The value of interacting with the person likely to buy your goods on farm is higher than ever.
Knowing exactly what to produce might be a relatively straightforward conversation or it could be highly complex. But recognising what is of greatest value to them is critical to adding value to both parties and to keeping costs down. For example, why produce fat carcases if your buyer wants lean? It costs more to make fat carcases and then costs to trim it off; it’s simply wasteful.
Producing what your buyer requires could either be the difference between a few percentage points of the sale value, which is important for the marginal benefit, or it could be a cancellation of sale (such as antibiotics in milk or ergot in grain), which could be disastrously expensive.
Adjusting a product to make an added-value commodity – high-protein wheat, brightly coloured beans, high-protein milk, the correct sized apples, clean carrots and so on – would progressively make a small premium on the commodity, a crucial process, and also enable your business to stand out as one to rely on, potentially then making it even more valuable.
Understanding the key consumer trends which may affect your business is also important. AHDB’s retail and consumer insight webpages provide a wealth of information in this area.
Steps for success
- Understand the EUROP carcase classification system and dressing specifications of abattoirs. Aim for most animals to fall within the green shaded area of the EUROP grid where there is the greatest demand and highest prices. http://beefandlamb.ahdb.org.uk/specification/
- Marketing prime beef for better returns
- Beef classification game
- Marketing lambs for better returns
- Lamb classification game
- Check you have the right breeds for your customers’ requirements and your farm system. Think ahead – what if their requirements change?
- Understand the timeframes required for finished animals
- Understand the disease risks from bringing replacement livestock on to the farm. Consider a closed herd/flock policy.
- Growing and utilising high yields of grass should reduce the cost of production. Rotational grazing can improve both grassland productivity and individual animal performance
- Concentrate supplementation is required when forage quality or quantity is inadequate for the output required. Formulate appropriate rations to balance analysed forage samples when needed
- Ensure labour inputs are planned and effective as there are wide variations between farms and labour is one of the most significant overhead costs
- Overhead costs are typically double the level of variable costs. Can these be spread over more animals through improved stocking rates?
- Benchmarking will help to identify your strengths and weaknesses and this will highlight the areas to concentrate on
- Make sure you are producing the right constituents in milk for the markets it is being used in. If you’re not being paid for higher levels of protein then don’t feed for it! https://dairy.ahdb.org.uk/technical-information/feeding/planning-your-nutrition/nutrition-and-milk-production/
- Make sure your Bactoscan and somatic cell counts are not being penalised: https://dairy.ahdb.org.uk/market-information/milk-prices-contracts/milk-calculator-and-contracts/improving-your-milk-price
- Consider the A&B pricing in your contract when deciding how much milk to produce, both in the short term and longer term: https://dairy.ahdb.org.uk/market-information/milk-prices-contracts/milk-calculator-and-contracts/the-ins-outs-of-ab-milk-pricing
- Get the best from your contract and buyer: https://dairy.ahdb.org.uk/media/1231557/back_to_basics_on_strategic_management_-_contracts_and_buyers.pdf
- Understand the variety, quality, protein levels your merchant wants and refer to AHDB’s Recommended Lists for information on yield and quality performance, agronomic features and market options to help with variety selection. Read through the contract first rather than just grow and sell
- Consider varieties with additional market options, e.g. growing uks Group 4 varieties to export specifications may mean your product is more marketable that just a Group 4 feed
- What are your merchant’s delivery requirements? Do they need a certain amount of grain in a certain period?
- Make sure your grain merchant understands your farm and business, e.g. storage capabilities, to lead to more opportunities
Knowing and understanding your market as well as knowing other markets is vital. Attention to detail in terms of varietal and land choice is paramount. Small issues can lead to large swings in yield which can all but wipe out profit margin in some years. An average potato yield is between 45 and 50 tonnes/ ha. If you are planting on marginal land that probably shouldn’t have potatoes on it then you are risking huge sums of money. If the market has a very high priced year then this sort of gamble could pay off but the potato market is as likely to have a very poor year as it is to have a good year.
Grow appropriate varieties for your customer’s needs. Match these varieties to land and irrigation availability.
Ensure dry matters and size are in line with specification.
Manage your crop to ensure you maximise tubers within size specification. This could mean burning off earlier than you would like (a crop in size spec is better than a high yielding crop that is out of size spec).
Consider contracting some of your crop to alleviate risk. Conversely don’t over contract your crop on a yield you hope to achieve and then under deliver to your customer.
Be sure to engage with more than one buyer. Supplying multiple companies gives you a better feel for the market place.
Be sure you keep up to date with market movements and price trends. Engage with the AHDB Potatoes MI to ensure you know what is happening in your market. Potato markets move fast so it is important to keep up to date.
- Increase the uniformity of finished pigs: https://pork.ahdb.org.uk/media/2028/Action-11-Increasing-uniformity.pdf
- Have good communication with your abattoir about scheduling, to minimise optimal pigs being rolled over into another batch
- Understand and meet your customers’ requirements for assurance, e.g. Red Tractor.
- Understand your retailers’ product specifications and meet them to reduce any penalties
- Work with your customers to understand the supply chain and explore ways of reducing lead time and increasing productivity - see https://horticulture.ahdb.org.uk/why-lean