Gap widens in Welsh lamb and beef performance

New figures show many Welsh lamb and beef farms struggled to meet the costs of production in the year to March 2013, but with big differences between the top and bottom performing farms.

The data comes from 550 randomly selected Welsh farms, analysed for Aberystwyth University’s Wales Farm Income Booklet 2012/13, and shows the impact on squeezed margins of increased production costs. The largest costs were feed and forage, with power and machinery the second largest. Combined these two groups accounted for more than half of the total production costs on sampled farms.

“On a gross margin basis both sheep and suckler calf enterprises made a positive return last year, although it was a significantly reduced return for sheep. When fixed costs are included, however, the picture changes markedly,” said John Richards, industry and market information officer at Hybu Cig Cymru.

The average gross margin per ewe on hill and upland farms fell by 30%. This meant a reduction of £11 per ewe to £40 on hill farms compared to the previous year. On lowland sheep farms, the gross margin declined by 20% to £53.33 a ewe, mainly because output fell by between 6-13% while costs increased by between 10-14%.

Only 59% of production costs for suckler calves, including cow and calf costs up to weaning, were covered by business returns. “When comparing suckler farms in the top and bottom third it is noticeable that those in the bottom third have production costs which are more than double those in the top third,” said Mr Richards.

“A contributing factor to this would be that those in the top third produce 15% – or 36kg – more beef per cow than those in the bottom third. Since March, however, we have seen lamb and beef market prices consistently above last year levels while many significant costs such as feed, fuel and fertiliser have levelled out.”