How are rising costs affecting budgets?

Editorin General Interest

With the cost of living on the rise and the overall pinch that many have started to feel, we caught up with Head Greenkeeper at Nelson Golf Club, Gary Mckie, along with industry experts to attain how budgets are being affected.

After six years of being the head greenkeeper and going through challenges such as Covid, Gary explained why the last four months have been the trickiest to manage so far in his career.

"It's not been easy. I think club committees do know about the issues, but they have buried their heads in the sand as the problems have built up."

He went on to express his worry about the constant change in budgets; "They just don't seem to be realistic now. Ideally the club would need to put their fees up by 15 or 20% to allow for greenkeeper wage rises and management of the course to still be sustained to a high standard."

He went on to compare his budget to previous years saying; "It's now about managing all of the aspects of the finances - when the team ask for X, Y and Z, the price for those things is sometimes drastically different to what they used to be. For example, if a machine breaks down the cost to fix it could have been around £100, but not anymore! The cost now could be upwards of £1000 and a service is £1500, so the machines themselves are costing more to manage." Gary explained it as being "an impossible task" at times when juggling course standards when everything is on the rise.

The products being used by the club are pretty much the same year on year, yet the budget has to be nearly doubled. The bigger picture surrounding budgets is clear when you take this example: Gary has always used the same fuel but, since 2019, he has seen it double in price. Course development has been cut back by two-thirds compared to the previous year and Gary commented; "Projects have definitely been scaled down this year due to the rise in prices of maintenance, fuel and other aspects of course management."

With members still wanting to play golf on top-quality playing surfaces, how is Gary managing both member expectations and fees? He simplified it for us; "The general consensus is that members are understanding that changes will have to be made in terms of membership fees. We are only asking for more from members because the outgoings have increased significantly. It isn't a bottomless pot, unfortunately, but it's obviously a headache for everyone, not just the club. We have to remember that members are also affected by the cost of living at the moment."

Gary went on to explain that they have no choice but to increase budgets in order to sustain a quality course, he said; "Your budget is going up 20% because the machinery, pesticides and fungicide prices are going up by that, we have to match it or be left behind in terms of standards."

Gary also reflected on the supply issues that have occurred due to the demand for machinery and equipment. "I've been waiting for a fairway mower now for over a year."

When asked about the biggest issues with the rising costs of managing a course, Gary indicated exactly why he has been worried about the budget increasing even more this year; "My budget is running away from me. To put it into context, in 2019 it was £43,000 and in 2022 we spent in the high £70,000 brackets including VAT and winter work. I can imagine going forward that the budget into 2023 will be even higher and we will be forced to spend even more. It's about the price, not the product. Nothing has changed significantly, it's all about the price increase."

Cost pressures create efficiency drive for effective results

Everyone is only too familiar with the realities of the high rate of inflation, including the huge impact of high energy costs on raw material production and the knock-on effect on the costs of products for turf managers.
It is also my considerable experience that the turf manager's budget rarely increases in line with inflation, and so inevitably turf managers are being asked to do more with less.

This presents a tough conundrum for manufacturers, where we are acutely aware of the implication of higher production costs driving increased prices, at a time when our customers are struggling to even buy the same products they used last year.

At Syngenta, we are always looking at ways to improve efficiency and optimise costs, while still trying to ensure we provide customers a premium product that offers real value for the results it delivers. That doesn't change.

However, it's not just in the costs of product production, such as raw materials and transport, that we have to address to ensure we can hold down costs as far as possible. As an R&D company driven by proven products, we must ask ourselves if we can make our trials work more efficient or can we move towards digital communications in an effort to reduce the costs to the consumer.

In addition, for me, at Syngenta one of the biggest things we can do is to experiment and communicate how turf managers can get the best of out the products they buy to ensure they get the best value for money.

Developing our app, in-house training, digital tools such as the GDD calculator or the Art of Application zone on the website, along with Syngenta nozzle technology, are all developments that can help course managers get the best value and efficacy from their products - to ensure they need to use as little as necessary to do the job effectively.

For all turf managers, it is without doubt a time to look to reduce costs as much as possible, but this doesn't always have to be a backward step; it might just mean getting more out of what you already do. Syngenta is committing to both parts of this challenge by looking at ways to be more efficient but also helping turf managers be more effective.

Daniel Lightfoot - MBA MSc MG MBPR CMgr FCMI, Commercial Head, Syngenta

Remaining competitive

"We budget and forward plan raw materials, be that steel, recycled plastic, fabric and many other items that we need to keep in stock."

"We have to forward plan for 3-6 months in advance on some items, then plan into production for staff to manufacture sub-components of our products, which then go into assembly processes, painting, plating, building and packaging before it goes into a box for despatch to you guys."

"Budgets and pricing will be reviewed in January; many items will not change drastically, but there will be some minor price increases as we look to remain very competitive in the market."

