Budgeting in a Wet Year

When the weather has prevented you from doing what you had planned and budgeted, does it make you ponder the benefits of planning in the first place?     

It is disheartening when a budget has been put together in good faith then, through factors not controllable by you, it simply is not achieved. We all recognise there is variation in the farming system but usually most plans can be put into practice.      

A substantial number of primarily arable farmers are in this situation this year, much, or all of their winter crops undrilled or perished in the field. Across the UK, as much as half the UK winter crop is in this condition. Few farmers have seen conditions this poor for a long time, but extreme weather events are occurring about once every 8 years on average, but by definition, random weather events can occur more or less frequently year to year. A drought in 2018 and floods in 2019 have coincided to bring two important events close together.       

But budgeting is still important for sound business management, giving us a steer on firstly what the weather has cost us, and what any mitigating measures might be able to claw back and quantifying what other options might add to the farm business. Sometimes, these events open our eyes to new enterprises, so best stay vigilant.      

The farm budget should also help identify how much money is available for reinvestment or not, prioritising the expenditures for next and future seasons. Having missed the autumn drilling, the farm vehicles might have done less work, so can they survive on farm another year? Or does the mineral fertiliser need to be recalculated? Do capital enterprises need to be postponed or financed by alternative means? The financial plan can also provide a target for playing catch up in future seasons.      

The late John Nix, creator of the Pocketbook argued in the forewords of previous Editions that planning routes through choppy seas is more important than in clear waters. The same is true in farming. Farming is seldom event-less and calm for long, with markets, weather, politics and other variables affecting our lives that we have almost no influence, let alone control over.

The start of the year is perhaps then a good time to revisit the farm budgeted plans, update them and reconfirm which route you are taking.

The John Nix Pocketbook