‘MINIMISING overhead costs is key to the future success of farming businesses’, according to Andersons consultants, who shared their research findings on the current climate of farming across the various sectors, at a meeting in Perth.

Anderson’s stressed that too few farmers were aware of the main costs in their business: “In order to improve farm profitability, farming businesses must have a grip on their overheads and be able to identify where costs can be mitigated to encourage profitability,” pointed out consultant, Richard King.

“When reviewing total farm costs, the industry tends to focus on increases in the ‘visible’ costs such as fertiliser and fuel, which account for 6% and 4% of overall costs,” Mr King continued. “However, these numbers are a much smaller share of overall costs. More focus should be put in to containing costs in categories such as machinery depreciation and miscellaneous costs, such as office costs, subscriptions and insurance – both sitting at 8% of total costs,” he added.

Given a significant reduction in both seasonal and full-time workers on farms in Scotland – a trend that is set to continue – he said: “One of the key issues is that staff are looking for a 2.5% yearly increase in pay, which doesn’t equate with stagnant prices – farmers aren’t making any more money from their wheat or milk, so can’t compete with inflation. A quarter of costs facing livestock farmers comes in the form of animal feed at 23% – with this as a necessity, staffing can be one of the first areas to take a hit.

“Last year was a difficult one for many horticulture businesses. Securing sufficient staff to work on and then harvest many of their crops has been an increasing problem for many labour-intensive farm businesses for some years, but the decline in migration following the disruption of Brexit has made things more complex.

“The rise in minimum wage, coupled with higher costs to attract sufficient workers mean that labour costs have doubled on many intensive farms in four years,” he pointed out.

Last year’s unusual period of weather played havoc with Scotland’s soft fruit industry, with fruit ripening too quick in the hot summer sun without the staff to pick it.