Flock profits hit by plummeting prices

18 July 1997

Flock profits hit by plummeting prices

GROSS margins from ADAS Rosemaunds January lambing flock crashed this year despite a £4.60/ewe cut in variable costs.

The main reason was a £18.20 a head decline in average lamb price, which pushed lamb sales output a ewe down £34.20. Ewe premium was also £6.50 lower, so total output less replacement costs was £78.10 a ewe, compared with £116.50 in 1996.

Gross margin a ewe, which was £38.50, fell to £30.40, and the drop would have been bigger but for the decision not to creep feed single lambs to ensure they would not be finished before the predicted price peak that never occurred.

"We were sure that we would get £65 a head, but averaged £52.30, or less than the 1995 figure" said senior research consultant Merfyn Davies.

"This shows the risk involved in targeting early season sales, and the importance of keeping a close watch on production costs.

With a stocking rate of 25 ewes a ha (10/acre) the January flock produced a gross margin of £760/ha (£308/acre), or £895 less than in 1996. In the light of current market trends, this is the same figure forecast for Rosemaunds March lambers this season. If Mr Daviess calculation proves correct, lower prices and a fall in ewe premium will push gross margin a ewe down £14 to less than £40, and gross margin a ha will be £280 down.

Profit hopes are higher for the May lambing flock, where variable costs are only around £15 a ewe, and there is a good chance of firm late autumn prices. Last year May born lambs out of Suffolk x Rouge x Speckled Face ewes averaged £49.70 a head and lambing percentage was 174. The 142 ewes generated a gross margin of £66.90 a head, and stocking at 15 ewes/ha (6 ewes/acre) produced a gross margin of £1004/ha (£406/acre).

Mr Davies said there were many advantages in a system that did not require winter feeding or housing. Lambs born outside were healthier and 80% of them could be finished off grass.

But good out-of-season prices were needed to make the system worthwhile as conception rates were lower and there was extra demand for grazing.

Rosemaunds May lambing flock may be the most profitable this year.

See more