The Profitable Farm

How we live, and in what numbers, and indeed whether we and our fellow creatures can live at all, depends very much on how we farm, and how we farm is determined to a critical extent by the economy. You might think, therefore, that in a rational world the economics of farming would be high on the agriculturalists’ and the government’s agenda, well worked out and well understood.

But this isn’t a rational world. Very few farmers have a firm grip of economics or of accountancy, and neither – all too obviously – do most secretaries of state, put in charge before drifting off into the House of Lords or moving on to what are perceived to be higher things. So The Profitable Farm, which spells out the very basics of accountancy as they apply to farming, comes as something of a revelation. The subject is remarkably complex but is explained with clarity and easily followed examples.

Chris Clark found, as so many have, that he could not make a profit or living from the 170-hectare upland Yorkshire farm he bought in 2005 – but his fortunes improved when he downsized. This was counterintuitive to the accepted narrative of “Get big or get out!” made popular by the influential Earl Butz, US Secretary for Agriculture in the 1970s. Puzzled, Clark consulted his friend Brian Scanlon, a business strategist, and between them they developed two big ideas.

The first is that farming is basically an exercise in energy conversion. Sunlight (via photosynthesis) plus mechanical energy (tillage) are converted into stored chemical energy in the form of human food. But as energy is converted from one form to another, some is wasted. Solar energy into grass, via photosynthesis, is very energy-efficient. Grass energy into cereals or pulses for human food is also efficient. Grass energy into meat via grazing seems very inefficient. However, much of the land in the UK, is not suitable for large-scale crop production, so grazing is often the best option, especially in the uplands.

But yields of meat from traditional breeds on ‘unimproved’ pasture may be disappointingly low. Therefore, it is tempting – and in recent decades has become the norm – to apply fertiliser and the rest of the agrochemical pharmacopoeia, and to swap old breeds for modern fast-growing and sometimes extra-fecund livestock to consume the increased yields. But it takes a lot of energy to produce the agrochemicals, and thus the whole process becomes much less efficient. Worse: about half of Britain’s home-grown cereal is fed to livestock for humans to eat. One more highly inefficient step. In the present economy, less energy-efficient doesn’t necessarily mean less profitable, but it often does. So it can indeed pay to produce less, more cheaply.

Attempts to maximise yields with extra inputs take their toll on both the soil structure and the natural world, expropriating rivers and groundwater, and polluting soil, watercourses and the atmosphere. Clark and Scanlon have developed the concept of Maximum Sustainable Output or MSO: the amount a given farm and/or agriculture as a whole can produce without triggering environmental decline.

The complications arise when we start to cost the exercise – an influx of balance sheets, profit-and-loss accounts, assets and liabilities and cash flow (which so often is the sticking point). The ideas of ‘term’ and ‘discounting’ – money changes value just by sitting around – complicate things further. The authors explain all this admirably, but some of it is unavoidably hard. Good accountants certainly earn their fees.

Everyone with a stake in farming should read this book. Ideally that means all of us, since our lives depend on it. As the authors point out, though, there’s still a lot of thinking to be done. I wonder if any existing economic system, whether Marxist, neoliberal or anything in between, is really fit for purpose – if the purpose is indeed to provide all of humanity with good food without destroying the rest of the world. And if not, what do we need instead?

-- Colin Tudge * Resurgence & Ecologist, Issue 353 *

“Agriculture has been waiting for this book for at least a century. In The Profitable Farm, Chris Clark and Brian Scanlon have used original thought and a unique perspective, to apply the fundamental laws of nature and proven economic theory, to the business of farming and its interaction with nature and the environment. The concept of MSO may at first appear challenging, but persevere, and this model brings clarity to the process of primary food production; energy conversion is at its heart and it cannot be divorced from sound farm business management. The implications of the book are profound and of significance worldwide.” – Andrew Hattan PhD, Dairy Farmer and Cheesemaker

“For the first time since 1975 UK farmers are facing the very real prospect of farming without government support. Chris Clark and Brian Scanlon encapsulate within this book a pathway forward for farmers towards a profitable and sustainable farm business focused on a deeper understanding of the value of natural resources and sound business decisions. With 80% of farms not currently viable without subsidy now perhaps is the time to re-evaluate your farm business, The Profitable Farm provides the first, fully farmer-focused financial assessment mechanism which will make any farmer who embraces the journey to MSO completely re-evaluate the practical and financial management of their farm.” – Andrew Jamieson - Jamieson and Jamieson Ltd

“For those of us trying to work out how to make farming profitable this is important reading. The authors understand that there is a sweet spot in farm management at which profits are maximised and that is not necessarily achieved by maximising outputs. As support payments become more vulnerable, this is an important lesson to learn.” – David Fursdon, Dyson Farming Chair and author of the Report on Protected Sites on Dartmoor

“Balancing a business financially is key to success. It is always about careful financial management and stacking layers of revenue that complement each other. Chris and Brian illustrate this so well within The Profitable Farm, showing how to keep control of your costs and inputs to make a business that will be here tomorrow.”  – Tim Parton, Farm Manager, Brewood Park Farm, & Soil Farmer of the Year (2017), Arable Innovator of the Year (2019), Sustainable Farmer of the Year (2019) & Innovation Farmer of the Year (2020)

“Nature and profitability are often seen to be in conflict with each other, yet they are closely entwined. Finally, in The Profitable Farm comes solid evidence for how they are dependent on each other, why sustainable farming is essential and why farming doesn’t follow the conventional rules previously established. The concepts in this book combat the current economic instability and biodiversity crisis we are facing as a nation.”– Tara Wright, 4th Generation Exmoor Farmer

“A truly thoughtful contribution to the potential future for such a critical aspect of the economy." – Andrew Marsden MStJ, Corporate Strategy Consultant

“Thermodynamics? How vital to our lives and yet how easily tossed aside as too difficult or, worse still, irrelevant. This book is important because it describes how ignoring these fundamental laws of physics leads us to economic miscalculation. This means needlessly lower profitability in this most noble profession of growing human sustaining energy – or food as we usually call it.” – Debbie Trebilco PhD FRSC, Scientist and Smallholder

“The authors brilliantly pour detailed farm business data, natural assets and landscapes, plus energy and nutrient cycles all into a black box. The emerging calculations – combined with their expertise to deliver a profitable and sustainable approach and based on Maximum Sustainable Output or MSO – are a bit genius. The book helpfully explores the history of farming and why it is in need of a serious reboot and why finances matter in the restoration of nature and vital ecosystems. I particularly liked the farm versus factory section but throughout the book there is rich and detailed graphs, explanations and case studies based on real farms and natural assets. Recommended for all farmers, policymakers and nature advocates.” – Vicki Hird MSc FRES, Strategic Lead on Agriculture at The Wildlife Trusts

“Chris Clark has led the way in encouraging upland farmers to evolve their businesses to be more profitable and at the same time deliver more for nature by optimising the livestock carrying capacity of their land. This book encourages farmers and advisors to drill down into their business accounts in a structured way and plan a way forward that improves outcomes for their family, their bank balance and the environment. An important task for us all in these increasingly challenging times.” – Professor Julia Aglionby, University of Cumbria & Commissioner, the Food, Farming & Countryside Commission