Loomio
Sat 14 Oct 2017 2:05PM

Accounting matters, for OurField Weston

GH Grahame Hunter Public Seen by 47

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 7:02PM

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 11:21AM

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 6:01AM

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 9:20AM

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 10:30AM

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 7:30AM

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 12:54PM

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 10:26PM

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

TT

Tessa Tricks Sun 5 Nov 2017 8:14AM

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

GH

Grahame Hunter Wed 1 Nov 2017 8:46AM

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._

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