Profitability of hill and upland suckler herds could be significantly improved without major management changes, provided the efficiency of each part of the business was fully evaluated in terms of its contribution to the final margin.
Gavin Dick, livestock and business specialist with SAC Consulting, told farmers at a conference in Cumbria that increasing output – and ultimately profitability – was as much about improving efficiency by reducing costs as it was about generating more income.
“Some suckler herds are considering switching to traditional breeds or crosses that can be managed with lower inputs, better use of poorer pasture and less housing. If the decision is made to change the breed, the system too has to ensure it capitalises on the potential lower production costs.
“Any increase in margin will result from costs being taken out of the system, rather than it being generated from the end market price. You may lose some income in terms of pence a kilo, but the kilos you sell will have cost you less to produce,” Mr Dick told an EBLEX conference on improving profits from hill and upland farms.
Figures produced by SAC showed the difference between Charolais-sired finishing cattle compared with Sim-Ling (Simmental x Luing) crosses was almost 0.5kg a day in favour of the Charolais.
“In this situation you’d have to decide if the drop in output in liveweight gain was justified by the cost of production you can take out of the system as a consequence of switching to a lower-input finishing animal.
“Suckler herds trying to improve margins must be prepared to look at every stage of the system and calculate what each is costing. Whatever breeding strategy is in place, it’s important to make sure it’s efficient all the way through, from the calf being born to the day it’s sold.
“Some suckler herd margins are being undermined by hidden costs such as those associated with difficult calvings and the subsequent higher labour inputs,” said Mr Dick.
He encouraged upland farmers to consider radical changes to their businesses and to look at establishing closer links with lowland producers.
“A joint venture with a lowland producer can be beneficial on both sides. If two farmers sit down and evaluate the strengths and weaknesses of their businesses, it’s often clear that working together can reduce some costs.”