Latest figures from across the UK show few livestock farmers are making money from sheep and beef production.

In their 2005/2006 reports on production costs and business income, Quality Meat Scotland, Hybu Cig Cymru (Meat Promotion Wales) and the English Beef and Lamb Executive all revealed huge variations in producer margins.

But, the industry’s starkest figures came from EBLEX, which revealed the majority of livestock producers in England made significant losses when hidden costs were taken into account.

According to EBLEX Business Pointers 2005/2006, beef producers, on average, made net margin losses of between £425.39 and £74.37/head.

Sheep producers also suffered losses, with the average ewe making a loss of between £49.25 and £41.76 and the average lamb losing £2.45.

Hidden costs

This is the first year the figures have included non-cash costs including family labour (calculated by EBLEX as £11.18.hr), interest in the working capital tied up in livestock production and a rental value for owner occupied land.

Even without these additional costs, the average English cattle farmer made losses of over £150 last year. Sheep producers made an average loss of about £3 to £13/head, while only the top 30% of sheep farmers achieved managed to achieve profits of about £5/head.

Richard Ali, EBLEX chief executive, said while the inclusion of hidden costs showed very few beef and sheep farmers were making a profit, the figures would help producers make better returns in future.

Mr Ali said sheep and beef production had undergone “significant change” and it had taken time for producers to restructure their businesses and adjust to the removal of direct subsidies.

• Among Scottish suckler herd producers, gross margins of LFA hill suckler herds ranged from -£99 to £213/head. Among non-LFA suckler herds, the average margin was £158.
  
  QMS said livestock producers had benefited from improved market prices in 2005. However, lower sheep prices during 2005 and early 2006 had impacted badly on producers’ profits.
  
• HCC’s farm business survey, due to be published at the Welsh Winter Fair on November 28, indicate in the average suckler herd, variable costs totalled 57p for each kg of liveweight produced, while herd replacement charges were14p/kg and fixed costs amounted to 98p/kg.
  
  But in the third of herds with the highest costs the corresponding figures were 84p, 24p and 137p/kg, making total production costs on these units 246p/kg, or 76p/kg above the average for all surveyed herds.