Sustainable Prices and Fixed Costs Key to Profitability

UK - The need for more sustainable beef and lamb prices to be paid to farmers was highlighted by the on-farm costing figures revealed in the fifth edition of Business Pointers published today (23 November) by the English Beef and Lamb Executive (EBLEX).

23 November 2007

2 minute read

Europe

The figures, which covered the year ending 31 March 2007, show the average beef producer is making a loss of between £94 and £430 per head. This compares to losses of between £74 and £425 in 2005/06.

The situation was slightly better for the average sheep producer in 2006/07 who lost between 65 pence and £36 per head, compared to losses of between £2.45 and £49 in 2005/06.

The 2006/07 data does not reflect the impact of this summer's Foot and Mouth and Bluetongue outbreaks, nor the rising feed price which are likely to emerge as factors in next year's figures.

A positive trend highlighted by the figures is that some beef and sheep enterprises have made good progress in improving aspects of their production performance, with the gap between the bottom third and top third performers starting to narrow across particular areas.

The biggest single factor differentiating between top third and bottom third performers during the year was fixed costs. Finding ways to reduce fixed costs - especially for many beef producers - has emerged as one of the key areas for farm businesses to focus on to influence their financial performance.

EBLEX Chief Executive Richard Ali said: "As our *price volatility report published earlier this month shows, the beef and lamb supply chain needs to have the right structures in place to deliver sustainable farmgate prices.

"The figures in this year's Business Pointers highlight the urgency of the need for sustainable prices for the vast majority of beef and sheep producers- not just for those farmers in premium supply chains.

"Encouragingly, the figures also show that producers are responding to the demands of the market in terms of improving output and technical efficiency.

"For our part, we will be adding a fixed cost element to our work under the EBLEX Better Returns Programmes to help producers look at their operations and see where improvements can be made."