Government is to fund a pilot project which aims to drill down into arable farmers' fixed costs to get meaningful benchmarking data.

The initiative, 4sight Farming, is a benchmarking group formed by an independent agronomist for farmers which analyses detailed machinery and labour costs, alongside variable inputs, to give farming businesses a greater understanding of true costs per crop.

The pilot is being funded to the tune of £95,880 by the Scottish Government and the EU. It aims to combine the findings of the data with lean management tools to help maximise the margins of 25 arable farming businesses in Central and North-east Scotland.

Eric Anderson, senior agronomist with Scottish Agronomy, who initiated the project in partnership with four other organisations, including agricultural co-op and collaboration experts, SAOS, said: “With so many unknowns ahead, I passionately believe making farmers data ‘work’ for them is the future.

"Working with some of our Scottish Agronomy members has shown that as much as 53% of wheat production costs are associated with machinery, fuel and labour inputs, yet there are no large-scale benchmarking projects that deliver an accurate picture of these costs per crop.

"By attributing fixed machinery and labour hours to each block of land, it will be clearer to farm business owners where efficiencies can be made and when combined with lean management tools, create opportunity to transform fixed costs for greater margins.

“With no clear commitment from the Scottish Government on the transitional changes after the UK leaves the EU, it is more important than ever for Scottish farmers to have a full understanding of their business costs. This could be the difference between a farming business being fit for the future and struggling to make it work.”

He added: “Figures show that with the loss of BPS payments, 40% of wheat-growing land – and 60% of land for other combinable crops and potatoes – will not yield enough to cover actual production costs. Farming businesses need to know their true cost of production so they can make positive change in their businesses.

"A lean management approach could be merging blocks of land to reduce movement between fields, or simply widening a gateway so a combine can move independently between fields without the cost of labour and fuel for a tractor and trailer to deliver the header.

"If farmers have a grasp of all their costs from the field up they can make simple but effective changes with confidence.”

A similar farming group in Oxfordshire, has provided benchmarking to its 14 members since 2003 to help drive down cost per tonne. Its online data system will be used by 4Sight Farming to analyse the data from five core farmers, ‘the operational group’, to give them an in-depth breakdown of their own business.

The data from the other 20 group members will be analysed by EQ Accountants, in Forfar, who specialise in agricultural services. The combined data from both groups will be used to provide a range of cost comparisons across operations and crops as the basis for discussion by the whole group.