Survey highlights jump in beef and sheep costs

Production costs for nearly all English beef and sheep enterprises are about 5% higher than last year, driven by soaring feed bills, EBLEX figures show.

Early results from its Business Pointers benchmarking survey of 240 beef and 178 sheep enterprises suggest it costs an average of 9.2p/kg more to produce one kilo of beef or sheep meat than this time last year.

On average, beef is 5.75p/kg more expensive to produce than in 2009/10, while sheep costs are up 12.6p/kg (see table). There has been a particularly large increase in costs for intensive cattle finishing, mainly due to a jump in feed costs and higher overheads. Sheep flocks have also seen a big increase in costs, with variable costs up 24% and fixed costs up 10%. There was a notable increase in replacement costs, which were up 48% in lowland flocks and 15% in Less Favoured Area flocks.

But EBLEX is confident that while costs have risen, higher market prices will mean margins should be generally better once the full report is published next month. Indeed, initial analysis suggests all top third producers are showing positive margins after cash costs.

“There is no doubt that the picture for beef farmers in terms of prices has turned a corner this year and got stronger and stronger. However, that does take a while to filter through and the reality is that costs have been rising as well,” EBLEX senior analyst Mark Topliff said.

“The business pointers data shows that the climate is still difficult for beef and sheep farmers, so it is essential that they keep a close eye on costs of production to see where efficiencies can be made.”


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