Loomio
Sat 14 Oct 2017

Accounting matters, for OurField Weston

GH
Grahame Hunter Public Seen by 431

anything anyone wishes to discuss or review about the cash flow, or income statement and stakeholder balances for the OurField venture

TA

Tony Allan Sat 14 Oct 2017

Dear Grahame,
Very many thanks for the draft accounts. They are very useful.

Would it take a lot of time to provide a comparative set of details for a nearby field where a 'normal' spring wheat crop has been harvested? Are the spring wheat prices evident yet?

How much would the nitrogen application - which we rejected - have cost?

Best TonyA

GH

Grahame Hunter Sun 15 Oct 2017

Yes, Tony I think what you are suggesting is really important, and I will try and get this together with John..also I am just waiting a final clarification of one point so I can put up the spreadsheet with the details..

TA

Tony Allan Mon 16 Oct 2017

Dear Grahame
Thank you very much for your amiable reply. Please do not devote a disproportionate time to the comparative metrics. We don't need high precision. We just want a sense of the impact of our decision making. If the numbers are strong, however, there would be the possibility of useful publication.

If you have time it would be helpful to have some notion of the role of EU CAP direct payments in the accounting.

Who is reading this sub-discussion?
Best Tony

GH

Grahame Hunter Tue 17 Oct 2017

Attached is the working spreadsheet for the accounts.

There are two sections -
* the calculation of the farming and other fixed costs (from A1) and
* the balance for the OurField cooperative members (from K36).

@johnanthonyallan the net rent figure /ha. (H5) includes a gross rent f £310 /ha. less a Basic Payment of £227. I suppose one way to look at this, is that if there were no basic payment, the farm rents would need to fall (collapse?), which would mean a similar drastic decline of land prices; and to the extent that land values do for many farmers secure indebtedness, there would be widespread insolvencies within the sector - although perhaps also an opportunity for new entrants?

TA

Tony Allan Tue 17 Oct 2017

Dear Grahame and John

Very many thanks indeed for the draft summary accounts. They are very interesting indeed.
Thank you also for including some comparative estimates for an area sown to spring wheat. The input costs of the spelt experiment are substantially higher than for spring wheat.

1 Is this mainly because the cost of seed was higher than for spring wheat. The price we paid for seed was probably higher than is would have been if we had made the decision to plant spelt earlier when there was spring-spelt seed available in the UK. Meanwhile the seed from Germany turned out to be high quality. Be assured we appreciated the research input.

2 What was the average yield of a spring wheat crop on a similar field?

3 The clover companion crop on OurField has also been an additional cost. How is the clover? Is there any way of identifying its benefits?

4 Your point about rent is very interesting. I hope we can discuss this amongst other issues at the Festival in London next month. Do we need a venue?

5 What prices are you getting for this season's spring wheat?

With very best wishes.

GH

Grahame Hunter Wed 18 Oct 2017

Good morning John.
when we started, I made some estimates of how things might go..as did others. Where I was very wrong is the estimate of seed costs: these ended costing £2,354, vs the forecast of £736, so a huge amount extra for that seed shipped from Germany and the clover.

I understood back then we would use about a tonne of seed (spread rate 180kg /ha. at £400 /tonne). The German seed cost about £600 /tonne (E700) and had to be shipped and then, upon cleaning, a further half tonne was lost: so it cost about £800 / tonnne and we put 1.5 tonnes seed on the 8 Ha. and then the clover mix in addition.

On the profit & loss (my figures, never published), originally I predicted a small loss, but then increased the yield assumptions. Revised upwards we cheerfully predicted harvesting up to 4.5 - 5 tonnes /ha. so optimistically might have expected 36 -40 tonnes of clean grain, vs the eventual 15tonnes achieved.

I see in Darren's spreadsheet of March 2017 (posted onto Loomio when we were deciding the crop) he thought the maximum /minimum harvest for Spelt would be between 6.2 tonnes and 2.5 tonnes /ha, and with this he worked out an average harvest of 4.3 tonnes /ha or 34 tonnes for the field.

Richard Harding's more sanguine estimate when we walked the field proved correct - "not more than a ton an acre".

