INSURANCE- ANOTHER COST TO ATTACK UNDER REGENERATIVE FARMING One of the many aspirations producers will have when moving to a regenerative farming system is to take a fresh look at both variable costs and fixed costs in connection with their whole farming system. Written by Nigel Wellings, Director ,Acres Insurance Brokers
I will base my thoughts for this article on combinable cropping farms For many producers significant cost savings are achieved in terms of variable costs.(seed, fert and sprays) From my own farming experience it was always difficult to get variable costs below the £500/ha mark. Yet I have a number of regenerative farming clients regularly achieving variable costs in the £380£420/ha range without any significant fall in output. From a fixed costs point of view labour and machinery are the 2 most significant items and again there is a huge scope for savings here. Gary Markham from Land & Family business quoted fixed costs of £350/ha against £449/ha for conventional farms in his benchmarking survey for No Till Farms in 2019. He concluded that one of the main drivers of profit is machinery costs. Lowering machinery costs especially in terms of self propelled items (tractors, sprayer, combine etc) will have a direct effect on insurance costs. As a general rule something like 50%-66% of Insurance Costs on a conventional farming business will
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be for the vehicles insured on the farm. Therefore the less horsepower used per hectare generally the lower insurance costs will be. Benchmarking Insurance costs is fraught with difficulty because included in the majority of farm insurance bills are items such as private cars,houses and house contents and other personal items that do not really relate to the business. There will also be major differences in insurance costs between an owner occupier having to Insure all houses and farm buildings and a tenant
who does not have to. Insurance Costs will range between £10ha and £20ha on a larger combinable cropping business. The marginal costs of adding further contract/share farmed land to this will tend to be very low-often around the £1/ha mark. As an example I have looked at the Insurance costs for 1 combinable cropping farm on 1000ha, both whilst using conventional tillage and since moving to a NO till regime. Under a conventional system the prime movers consisted of an Agco Challenger Crawler at a value of £220 000, Bateman Self Propelled Sprayer at £180 000, Claas Lexion 770 Combine at £230 000 and 3 John Deere tractors at £40 000, £90 000 and £120 000. Total value tied up in self propelled kit is £880 000 (£880/ ha). For Comprehensive insurance on all these items plus implements and trailers the client was paying approx. £7500 per annum (£7.50/ha) Since moving to No Till the machinery fleet has been drastically altered, Out has gone the Challenger Crawler along with Sumo Trio and Vaderstadt drill,No longer using a self propelled sprayer this has been replaced by a ISSUE 13 | APRIL 2021
