15 October 1999

Stocking rate

dilemma for Agenda 2000

The potential effects of

Agenda 2000 on

extensification payments

and whether or not to finish

cattle are current chief

concerns for the manager of

the Fife suckler and beef

unit involved in our Making

Money Out of Beef series.

Emma Penny reports

AGENDA 2000 is likely to have the greatest effect on farms depending on extensification payments, and will affect decision-making for Mountquhanie Farms manager Sandy Henderson.

The move to including all animals over six-months-old in stocking rate calculations for extensification – rather than just those which claims are made on – will push stocking rates above limits on some farms, meaning a loss of extensification payments. No other livestock payments will be affected by real stocking rate limits.

Current stocking rate at Mountquhanie Farms, Cupar, is 1.37, based on 299 suckler cow premium claims and 60 first beef special premium claims across 244 forage ha (603 acres). This means Mr Henderson can claim extensification payments, but under Agenda 2000 this may change, warns MLC beef analyst Duncan Sinclair.

"Its changing to a real stocking rate calculation including all cattle over six-months-old plus Sheep Annual Premium claims, but not lambs.

"This will be calculated throughout the year, which means its either to be based on stocking rates at five or six dates throughout the year, or as an average across 365 days.

"Where its based on five or six dates, those dates are likely to be announced about two weeks afterwards." This means there is no potential to sell stock before that date to cut stocking rates, he says.

To help calculate the likely effect of Agenda 2000 on extensification payments, Signet has developed a computer spreadsheet, and this shows that Mountquhanie Farms is likely to be affected by the changes.

All cattle over two-years-old are included. Mountquhanie currently has 300 beef cows, six stock bulls and 20 in-calf heifers over two years old. The farm has 70 steers over six-months-old but under two-years-old, and 150 heifers which are between six months and two-years-old, including bought-in herd replacements, home-bred bulling heifers plus those retained for finishing.

Including stock over six-months-old pushes the farms stocking rate up to about 1.9 LU. This will still be within eligible bands for the lower rate of extensification until 2002. But when maximum stocking rate for extensification claims falls to 1.8 LU in 2002, Mr Henderson is likely to lose this payment, says Mr Sinclair.

Calculations are complicated because no-one yet knows whether agriculture departments are likely to opt for stocking rates on five or six dates spread evenly throughout the year or across 365 days.

If its the case that rates on five or six dates are chosen, the fact that the spring herd starts calving in February will impact on stocking rates. This is because calves from the spring herd will be six months old for any autumn counts, and the previous years autumn-born calves may still be on-farm. Including both will push stocking rates up for autumn count dates.

"But its an average across the whole year: Being over stocking rate limits on some dates doesnt matter too much – as long as you are correspondingly under that at other times. But this does require detailed record keeping and a close eye on stocking rates at all times," warns Mr Sinclair.

In some cases, where farms are well under stocking rate limits, they can opt to guarantee theyll be under limits at the start of the year. "This means less need to juggle stocking rate, but these farms will still need to keep good, accurate records.

"Anyone considering claiming extensification should think about forward forecasting stock numbers throughout the year and identifying critical months when you may be close to stocking rate limits.

"It might be complicated, but you cant afford not to do it; in some cases, business profitability hinges on whether or not a farm gets extensification. Its a tremendous return for accurate record keeping."

So where farms risk being over stocking rate limits, consider alternatives, says Mr Sinclair.

"It will be possible to claim 20% of your suckler cow premium on heifers, which can help cut stocking rates as heifers which are under two-years-old, or which have not calved count as 0.6 of a livestock unit, rather than one, which an adult cow does."

At Mountquhanie, he believes Mr Henderson might consider despatching cull cows as soon as possible. For example, some culls from the autumn calving herd are currently sold in October and November, but Mr Sinclair suggests moving them off-farm earlier to reduce their impact on stocking rate calculations.

Calving the spring herd later may also help where agriculture departments opt for five or six key dates a year, reckons Mr Henderson.

"Moving calving to March would help to avoid those calves counting in an early autumn stocking rate calculation when weve still got the previous years autumn-born calves on-farm."

Another option might be to buy or rent more land, and as part of Mountquhanie is in an LFA, this might be easier than on non-LFA farms, but it still requires investment.

If Mr Henderson cant get stocking rates below 1.8 by 2002, he will lose extensification payments altogether. However, Mr Sinclair believes that as other livestock premiums increase then, one option may be for Mountquhanie to finish more cattle.

"In 2002, beef special premium, suckler cow premium and slaughter premium, which is paid on any cattle slaughtered, will all increase, meaning there will be more money targeted at finishers.

"If you have capacity to finish cattle, it may be an option to forget claiming extensification and exploit the slaughter premium instead. Finishing 200 cattle a year and claiming BSP and the slaughter premium would make up for the loss of extensification," says Mr Sinclair.

Its an option Mr Henderson will consider – along with all the others suggested – as hes keen to ensure maximum farm income. "I dont know what path well take yet, but the most worrying aspect of the new extensification system is that it requires 100% accuracy which is often difficult at the end of a working day."

&#8226 Count all cattle over six-months-old.

&#8226 Average throughout year.

&#8226 Limits will fall in 2002.

Making Money From Beef

This series, Making Money Out of Beef, involving the MLC and Signet, aims to identify areas on-farm where changes to boost returns can be made. Each of the three farms in the series will be visited twice a year to report on progress.

Further information on improving profitability can be found in the MLCs document, Making Money Out of Beef, which is available free from the MLCs hotline (01908-844337), or can be ordered through FWi (www.fwi.co.uk).