Livestock 2013: Beef and sheep farmers can expect upturn in 2013/14

Beef and sheep farmers should be expecting an upturn in returns over the coming year, according to farm consultants Andersons.

Business will improve over 2013/14 and “huge opportunities” still exist for many businesses to implement more robust and profitable systems, said farm business consultant Oliver Lee.

Meadow Farm, one of Andersons’ model farms on show at Livestock 2013, is anticipating a significant improvement in fortunes, with a predicted business surplus of £158/ha, compared with just £20/ha in 2012/13.

Meadow farm

  • 154ha lowland
  • 60 suckler cows
  • 500 ewes
  • dairy and bull beef enterprise
  • 32ha feed wheat and feed barley

The business surplus takes into account proprietor’s drawings and also includes the farm’s single farm payment.

This increase is driven by an improved livestock gross margin, which has in turn been generated by the expected robust beef and lamb prices in the second half of 2013, said Mr Lee.

Overhead costs for Meadow Farm are budgeted to increase, mainly as a result of modest routine property investment.

“Despite the improving financial picture for Meadow Farm (from the poor performing 2012/13 year), the business is not robust enough to withstand significant reductions in future support payments,” Mr Lee said.

“Many proprietors of similar businesses may assume that there are few options available to do things differently in order to strengthen the business,” he added.

However, there are ways of restructuring the business to get the best out of the enterprises, he said.

In restructuring Meadow Farm, the sheep enterprise is increased, bull beef finishing ceases and the combinable cropping activity is undertaken on a contract farming basis. The suckler cow business remains the same.

“The effects of these enterprise changes mean that more focus is given to livestock and grassland management and performance, but as importantly, the overhead structure of the business is significantly reduced.”

This will allow a surplus of £73/ha before subsides and more than £300/ha, taking into account SFP and ELS.

 

     ANDERSONS MEADOW FARM – Source: Andersons The Farm Business Consultants
 £ per hectare  2012/13  2013/14  2014/15

 2014/15

Restructure

 Livestock Gross Margin*   477  604  600  639
 Crop Gross Margin*  748  969  966  856
 Total Gross Margin  585  745  741  751
 Overheads  500  512  528  368
 Rent, Finance & Drawings  306  309  306  310
 Margin from Production  (221)  (76)  (93)  73
 SPS (and ELS)  241  234  234  234
 Business Surplus  20  158  141  307
     *Per hectare return for the area the enterprises occupy

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