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FRY NG

16th November 2000
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Which of the following most accurately describes the problem?

Haulage and farming have always been closely related businesses. With the financial crisis facing farmers set to worsen next year, could a move into haulage help save them from bankruptcy? Guy Sheppard reports.

T0 many hard

pressed farmers struggling against the worst agricultural recession since the 1930s, haulage must seem the answer to their prayers. They may well have some of the experience and assets needed to gain a foothold in the industry and the work often ties in neatly with the slack winter months after harvest.

There is plenty of anecdotal evidence that more and more farmers are thinking along these lines. Mark Bratt, transport advisor to the National Farmers' Union (see Sound Off. page 44) reports that when he started the job 18 months ago, inquiries from members about diversifying into road transport were virtually nonexistent. "Now were probably getting four or five inquiries a week from farmers either looking to convert their restricted licence so they can do hire-and-reward or are looking to get a larger vehicle," he says. They are looking around to see what they can do with their business premises and what income they can generate."

The attraction to farmers is understandable, even though haulage has many well-documented problems of its own. According to a report published last month by accountants Deloitte & Touche, farm incomes have plummeted by 90% in the past five years because of the strong pound and a sharp fall in world commodity prices. Haulage margins are tight, but according to the report a typical 500-acre family farm in lowland England will make a £4,000 loss next year.

Fortunes

The varying fortunes of the two industries are illustrated by LH Vergette & Son, which has an Soo-acre sugar beet and cereals farm at Etton near Peterborough as well but also runs three artics delivering coal, aggregates and stone as well as farm produce.

John Vergette, who runs the business with his parents, says the haulage operation is now bringing in most of the family's income, even though they farm good quality land. "We've been farming here for 8o years and it's only in the past co years that we've properly gone into haulage." he adds. "It's debatable whether we'd still be in farming without haulage."

However, not all farmers are as honest as the Vergettes and there is increasing suspicion that some farmers are using their rebated red diesel to compete unfairly.

Bob Stacey, head of technical services for the Road Haulage Association, reports: "Complaints about farmers have increased over recent times purely because everyone is finding it so much more difficult to operate. If you see someone you believe is operating illegally, you are more likely to moan about it these days."

But there is some evidence that misuse of red diesel is increasing. Customs & Excise says fines and repayment of duty on fraudulently used red diesel totalled 13.3m last year—three times the amount 1996-97. But the figures do not show how much of the misuse involved haulage, and part of the rise is explained by the success of the Customs & Excise road fuel-testing unit.

The most obvious way for farmers to establish a legitimate foothold in haulage is to use existing farm vehicles for hire and reward.

David Firth, who runs a i8o-acre arable farm near Boston, Lints decided to diversify seven years ago. "We had always used a little farm lorry to carry our own sugar beet and when we got a better lorry we started taking one or two neighbours' sugar beet as well," he says. "We were aware that we were not going to make enough money out of farming; this was a way of bringing in extra income during the slack winter months."

Now he owns two 41-torme artics and an 18-tonner and has diversified into hauling agricultural lime and delivering fresh produce for the supermarkets. "There's not a lot of money to be made out of

farming and not oodles to be made out of haulage but running two to three small enterprises together gives us a reasonable standard of living," he reports.

Farming

But Firth adds that haulage is not necessarily more secure than farming: "If you become a subcontractor to a big haulier you can be picked up and dropped like there's no tomorrow. You want to be very, very careful that you have a role for your truck before you start off" The precarious nature of haul

ing farm produce is emphasised by Bob McKinnon, managing director of Kilmarnock-based James McKinnon junior Haulage: "We were in milk for 74 years until July 1999, when I was told I was too dear and lost a L3rna-year contract." He now delivers animal feed but says it has been a real struggle to finance the transition—and there are other pitfalls to be wary of as well.

Peter Carter, managing director of Carter Haulage & Storage (Norfolk) is a farmer's son who became a truck driver when he

was 21. suppose it was a bit in my blood because my tl used to have some lorries hir and I always wanted to dr lorry," he says. The mainst his business, which emplo) drivers, is potatoes. He bel his farming background him a good understanding ol torners' needs but fully apr ates the differences bets farming and haulage: "In f ing, you have to wait for weather, the right seasoni transport you are workini such small margins that you every job you can, I have farmers try and diversify haulage but they don't set hidden costs and after t-sA three years they pack up. Wit business, warehousing feec the haulage. It doesn't follom farming is going to feec haulage in the same way."

Haulage

However, there are plent farmers who owe their survi diversifying into haulage. Fergusson, who has a 5oo farm in Ayrshire, bought hi: truck nearly io years ago. hoping to buy his third spring to take on more hay, fertiliser and animal feed de ies. Like Vergette, he says without haulage he would had to consider abandonin farm over the past year.

"It is the way farming now; you have just got to tr do something else as well adds. For the past three ye has owned a truck-mounted lift for delivering fertiliser to farms and he attributes of his success to investir equipment that sets him sli apart from a general haulie advice is: "Unless you an pared to throw a lot of mone spend a lot of hours on it a] something that not even else is doing, I would sal would be wasting your time Haulage might be a savio farmers but this might not I best time to make the 1 Mark Hill, partner in chat Deloitte & Touche's food am culture group, warns: "A people talk about divers ific but diversifying because yc desperate is not a recipe fo cess. The time to do it was and '96 when you could g buy your lorry and not worry about hp payments."


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