LMC Report: SOS – Save Our Sucklers

NORTHERN IRELAND, UK - The Livestock and Meat Commission (LMC) recently presented the Task Force annual update of the costs of production for beef cattle. It showed that the total cost of producing sucklers to beef was now over £4/kg carcase weight for efficient producers.

2 December 2010

3 minute read

Europe

Both EBLEX and QMS have recently published their latest enterprise costings (EBLEX for year ending 31 March 2010, and QMS for the 2009 calf crop year), and they tell the same story as the Task Force. Both EBLEX and QMS state their costings for suckle herds on a live weight basis. These are shown in Table 1, with calves sold as weanlings except where indicated otherwise.

If the costs on a liveweight basis were converted to a carcase weight basis at a killing-out percentage of 55.5, then the total costs of production range from £4.30 to £5.70 per kg carcase weight (from £2.39 to £3.17 per kg liveweight divided by 0.555). EBLEX has also given an estimate of the total costs for April to September 2010 for average combined rearer/finisher herds of £3.87 per kg liveweight which equates to £5.46 per kg carcase weight. This corresponds more closely with the time period of the Task Force update figure, which was to August 2010, but it has to be pointed out that the EBLEX figure of £5.46/kgCW is an average performance figure, as indeed are all the figures in Table 1; the TF figure was for the most efficient producers operating at scale. However, even for the top-third of producers in England and Scotland, the profit margin over all costs is negative.

The figures are not given to illustrate any differences between England, Scotland or NI, but to demonstrate that sucklers, wherever they are farmed in the UK, are consistently in the same boat which is that the returns from the market do not cover the total costs of production. In all the situations in Table 1 the returns from the market do not even cover the variable, replacement and fixed costs, leaving less than nothing for own labour, land and working capital costs for average performance, although as performance levels improve then so the proportion of producers making positive net margins increases (22% of all suckler herds in the QMS figures achieve a positive net margin, but for most this is still not enough to totally cover own labour, land and working capital costs).

Finishers are somewhat better off than suckler producers. It should be noted these figures are now given in £/kg deadweight, the QMS figures having been converted from a liveweight basis for comparability.

All average performance levels again show that the returns from the market do not cover the total costs of production, but when we look at the figures for top-third intensive/cereal finishers, positive margins over all costs did result. This was achieved by having faster growth rates, finishing more cattle as bulls, realising a higher sale price, feeding a higher proportion of cereals and making greater use of home-grown cereals. However, since 2010 harvest cereal prices have risen, and profitability of the top-third producers may no longer be the case. 50 per cent of all finishing herds in the QMS figures achieved a positive net margin, but again for most this is still not enough to cover all own labour, land and working capital costs.