English Farms Losing Money Despite Improvements

UK - According to EBLEX, English beef and sheep enterprises are becoming more efficient, despite rising costs and the difficulties caused by last year’s foot and mouth (FMD) disease outbreak. They are however, still operating at a loss.
calendar icon 1 December 2008
clock icon 3 minute read

A Livestock and Meat Commission bulletin says that nearly all livestock enterprises in England 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. Mr Topliff would argue that being in the top or bottom third of producers primarily comes down to being able to manage fixed costs. In many instances this is because the top third farmers are looking at ways of spreading costs such as labour and machinery over other areas of the enterprise. They are also 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. The main driver behind this is 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 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 to 139 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 commented: “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. 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.”

Net margins for Average Livestock Producers in England
(£/head, including non cash costs)
  2005/06 2006/07 2007/08 3 year difference
Lowland suckler herds -£351.56 -£297.21 -£278.41 +£73.15
LFA suckler herds -£425.39 -£357.83 -£356.65 +£68.74
Intensive finishing -£74.37 £94.05 -£127.17 -£52.80
Extensive finishing -£262.94 £239.36 -£153.90 +£109.04

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