TA

Tony Allan Thu 19 Oct 2017

Dear Grahame
Very many thanks for the details on where the extra costs have come from. It is all very helpful. A lesson we need to learn is that we should not limit our options by not having a timely plan in place on what to do next.
Be assured we appreciate the effort you put into acquiring the seed from eastern Germany and the accounting. We have unique experience and keeping track of the costs and income is vital..

TonyA

D

Darren Mon 23 Oct 2017

Finally got a chance to look at the spreadsheet. Interesting to see all the expenses involved.

TT

Tessa Tricks Sun 5 Nov 2017

Couldn't agree more. Thank you for taking the time to lay out the detail so clearly.

GH

Grahame Hunter Wed 1 Nov 2017

What is it worth?

To better understand the financial implications of the poll, and for those who may not have studied the accounts to date, this note may be useful.

  • As an ordinary member of the OurField collective (there are 42 of you..) each one of you has £75.86 to your credit. These funds are presently held by John Cherry.

  • You also “own” around 250 kg of Spelt grain in its hull, which is presently lying in a Weston Barn, where it is dry and secure, and not deteriorating. There is no rush to sell it.

  • Your cost of each Kg. of Spelt grain has been around 30p /kg: but as Tony Allans’ graphs show, the world price for grain is around 14p /kg. so that may be all it is worth. This seems to re-enforce Tony Allan’s remark that this is a broken market. The farmer has taken a risk to grow a crop, which in a poor year and after all the effort and expense of farming may have cost him/her – as in our case – up to 100% more than it is worth at the end of the season.

  • The funds each member has on hand (representing a further 30.4 p /kg of your Grain) is more than adequate to beneficiate the grain in any of several ways – hulling /bagging / milling etc so no more money will be asked of you whatever you decide..

It is also perhaps interesting to reflect that a member of the public who buys an artisan loaf, say at £2.50 for a regular 600gm loaf, is paying around £6 /kg for the flour content of his bread. So one can see that there is scope for making money between the 14p/kg world price and the £6 consumer price, but it is just not at the farming end..

I was amused to be offered “gluten free” steel cut oats recently for £5.50 kg direct from a mill (for my porridge) and on querying it was assured that this price left little room for profit. My local farmer sells his oats into the market for about 18p / kg.

On a related note, it is not really appropriate for the OurField collective funds to be held in John Cherry’s personal bank account, as this will have to be accounted for by him / Weston Park Farms for tax and VAT. _ I would like to move to open a free, “society” bank account for the collective. Any objections? It will take me a few weeks to set this up, if instructed._

AR

Abby Rose Wed 1 Nov 2017

@abiaspen is the bank account sorted now? where are we on that?

AR

Abby Rose Wed 1 Nov 2017

Thanks @grahamehunter this is super helpful breakdown and good to think about the financials of it from many different perspectives!

AS

Alexandra Sexton Mon 6 Nov 2017

Thank you Grahame for these very helpful details, fully support opening a collective bank account if this is still being decided

GH

Grahame Hunter Wed 8 Nov 2017

OurField Weston bank account

In order to hold the money belonging to the Weston field co-operative members, and to deal with the payments in and out in the next months (hulling, milling, shipping, selling etc) I will open a bank account for the co-operative. Initially, and until someone stands forward to become the Treasurer, John Cherry and I will be the joint names for the account.

Anyone leaving the cooperative will be paid out of this account, and new members will pay into it, so it will be very transparent what money is there for everyone to share and distribute as you decide.

__ This account is separate to any financial arrangements and funds held by the organisers for the OurField group. This is only for the Weston farming activities of the cooperative.__

TA

Tony Allan Thu 9 Nov 2017

Dear Grahame
I am very pleased that you have opened a bank account. It is also good that you have noted that we need separate accounting arrangements for activities beyond the farm gate.
This could be a long intervention. I shall make it brief .
We have decided by vote to engage in processing and marketing beyond the farm gate without knowing whether we have the capacity to operate effectively. Effective operation will require many inputs, skills and networks.
I am not against such activity and proved this by offering to donate £100 towards beyond farm gate initiatives. I voted, however, to sell the 15 tonnes, although hoping that we might use some of the 15 tonnes as seed,
To get your attention I feel obliged to say that my continued participation in the OurField project depends on someone coming forward to take on the accounting and related financial responsibilities beyond the farm gate. I know this seems boring and unimaginative. But it is an essential change. I judge it to be so important that without such a new arrangement I would not want to continue as a co-investor.
I could make the case in more detail but I shall leave it there.
With deep respect and every good wish to all co-investors. Tony

