Three quarter of the financial year have now been completed, and for the farm and its ancillary businesses the year so far has been on budget, that is despite fuel costs being through the roof. The average has been 127 pence per liter, which is about twice what it was last year. Not insignificant. All other energy costs have been stable for the year since 100% of our energy is produced on the farm. We have not had to use the generator once this year and we have "given away" the waste gases our biodigestors produce that we cannot use. All our farm equipment, aside from tractors, are now electric. The range, price and quality is more than sufficient for our needs. We have actually used my car once to drive down to London, but we did this only once, the train is far more convenient.
In terms of profits, we are on budget for the year. Granted, that most of our "real profits" are generated in Q1 and Q4 when produce prices across the nation are higher. We have noticed a steady state in our transformation businesses over the past four months, after a few months of decline caused by a slowing British economy, but it has not really affected our bottom line, we still sell 100% of our production and our partners are happy with the situation.
I am fully aware that our situation is abnormal, the use of biodigestors and the "free" energy it produces is something we planned for in our initial plan, the growth to 22 greenhouses was not planned initially, but was the result of a "bitcoin windfall" a few years ago right after the pandemic (in short I bought a 1,000 bitcoins very early one to satisfy my then employer's disclosure requirements, the total cost was insignificant).
There is no doubt that the UK economy is greatly affected by the rising energy prices, it is a real transfer of wealth from the UK to our trading partners (about 40% to US producers). I have no idea how the government will meet this new, and probably permanent situation. One thing is certain additional measures will need to be taken to reduce the country's dependence on fossil fuels. At the current price levels, electric cars are a great idea, as long as the energy is not produced by either a fuel oil or gas power station. I suspect that coal will make a small recovery in the country, as will nuclear energy, and a variation of "green energy solutions".
I have been at several "seminars" and the overall situation is that even if things soon return to normal in the middle east, which is always possible if unlikely, it will take years for the situation to return to its "pre-crisis" levels, if ever. Diversification is the UK's only realistic option. It will cost treasure and time.
As for the farm we are largely insulated from energy price fluctuations. However, our clients are not, and we are realists about this situation.
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