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Costs Of Production Rise For Beef Farmers

13 September 2011
EBLEX

UK - Beef and sheep farmers have seen production “cost per kilo” figures rise across almost all enterprises, data from the annual EBLEX business Pointers benchmarking survey has revealed.

It costs an average of 9.2 pence per kilo (4.6 per cent) more than in the previous year to produce one kilo of beef or of sheep meat, driven largely by rising fixed costs, according to figures for the year to 31 March 2011.

Beef was 5.75 pence per kilo (2.6 per cent) more expensive to produce than in 2009/2010, while for sheep production costs were up 12.6 pence per kilo (6.6 per cent).

However, year to date figures (April to September 2011) to be included in the full Business Pointers report in October are expected to show significant improvements over the previous year’s picture, reflecting an upward trend in the markets, especially for cattle. And initial results from analysis of the data suggest all top third producers are showing positive margins after cash costs.

The data was collected for EBLEX from 240 beef and 178 sheep enterprises across England, representing lowland suckler herds, less favoured area suckler herds, extensive finishing and intensive finishing herds for cattle, and lowland, less favoured area and store flocks for sheep.

Mark Topliff, senior analyst with EBLEX, said: “There is no doubt that the picture for beef farmers in terms of prices has turned a corner this year and got stronger and stronger. However, that does take a while to filter through and the reality is that costs have been rising as well."

“Production costs are up an average of 2.6 per cent per kilo for beef farmers and 6.6 per cent per kilo for sheep farmers, largely down to rising input costs and, in particular, fixed costs."

“Looking at some of the specifics, extensive finishing herd results show lower costs in 2010/11 following a year of higher allocated costs. But intensive finishers have had a significant rise in overhead costs, rising on average by 12 per cent with only contractor costs returning a lower figure compared with the previous year."

“In common with intensive cattle finisher, sheep flocks also had a significant rise in costs with average variable costs up around 24 per cent and fixed costs over 10 per cent higher. Major areas of increase came from feed, power and machinery repairs. But replacement costs also saw a noticeable change of 48 per cent in lowland flocks and 15 per cent in LFA flocks."

“The Business Pointers data shows that the climate is still difficult for beef and sheep farmers so it is essential that they keep a close eye on costs of production to see where efficiencies can be made.”

You can view the full cost per kilo data on the EBLEX website at www.eblex.org.uk

The complete Business Pointers data set will also be posted when the report is published next month, with the document itself available free either as a hard copy or a pdf download.

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