Trim machinery costs to keep overheads low

There is a massive £250 per head difference in fixed costs between the top and bottom third of lowland suckler beef producers and more must be done to redress the balance, EBLEX says.

Analysis of its 2011 Business Pointers costs of production survey revealed that the top third of English suckler producers kept total overheads to around £217 per head in the year to 31 March 2011, while the bottom third came in at £467 per animal.

The difference meant the bottom third of producers made a loss of £397 per head, compared with a modest £4.60 per head positive margin for the best performers.

One of the biggest reasons for the difference was in power and machinery costs, where less efficient producers appeared to be significantly overpowered, senior EBLEX analyst Mark Topliff said. They spent £110 per animal on machinery upkeep and running costs, almost three times that of the best producers. Depreciation costs (machinery and fixtures) were noticeably higher at £78 per head, compared with £27 for the top 33%.

“It is also interesting to see that contract costs are significantly higher for the lower performers, further suggesting they perhaps have too much machinery; if contractors are doing more of the work, less machinery should be needed,” he said.

Mr Topliff acknowledged some farmers using contractors may be reluctant to get rid of all their own kit, but said attitudes needed to change. “It’s worth getting a fresh pair of eyes onto the farm, such as a neighbour or family member, and explain to them what you do and why. You might not act on everything they suggest, but at least it’ll get you thinking about things like feed systems, building layout and machinery on the farm.”

In some cases it might be possible to alter the layout of buildings or handling systems to save time and reduce labour costs, while simple changes to feeding regimes could help reduce labour and machinery costs. Outwintering could be an option on suitable land, he noted.

EBLEX wants beef and sheep producers to take part in its Business Pointers 2012 survey. If you would like your enterprise costed for free, email your name, address and contact details to brp@eblex.ahdb.org.uk