Savills Rural and Farmers Weekly, the leading agricultural publication, have joined forces and pooled expertise in order to develop a virtual farm model to help farmers better understand and manage the potential pinch points that occur during day-to-day management. The model was launched yesterday on the first day of Cereals 2010, the leading technical event for the UK arable industry.

The 'virtual farm' model delivers sophisticated cash flow analysis with sensitivity to input and output prices, enabling practical solutions to farm business management and marketing problems to be identified.

Ian Bailey head of Savills rural research comments, "Through this model we have taken standard farm benchmarking practices and layered on additional flexibility. This should enable current issues in terms of cost performance each year to be analysed, challenged and related to profitability by business managers."

• The farm model: Hypothetical 2050-acres
• Tenure: Family partnership ¾ owner-occupied ¼ farmed on an FBT
• Location: Central England
• Traditional and modern farm buildings
• Rotation: 2000 acres of combinable crops (first and second wheats, oilseed rape and spring beans) with an additional 40 acres of woods and 10 acres of other land, tracks, buildings.
• Cultivations and machinery centred on a non-inversion tillage system
• The business has a core borrowing on a long-term loan, plus appropriate overdraft

"We've built the gross margins from first principles, for example, down to the nearest kilogram of nitrogen or litre of fuel. This will enable us to look at the full impact of certain business management issues," says Robert Hall Director of agribusiness.

The model can be used to demonstrate how increases in red diesel and fertiliser prices, delays to the single payment, or fluctuations in grain prices, impact on farm business cash flow through the season.

"Ultimately this will help farmers plan and prepare for potential pinch-points," says Ian Ashbridge, Farmers Weekly Business Editor, "One solution may be to alter crop selling periods or the timing of input purchases, and the model will be able to demonstrate how this affects business performance throughout the season," he says.

We collectively acknowledge that the model is a hypothetical farm and figures are unlikely to exactly match individual situations. We are fully aware that all businesses are different, but this model will identify the issues of sensitivity and identifying trends all arable farmers need to be looking at. In essence it will allow us to challenge and discuss various scenarios to drive business efficiency.