4 October 2012

2 minute read

Europe

However, once fixed and non-cash costs are taken into account, the net margins for many enterprises slip into the negative, demonstrating the importance of the relationship between controlling costs and achieving profitability.

“The record cattle and sheep prices we experienced in the last financial year have lead to improved margins across every type of beef and sheep enterprise, however rising variable costs, particularly in terms of feed and forage, have continued to have an impact,” said EBLEX/AHDB senior analyst Carol Davis.

“As a result, Business Pointers estimates show that many enterprises have made a loss after fixed and non-cash costs are deducted. However, top third producers across all types of enterprise showed positive margins, with the exception of beef suckler herds. This demonstrates that by focusing on on-farm efficiency it is possible to generate a profit in spite of the challenging financial climate.

“Focusing on overheads and ensuring market prices are maximised is likely to be the most effective route to improving margins for many cattle and sheep producers."

EBLEX Business Pointers are published each autumn as a reference point against which beef and sheep producers can benchmark their own performance. This year’s publication will use estimated costings. A new system of monitoring and analysis – Stocktake – is being put into place to collect actual farm data from a range of farms and enterprises to give an accurate picture of the situation in terms of costs of production and margins.

The full Business Pointers report is due to be published in late October.