GH

Grahame Hunter Sat 11 Nov 2017

Tony, I shall be interested to see what co-operative members think on this topic.
perhaps loomio is not an ideal forum for this; and there may need to be some management structure in place for the cooperative; __ which may have to be a different set of people to the OurField organisers__ - who by definition (and perhaps unfortunately) are not members of the co-operative.

AR

Abby Rose Mon 13 Nov 2017

Just to clarify @grahamehunter - we decided in the end that members of the organising group could invest and choose to be part of the co-investor group if they liked. @annielandless and I did choose to invest and so are both co-investors and organisers. The only person we decided wasn't allowed to be a co-organiser is you @grahamehunter as moderator and that is because we thought it important that the moderator is impartial as ultimately you are the person putting the proposals together based on what the collective say in discussions.

GH

Grahame Hunter Mon 13 Nov 2017

oh good, I am glad that is clear. That seems to be the right arrangement then on membership.

TA

Tony Allan Sun 12 Nov 2017

Dear Grahame
Very many thanks for responding. It would be very good to hear from other co-investors. I agree the Loomio platform may not be the ideal medium. But some preliminary ideas and suggestions could be generated if co-investors would comment. Again many thanks.

GH

Grahame Hunter Sun 12 Nov 2017

I see, Tony, that you and I are having a lonely conversation.

After the 23 November meeting - which sadly I cannot attend as I am out of the country - I will put up a poll of how the Cooperative and John (who after all is key to the matter) may wish to go forward, eg raising issues of new members, leaving members, the extra hectares, finances, management, valuation of non financials such as soil fertility etc etc.

For now, I will try and nudge forward the group decision to hull /mill all the grain.

There is sufficient funds to meet all the present costs of bulk hulling /bulk milling, so your offer to raise the subscription towards costs beyond the farm gate is not currently on the table.

g

WA

Wendy Alcock Sun 12 Nov 2017

I was just replying on the other thread and emailing Wrights, @grahamehunter, then planned to reply to Tony :) I agree input to all threads is sadly low though. Maybe this discussion would be better on the main thread, as all issues to do with the field are interrelated?

@johnanthonyallan Tony, I just wanted to say, please do see out this current year before deciding whether to continue as a co-investor. I voted for the option that I did to see if we can make it work with limited, but not excessive, admin beyond the farm gate. If it becomes too much (and we continue) we can decide differently next year. But it may not be too problematic, she says with her fingers crossed!

I’m afraid I am personally not able to take on the accounting and related financial responsibilities but if we can keep things simple (ie, one mill, one bakery) it may not been needed. Or the amount of time required for certain options can be factored into the choices offered for the vote in future years (ie, ones that are not feasible are not offered as a choice).

All for discussion on the 23 I think. I’m looking forward to seeing you there. And visiting the bakery for the first time.

TA

Tony Allan Sun 12 Nov 2017

Dear Wendy
Many thanks for your constructive reply. You make very useful points.
Can we suggest an agenda for 23 November. Tony

WA

Wendy Alcock Sun 12 Nov 2017

I think your suggestions last week offer a good draft agenda Tony (which I have tweaked). But maybe @abbyrose will want to add/amend.

1 Will we continue, if so, should we develop an on farm OurField three (???) year strategy

2 How far do we want to be involved in beyond the farm gate strategy on marketing and processing and retailing

3 Reporting, accounting, budgeting and overall planning. Investor arrangements etc

AR

Abby Rose Mon 13 Nov 2017

@wendyalcock and @johnanthonyallan thank you for your suggestions of the agenda. I think that simple 3 point agenda looks great. I will add anything to it that is brought up in the meantime... very much looking forward to seeing you all a week on Thursday at 6.30 to discuss in person!