understanding on-farm profitability - ahdb beef &...
TRANSCRIPT
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Understanding on-farm profitabilityMark TopliffLead AnalystFarm Economics
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Outline of talk• Economic trends at the farm level• Trends in productivity• Tools to help understand profitability
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Economic trends at the farm level
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A recovery, of sorts, in sucklerherd gross margins
Source: EBLEX Business Pointers/Stocktake – Lowland English Suckler Herds, average
050
100150200250300350400£ per cow
Direct subsidies
end
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Higher cattle prices help extensive beef finishing gross margins
‐300
‐200
‐100
0
100
200
300
400
£ per head
Direct subsidies
end
Source: EBLEX Business Pointers/Stocktake – English extensive beef finishing, average
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Volatile business incomes
Source: Defra/FBS, English Farm Business Incomes
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Lowland Grazing Farms
LFA Grazing Farms
In current prices (£/farm)
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Contribution to Superiority
34%
19%27%
20%
Extensive Finishing (over 16mths age)
Output Rep/Pur costs Variable Costs Fixed Costs
21%
14%
49%
16%
Beef Finishing (up to 16mths age)
Output Rep/Pur costs Variable Costs Fixed Costs
17%
11%
4%68%
Lowland Suckler
Output Rep/Pur costs Variable Costs Fixed Costs
33%
6%16%
45%
LFA SucklerOutput Rep/Pur costs Variable Costs Fixed Costs
Source: EBLEX Stocktake 2013/14
% of the difference of top third to the average
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Trends in productivity
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No improvement in calves weaned
2004/0588.5
2008/0988.3
2013/1484.9
Calves weaned per 100 suckler cows put to the bull
Source: EBLEX Business Pointers/Stocktake, English suckler herds
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Reducing concentrate usage in LFA herds (kg/cow/year)
2004/05223 2008/09
168 2013/14143
Source: EBLEX Business Pointers/Stocktake, English LFA Suckler herds
Usage affected by• Price of concentrates• Availability of other
homegrown feeds• Weather• Silage/hay quality• Price received for
calves
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Saving costs through reducing inorganic nitrogen usage
2004/5 – 78kg/ha
2008/9 – 60kg/ha
2012/13 – 44kg/ha
Source: EBLEX Business Pointers/Stocktake, English lowland suckler herds
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Genetic potential of cattle continues to increase
E.g. Limousin recorded cattle• Ongoing
improvement in genetic potential in most breeds
• Has it been fully realised?
• More potential to come?
Source: The British Limousin Cattle Society
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Greater productivity of sucklercalves
Calf daily weight gain (kg) birth to weaning• 2004/5 – 1.02• 2008/9 – 1.07• 2013/14 – 1.12
• 1970 – 0.89
Source: MLC/EBLEX Business Pointers/Stocktake
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Steady improvement in the productivity of finished cattle
Extensively finished cattle daily weight gain (kg)• 2004/5 – 0.76• 2008/9 – 0.67• 2013/14 – 0.78
• 1973 – 0.63
Source: MLC/EBLEX Business Pointers/Stocktake, Extensive Finishing Cattle
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Age at slaughter trends
2006 2011 2014 2006 to 2014 trend
12-15 Months 6.7% 10.2% 10.9% Increasing
15-18 Months 10.8% 11.7% 8.9% Decreasing
18-21 Months 13.6% 15.7% 13.4% Little change
21-24 Months 19.3% 21.4% 20.4% Increasing
24-27 Months 20.6% 19.5% 19.9% Decreasing
27-30 Months 26.7% 16.1% 17.7% Decreasing
30-36 Months 2.4% 5.4% 8.8% Increasing
Source: British Cattle Movement Service, Great Britain cattle
66.6% 58.0%
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Prime cattle carcase quality has improved
2005 2009 2014
England 41.3 48.8 52.1
GB 45.4 50.9 54.6
Source: EBLEX/MLCSL Carcase Classification – England/GB
% of carcases in E,U,R 1,2,3,4L classifications
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Increasing average prime cattle carcase weights
Source: EBLEX/MLCSL Carcase Classification ‐ England
325 kg
329 kg
340 kg
2005
2009
2014
Driven by:• Genetics• More cattle in target
spec• Heavier cattle more
income per animal• Change in mix of bulls,
steers and heifers
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Summary
• Period of transition from direct to uncoupled support
• Profitability of sector remains a challenge• Costs have tried to be reduced• Improvement in physical output needed…• …but seeing better marketing of cattle and genetic potential
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Voting time
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TESTQ1: Opportunity (imputed) costs are simply a theoretical concept made up by economists to confuse people
A. TrueB. False
58%
42%
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Q2: As part of your normal line of work, do you help your clients benchmark their suckler/beef
herd performance?