James Buckholt - Manging Director, BMS

Flexibility is key

Economists use the phrase, 'the answer to rising prices is rising prices.' It sounds obvious but when you think about it, it's the challenge we all face.

Price increases in the form of fuel surcharges, energy costs, wages, product scarcity and strong commodity inputs saw prices moving skywards throughout 2022. Most fertilisers use large volumes of energy in their production, couple that with haulage increases and raw material costs and we have seen staggering increases in costs, way beyond 'normal' inflation.

So, what prices need to rise?

Simply put, ultimately, our customers will have to pay more for the services our industry provides, whether that be golfers, grass roots, football clubs, village cricket teams or bursars in academia; it is going to cost more to play.

Agrovista Amenity has always positioned itself as a business that offers choice across a customer's spend potential and our core ethos has been to focus on value not price. Turf managers are going to have to be flexible with product choices and will have to be prepared to reimagine nutritional inputs and IPM approaches like never before. I am confident UK turf professionals are more than capable of getting through the season ahead, balancing budgets and still producing world class surfaces. It is my hope Agrovista Amenity can play its part in supporting the industry. In 2023, we will be launching a suite of testing services and a nutritional programme service allowing live weather data to guide product choice.

John Marland - Head of Amenity, Agrovista Amenity

No return to normal trading until 2024

The fertiliser industry has gone through many changes in 2022 due to a number of external factors impacting the supply chain and every aspect of logistics. Mining and extraction of the elements have been impacted by rising wages, local overhead costs and the availability of labour to mine.

In addition, all of the fertiliser processing plants are faced with the same problems experienced by the mines. The supply chain is pressed on cost by every aspect of the manufacturing and packaging process; pallets, wrappings, cans and associated materials used in the complex process of producing quality chemistry have all seen a dramatic rise in cost.

The rising cost of fuel, gas, shipping and truckers wages has also impacted the final cost to the end user as has the appointment of a customs agent for every UK company as a consequence of Brexit and importing from the EU.

The initial rise in costs started during the Covid pandemic when global shipping came to a cessation and many consignments and containers were out of place in world ports after the 12-month Covid hiatus. This global shipping programme was perfected during a post-World War II period and disassembled in a twelve months Covid period and it has still not properly recovered to the efficient pre-covid point. This disruption has seen shipping costs treble in many situations and reflected in the price of a pallet of fertiliser rising from €70 to €195 from the EU Zone to GB.

Will we see a return to normal trading conditions in 2023? In short probably not, we don't anticipate a return to normal trading until the summer of 2024, and certainly the war in Ukraine will be a major factor in any return to normality. The addition of BREXIT customs administration certainly does not help.

Gerald Bonner - Managing Director,Compo Expert

Pay and budgets

We spoke to Golf Course Manager Dale Housden.

With all of the strikes going on at the moment in other sectors do you think this is something that our industry needs to consider in terms of pay?

I'm not sure a strike is the best way to approach pay increases, as many couldn't afford that approach. I feel the main objectives and actions should come from industry leaders which would then filter down. Golf Clubs seem reluctant to pass on increased membership fees and that trend seems to be more evident at clubs which are run by a voluntary committee - more so than privately owned. Pay increases have to happen before we see an even bigger decline in quality and the amount of labour at our disposal.

What is your take on the rising prices of maintenance, pesticides and fungicides. How are you managing that?

It's certainly a tough gig for turf managers at the moment. Personally, for the last six or seven years, I've been very conscious of the number of pesticides or fungicides I use, so reducing those in line with budgets hasn't been so much of a shock to me as maybe some. I'd recommend those reliant on 5-8 fungicides a year, wean their areas off them as best they can and look at alternative methods/products.

Recent price increases, withdrawals and also the strength of some of the products that we need in our armoury is certainly putting even the most skilled greenkeeper with a decent budget to the test. It's definitely a balancing act for most as to whether apply something that you can afford vs something that is needed.

Has your budget changed due to the rise in industry products?

Yes. This was something I discussed very early on with our board, when the rises began to be rumoured. They have been very supportive and agreed budget increases to ensure that we could not only retain status, but continue to improve our course. My budget had to be increased to ensure that we retained the momentum that we have built over the past three to four years, since my tenure here at Drayton Park.

Do you have any advice for managing budgets and pay in the coming months and years?

I would recommend to keep a vested interest in the club's progress. If you understand the nature of the business, basic finance and the running costs of everything from the entrance gate to the furthest point on the course, it will help understand what resources are available.

Thus, saving time having expectations/wishlists that are just not achievable. When it comes to staff pay levels, I'd certainly suggest to consider non-monetary benefits that could be rewarded.

Do you think that these prices will rise or fall in the coming years?

I do not see any huge drops in prices yet! I'm sure they will keep rising steadily until the economy settles. Like most situations, we will get used to budgeting with higher costs. Unfortunately, budgets will just not go as far as they used to.

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