21 November 2008

3 minute read

Europe

Nearly all livestock enterprises returned a negative net margin figure for the year ended 31 March 2008, but for most farms, that figure was an improvement on previous years - by as much as £109 per cow and £17 per ewe.

Improvements are also being made in key performance areas such as calving periods and numbers of lambs reared per ewe. According to EBLEX Economics Manager Mark Topliff, this year's figures show a definite widening between top and bottom third producers when comparing gross margins and net margins excluding non cash costs.

"Being in the top or bottom third of producers in the main comes down to one thing - being able to manage fixed costs. In many instances this is because top third farmers are looking at ways of spreading costs such as labour and machinery over other areas of the enterprise, or they are being more efficient with inputs."

Store lamb enterprises were one of the few examples of producers reporting a positive net margin - an average of £1.80 per lamb (or £10.77 for top third farmers). This was down to faster finishing times and timely marketing following last year's FMD outbreak.

However intensive beef finishers' performance has worsened since 2005 /06, with the average producer now recording a loss of £127.17 per animal. This is mainly as a result of high feed prices and increased fixed costs.

Beef and sheep producers are also making significant progress in key technical performance areas.

For beef enterprises, the daily liveweight gain for average lowland and LFA suckler producers has improved from 1.06kg and 1.04kg in 2005/06 to 1.08 kg and 1.07kg respectively in 2007/08. LFA suckler herds also improved their calving period from 22 weeks to 16.1 weeks over the same period.

Sheep enterprises are also showing significant performance improvement. Lowland flocks increased the number of lambs reared per 100 ewes from 135 in 2005/06 to139 in 2007/08, while LFA flocks recorded an increase from 136 to 141 lambs per ewe over the same period. Both lowland and LFA enterprises also reported significant increases in the percentage of lambs sold at slaughter.

EBLEX Chief Executive Richard Lowe added: "These figures show a sector responding positively to the challenges posed by the market, global commodity increases and disease outbreaks.

"Producers are clearly heeding the call to improve production efficiency, and more enterprises are now taking a hard look at how they can tackle their costs.

"Since this year's Business Pointers was compiled, input costs have risen dramatically over the summer, and it remains to be seen whether the impact of this will be offset by returns from the marketplace."

Copies of the Business Pointers report are available on the EBLEX web site - www.eblex.org.uk - or by telephone on 0870 242 1394.