12 January 2012

2 minute read

Europe

Analysis of EBLEX’s 2011 Business Pointers data for extensive finishing enterprises shows dramatic differences between top and bottom third producers for fixed costs and output prices achieved.

Fixed costs alone were more than double for the less efficient producers at £376 per head compared to £187 per head for top third performers, while output – the average price received per animal sold – was £521 for top third compared to £337 for bottom third.

Mark Topliff, EBLEX senior analyst, said: “There is no doubt that operating conditions for extensive finishing have remained difficult. Net margins have fallen from year earlier levels because outputs also fell, despite reduced costs per head.

“However, the most efficient and best performing producers were still seeing positive margins of £102.60 per animal. In contrast, those performing least well saw negative margins of -£281.40.

“Just examining fixed costs alone, we can see how much can potentially be saved. Simple measures like looking at the energy tariffs used, cutting back on non-essential machinery and rationalising spend on labour can all help to improve margins.

“If we then also concentrate on the output and ensuring the maximum number of cattle are produced to the target classification, it is possible for under-performing enterprises to improve their bottom line with fairly simple steps.

“I would hope that the higher prices we have seen in the last 12 months will be reflected in improved output figures next time around, but by looking to make additional efficiencies, producers can ensure that they maximise their returns.”

Variable costs across extensive enterprises, however they performed, remained relatively similar but it is essential that “the eye is not taken off the ball” as very minor raises in variable costs can significantly impact margins.

It is also important that all extensive finishers thoroughly investigate available environmental scheme payments.

The Full Business Pointers report, and a breakdown by enterprise, can be found at http://www.eblex.org.uk/returns/businesspointers11.aspx

Stocktake will be the new face of Business Pointers from 2012 and EBLEX is recruiting farmers now to take part. If you are a beef or sheep farmer based in England and are interested in having your enterprise coasted for free, please email your name, address and contact details to [email protected] Places will be limited. Costings work will begin in February 2012.