Farmers addressing cost efficiencies

A survey of lamb producers in Wales by HCC highlights differences between farmers who cover their costs from market returns and those who are falling short. It pinpoints some of the possible reasons for this variation.

The survey shows market

returns cover 113% of the costs of the top third producers while only meeting 64% of the costs of the bottom third.

Prys Morgan, HCC's industry development manager said: "There are many factors responsible for this significant gap and, added together, they are making the difference between covering costs and failing to do so.

"However, in a post-CAP (Common Agricultural Policy) reform environment, the

results clearly indicate that the top third producers can cover their costs.

"Although the difference between the top and bottom group remains

substantial, the survey

reassuringly demonstrates that the bottom third of producers are beginning to effectively address their cost efficiency."

The report shows a variation of 16% between the top and bottom third of producers in feed and

forage.

The total weight of lamb produced, which is influenced by the number of lambs reared per ewe and the weight of the finished lamb, is a significant factor in determining cost of

production. Vet and medicine costs also play an important part in defining the results.

The top third of producers had low vet and medicine costs, some 33% less than the bottom third. Morgan added: "Well targeted and sensible use of health plans

reduces overall vet and medical costs and may also play a part in

improving the output per ewe.

"A deliberate policy of culling ewes that are troublesome - for example, those with

mastitis, feet problems or that have

lambing difficulties - also helps reduce treatment costs."

Bottom third producers spent nearly double that of the top third producers on fixed cost items such as machinery and finance.

Morgan added: "A reduction in the cost of production can be achieved through ensuring that the flock is selected on breed traits that enable ease of

lambing, mothering ability and growth rates.

"This reduces labour input, along with simple feeding systems which can also reduce machinery requirements."

The data was collected by Farm Business Survey,

University of Wales, Aberystwyth, on behalf of the Farming Connect Sheep and Beef Development Programme.

It is based on 61 farms (51 hill and upland, and 10 lowland), for the financial year 2005/06.

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