A. YesB. No
Yes No
50%50%
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Q3: If you help clients benchmark their performance what is the main source
for comparison?A. Reference books such as
Nix, SAC and ABCB. Farm Business SurveyC. Internal client databaseD. AHDB/StocktakeE. Other
Refer
ence
book
s suc
h as N
i..
Farm
Busin
ess S
urve
y
Intern
al clie
nt da
tabase
AHDB
/Stoc
ktake
Othe
r
26%
17%13%
30%
13%
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Q4: What is the best basis on which to calculate or benchmark
herd economic figures?A. Per head (ie. Cow or
finished animal)B. Per kg (ie. Per kg of output
or carcase weight)C. Per hectare (Whole farm or
forage area)D. No one way
Per h
ead (
ie. Co
w or
finish
e...
Per k
g (ie.
Per k
g of o
utpu
t o...
Per h
ectar
e (Wh
ole fa
rm or
...
No on
e way
10%
57%
23%
10%
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Tools to help understand profitability
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The Stocktake farm costings tools
Monitor costsManage performanceImprove returns
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What is Stocktake ?
• It is a web-based beef and sheep enterprise cost and performance benchmarking system
• Participants can benchmark against other participants
stocktakeplus.org.uk
• Data collected by AHDB, but can be used by consultants as well as farmers
• Aggregated data provides a national picture of the performance of the beef and sheep sectors
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What’s involved?• Farm visit• Upload data to website• Validation of data• Approval of data• Report sent to farmer
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Summary of data collected
Key Farm and Output DataLivestock numbers, weights and sales etc
Grazing, Feed and Crop Costs– Period grazed by breeding flock.– Tonnage and cost of purchased feeds and split between breeding flock and other livestock.– Tonnages produced and fed of home-grown forages and grain.– Home-grown crop costs – fertilizer (inc tonnages and type) seed, spray, crop sundries.
Labour– Family labour – hours worked on farm and split allocated to each enterprise.– Employed labour hours worked on farm and split allocated to each enterprise.– Cost of employed labour.
Livestock Costs Vet, Bedding, Preganacy Scanning, Livestock sundries and Levies and commissions.
Machinery and Power CostsSecond hand valuations and then machine repairs, machine hire, contracting, electric and fuel.
Property Costs– Building investment in the last 20 years.– Building repairs.– General farm maintenance.– Average field rent (per ac/ha).
Overhead Costs– Water.– Telephone.– Office, Subscriptions and Postage.– Professional Fees.– Farm vehicle costs.– Insurance.
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England ‐ Lowland Suckler Herd 2013/14
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England – Extensive Finishing 2014
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Stocktake Plus Data
Performance data forTop 1/3 Average
Stocktake Records
Enterprise recording tool
Flock Calendar
Herd Calendar
Performance Indicators,comparison and benchmarking
Physical data Financial data
Analysis of scenarios
Lowland April LambingFlock
Lowland March LambingFlock
Hill Flock
Lowland Spring CalvingHerd
Lowland Autumn CalvingHerd
Upland Spring CalvingHerd
Target Enterprises
Stocktake Plus
Complete costings tool and service
and web tools
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stocktake.ahdb.org.uk
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Any Questions?