Media misses reality on farming
Recent media headlines about confidence returning to the farming sector fail to take into account that costs of producing meat have also risen steeply, says EBLEX chairman John Cross.
Recent media headlines about confidence returning to the farming sector fail to take into account that costs of producing meat have also risen steeply. That was the message from John Cross, chairman of EBLEX, speaking at the organisation's National Producers Conference in Bristol last Monday.
"These positive headlines need to take into account the increase in input costs for beef and sheep producers, and the long term impact of both domestic and global market forces," said Cross, pointing to EBLEX's 2007 Business Pointers to reinforce his message.
This shows that, from March 2007 to February 2008, the average intensive beef finisher faced a 49% increase in feed costs and a 20% hike in bedding costs. "So even with farmgate price where it is, the cost increases have effectively wiped out any net profit margins for the average beef finisher," he said.
In the same period, the average lowland and LFA sheep producer has faced a 22% price increase in fertilisers and an 18% increase in costs. Cross explained: "Profitability is not just about the price you get for your animals. It's about looking at every aspect of your business - the management and cost factors you can control, and those you cannot. The trick is knowing what information to access, and more importantly, how to put it to practical use in the day-to-day farm business."
Beef consultant David Evans talked about the challenges the UK beef producers would continue to face because of decreasing production, due to CAP reform, low profitability and recently high feed. At the same time, he said, increased consumption was forecast in the new EU27, which would lead to an increase in carcase price in response to tighter supply. He also predicted imports would rise to meet demand, but said trade barriers would continue for some years.
Anne Mottet from the GEB Institut de l'Elevage, studied the outlook for the sheep market. She said decoupling had meant the income of sheep farmers in France had fallen by 25% in 2007. In Ireland and UK, net margins were reduced by 20-30% between 2005 and 2006 and even more in 2007. And she recommended the promotion of EU production standards, as well as partial or total EU-funded support for sheep farmers to drive efficiency and innovation.