8 November 1996

STORE LAMBS A RISKY TRADE…

High prices for store lambs will make efficient finishing more important than ever this year. Robert Davies reports

MAKING a profit from store lambs can be tricky at the best of times, and this year, with high lamb prices, its likely to be even more difficult.

Because of uncertainty over BSE and next springs beef prices, farmers who usually buy store cattle are bidding for lambs instead. In addition, census figures indicate that the 1996 lamb crop was smaller, and there are signs that more potential store ewe lambs are being retained on hill farms for breeding, or slaughtered at lighter weights.

Those factors have led to higher prices. Some crossbred store lambs have been selling for about £40 a head; up to £10 a head more than in 1995, while many purebred hill lambs have realised £5 to £7 a head more.

MLC economists who are monitoring the market question whether all buyers have done their sums. They warn that it is risky to anticipate that finished lamb prices early in 1997 will match those of this year, which were boosted by the BSE crisis.

The message from Milton Keynes is that finishers will need to be efficient to make reasonable profits on stores bought at this back ends high prices. It is a claim supported by figures from late 1995 and early 1996 published in the MLCs Sheep Yearbook.

These show that 33kg liveweight short keep stores, finished before the turn of the year cost an average of £36.68 a head. They were sold 44 days later, weighing 36kg liveweight, for £45.92, achieving an average gross output of £9.24 a head. Variable costs of the 31 flocks monitored averaged £4.32 a lamb, leaving gross margins of only £4.92 a lamb – £161/ha (£65/acre).

But on 22 of the units surveyed, lambs bought at an average of 31kg liveweight and costing £35.10 a head for spring finishing made more profit – solely from the steep rise in price.

They put on 4kg of liveweight. Although variable costs for the period were more, averaging £6.17 a lamb, they sold for £15.06 a head more than their purchase price. This left gross margins of £8.89 a lamb, and £372 a ha (£150/acre).

The stores were on-farm for an average of 101 days, but produced margins only £138/ha (£56/acre) less than that achieved by upland flocks – who face heavy investment in ewes run for a whole year to produce crossbred finished or store lambs.

However, current high store prices will make it much more difficult to repeat that financial return, warn economists.

It will be difficult to make profit from expensive store lambs this year; efficient finishing will be crucial.


STORE LAMB PROFITS


&#8226 Consider how much to pay.

&#8226 Ensure efficient finishing.

&#8226 Dont anticipate high finished lamb prices in spring.