Farmers urged not to lose sight of the bottom line as prices rise
Prices may be rising, but farmers still need to cut costs, warned Ian Watson, chairman of the Beef Expo 2006 organising commitee.
Opening the event last week, Watson, a Cumbrian farmer, said that there were no guarantees how high prices would rise but, without cost cutting, many farmers would still not cover the cost of production.
Following hard on the heels of the previous week's National Beef Association AGM, Beef Expo 2006 at Carlisle proved to be a highly successful event. Over 400 attended the pre-event conference and dinner and with 5,000 reportedly attending on the day.
During the conference, Peter Cook, former economics professor at SAC, analysed the potential impact of CAP Reform on farm output and profitability. Drawing on a survey forcasting possible changes in Scottish agriculture for the 2001 to 2010 decade, Cook conceded that the initial profections were probably too pessimistic.
Expectations of a 5% decline in the beef breeding herd and a 10% drop in finishing cattle in Scotland, and an equivalant decline in the ewe flock, are unlikely to be realised. The recent uplift in producer prices, coupled with the Scottish Parliament's decesion to retain a suckled calf premium, will have slowed the exit, he predicted. The aniticpation of export benefits into an under-supplied EU and growing world market are likely to make a significant impact.
Cook's Scottish farms costings data from 2001 indicated that suckler farmers need an additional £160 per cow to achieve a 10% return on capital. This is equivalent to approximately 50p/kg on a carcase, or £2.30 to £2.40.
His solution is 'the cow' - a smaller, hardier cow with progeny that finish at a younger age. According to Cook, the live weight cost of finishing cattle at 17 months old is 51p/kg, whereas this rises to 61p/kg when cattle are kept to 28 months old.
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