9 January 1998

Sheep cushion to ailing beef is no longer there

A merry Christmas it might

have been at Rugley, but a

prosperous New Year seems

somewhat less likely as the

business comes under

further pressure.

Tim Relf reports

NO LONGER can the Jacksons rely on their sheep enterprise to carry the loss-making beef business.

Income from finished lambs has fallen, with the batch sold just before Christmas making £39 apiece, down £4 on those leaving the farm in early December. With about 100 still to be sold, and prices now about £15 less than a year ago, Alan Jackson is in a worried mood.

About 100 cull ewes are also soon to be marketed and the expectation is that these will make nearer £25 than the £40 traditionally seen when put through a local auction ring.

New government rules on removing Specified Risk Materials from sheep more than a year old are likely to hit the ewes value, reckons Alan.

"But we wanted to wait until they were well-fleshed before selling them. Plus, big numbers have probably been offered to beat the introduction of the new rules – so there may be a temporary shortage now. Either way, marketing stock has become a lottery."

Factors discussed

Such factors – together with the on-going beef problems – were discussed by Alan and Lorna Jackson at their recent annual meeting with the bank manager. In 1996/97, a buoyant sheep trade and a good arable harvest helped. But the present situation has been exacerbated by last summers bad harvest.

"It was bad in terms of yield, quality and price," says Alan. And perhaps for no crop more so than barley, of which there are still 100t to be sold. The current market value is about £72/t. (The one note of optimism, however, was oilseed rape which, at £160/t, made more than expected.)

Not only has the borrowing requirement risen but, as stock numbers and values have fallen, so the worth of the business has been eroded.

"Soul-destroying," says Alan of the way much of the progress made over 27 years has been stripped away. "Like most farmers, we have never had a lot of cash in our pockets. Profits are tied up in growing the business."

But the drastic cut in cattle numbers, together with a £150 a head reduction in the average value of beef stock compared with before the BSE crisis broke, has taken its toll.

"It was certainly a mad rush to get the IACS cheque into the bank when it arrived a few days before Christmas."

Managers visit

Following the bank managers visit, meanwhile, what few spending plans there were have been reviewed. Any big outlays have long-since been out of the question, but now even some minor road repairs have been put on hold. The regular order with a fencing contractor – something thats happened for 15 years – has also been cancelled.

"If the grain trade remains in the doldrums, well cut back on arable inputs, too. It doesnt make sense to go for big yields at these prices.

"Some things, however, you just cant economise on – wages and animal health, for example."

No improvement

There was no prospect of any improvement in beef prices to cheer the bank manager meeting, either. The batch of 10 Aberdeen-Angus heifers sold in December – although appearing to turn a profit – made a loss when all the costs were considered, says Alan.

"People told me it was wonderful – making nearly £100 a head in 60 days. So I sat down and worked out all the cost and it suddenly wasnt so wonderful. There was just £25 a head left to cover fixed costs, such as labour, rent and machinery."

Alan has also bought 14 Belgian Blue steers. At 20-months-old, typically weighing 500kg, these cost £440 apiece. "It may have been a rush of blood that made me do it but, after all, we have to farm something."

These are among the 150 finishing cattle now in the pipeline at Rugley, the next batch of which will probably be sold in mid-January. One advantage of the scaled-down beef enterprise is that there isnt the usual pressure to sell stock to make housing space for the in-lamb ewes.

Some of the bullocks may be offered as stores because, with subsidy payments still available on them, they might attract some extra demand from someone still eligible to claim. (The Jacksons are well over the 90-head ceiling on claims.)

Longer term, the family see the future as building a suckler herd. They are disillusioned with beef finishing which, they say, has not received its fair share of BSE-related compensation.

"The over-30-month-scheme, the calf slaughter scheme and cohort payments have all been directed at other sectors of the industry," says Alan.

"Establishing a suckler herd, however, has horrendous cash flow implications. The offspring of the heifers bought in 1996 – even if sold as stores – would not generate any cash until 1999 at the earliest."

And cash flow considerations are something of which the Jacksons are only too well aware after the meeting with the bank manager.

"But what else can we do? The strong £ sterling is continuing to affect every sector of the industry. If lambs continue to make less money, then even the pedigree sheep enterprise could seem less attractive. People are not going to be bidding as hard for my tups next autumn.

"Agriculture is a business of ups and downs, although in the past, one bad enterprise has been offset by a good one. I cant remember the last time every sector was so depressed. Thats why farmers are protesting on the docks."

Rugleys cull ewes have fallen in value…like just about everything else, says Alan Jackson who starts the New Year in a worried mood.

FARM FACTS

&#8226 A 280ha (690-acre) arable and grass unit in the north east, farmed by Alan and Lorna Jackson on a full agricultural tenancy from the Duke of Northumberland.

&#8226 Heavy land growing combinable crops and grass, 25% in the LFA.

&#8226 Continental cross beef cattle finished on semi-intensive system.

&#8226 British Milksheep producing prime lambs, plus small pedigree Suffolk and Texel enterprises.

&#8226 Three full-time employees, supplemented by casual labour.

Aberdeen-Angus heifers

Aberdeen-Angus heifers


£/head

Bought (Oct)450.00

Sold (Dec)546.78

Margin96.78

Commission16.40

MLC + class4.40

Meat inspection1.63

Sale insurance1.50

Haulage5.00

Rolled barley (£80/t)20.00

Minerals0.70

Silage (£7/t)8.40

Straw (£10/t)3.50

Vet2.42

Interest on purchase6.94

Gross Margin24.89