Major differences in profitability – up to £911/ha on lowland dairy units and £263/ha on hill cattle and sheep farms – are highlighted between the average and top-performing farms in the latest Welsh Farm Business Survey.
Aberystwyth University conducted the 2013-14 survey across a random sample of 511 farms across Wales.
After rent and finance charges were deducted, results showed the average profit a hectare for hill cattle and sheep farms was £153/ha compared with £416/ha for the top third of producers – a variation of £263/ha.
For hill sheep farms the difference was £172/ha – the average profit was £122/ha compared with £294/ha for the best performers.
On upland cattle and sheep farms the average profit level was £207/ha, compared with £477/ha at the top end, a £270/ha difference. On lowland cattle and sheep holdings the average profit was £303/ha, against £583/ha for the top third of producers — £280/ha higher.
At £810/ha, the average profit on hill and upland dairy farms was £881/ha lower than the £1,691/ha made by the top-end milk producers, while lowland dairy profits were on average £957/ha and £1,868/ha at the upper end – a difference of £911/ha.
Gross margins for the average hill sheep flock was £19.37 a ewe and £43.11 a ewe at the top end, £40.32 a ewe on average for upland flocks, against £71.67 for the top producers. In lowland flocks, the average gross margin was £48.70 a ewe against £72.19 a ewe for the top one-third.
Returns for lowland suckler cows were £470 a cow on average and £846.66 for the top producers, £357.94 a cow on average and £600.06 for the best upland farms, with £334.10 a cow being the average and £569.29 a cow the top rating on hill suckler farms.
The average gross margin a cow on hill and upland dairy farms was £1,061.93, against £1,497.46 at the top end, and £1,113.65 on average and lowland dairy farms, rising to £1,521.34 a cow for the top one-third performing herds.
Tony O’Regan, director of the survey, said the results had highlighted significant differences between the average and best-performing farms.
But he warned the results did not take account of the cost of a farmer’s labour and the absence of this could present a false picture of the economics of production.
“The dairy sector best illustrates this since labour and pension costs alone can add about 6.7p/litre, pushing the top producers’ cost of production to over 27p/litre and the bottom closer to 37p/litre,’’ he said.