie in store for the sector and how to anticipate them.

Buoyant demand for UK apples but frost and labour remain concerns

Buoyant demand for UK apples but frost and labour remain concerns

As the British apple season begins, English Apples & Pears (EAP) is warning that growers will feel the effects of both a late frost in spring and also constrained labour supply.

Tomorrow's tractors

Tomorrow's tractors

These machines have advanced rapidly over recent years but what does the future hold? Sally Drury looks ahead.

Follow us on:
  • Facebook
  • LinkedIn
  • Twitter
  • Google +
Horticulture Jobs
More Horticulture Jobs

Pest & Disease Tracker bulletin 

The latest pest and disease alerts, how to treat them, plus EAMU updates, sent direct to your inbox.

Sign up here

Professor Geoffrey Dixon

GreenGene International chair Geoff Dixon on the business of fresh produce production

Read Professor Geoffrey Dixon