Lowland lamb producers lose

By FWi staff

LOWLAND lamb production showed an average net margin loss of 23.57 a lamb for the 1999 crop, according to a detailed survey of 363 flocks in England and Wales, undertaken by Exeter University Agricultural Economics Unit.

And net margin for the 2000 lamb crop is unlikely to be much different, even though lamb prices have been 4 to 5 a head better over the year, says study co-ordinator Mark Fogarty of the Exeter team.

“That extra income will have been wiped out by higher fixed costs and feed prices coupled with a reduction in the ewe premium of about 3.”

Net margin is a strict assessment of economic efficiency, he says.

“It is what is left after deducting all costs including all labour charged at the going rate, and rent and finance charges.

“These results show that the average sheep enterprise does not generate an income sufficient to provide an adequate return on all the resources used.”

He notes that lowland sheep have not recorded a positive net margin since the first of these studies in 1988.

On the question of “is it worth continuing in sheep?”, the study may help, he says.

“The important point at farm business level is the enterprises contribution to farm profits, and it may be more important to look at gross margin (32 a ewe) or occupiers income (1.50 a ewe), rather than net margin.”

But the top flocks were more efficient, recording a gross margin of 39 a ewe and occupiers income of 15 a ewe.

Mr Fogarty concluded that many flocks could improve both technical performance and marketing, for example on weight and fat level.

• The report Lowland Sheep 1999: The Economics and Management of Lamb Production is 10 inc p&p from Exeter University Agricultural Economics Unit (01392-263840)