Profitability gaps in livestock identified

There is a “considerable” variation in the profitability between the top third and bottom third of livestock producers, the 2015 edition of the ‘Cattle and Sheep Enterprise Profitability’, published by Quality Meat Scotland (QMS), has revealed.

The report, which covers the 2014 calf and lamb crop, also said that, of the suckler herds surveyed, those in the top third of gross margin per animal achieved higher output through higher calf rearing percentages. This, combined with selling heavier calves, resulted in higher yield per cow in the herd. Suckler producers typically received 6-10p/kg lwt more for the calves they sold. Those in the top third also had lower total variable costs than the average, while achieving higher output.

In the sheep sector those in the top third of sheep producers similarly achieved higher outputs through better stock performance. They reared about seven to 15 more lambs per 100 ewes than the average, the report revealed.

Although they did not rear lambs to the heaviest weights, the larger lamb crop resulted in top-third flocks selling 5kg lwt more lamb per ewe. They also sold the highest proportion of lambs for immediate slaughter. The net effect of this was that income from lamb sales was £13-£14 per ewe more than the average.  
Stuart Ashworth, head of economics services with QMS, said that the calf and lamb crop benefited from an improved season weather-wise. This resulted in a general improvement in profitability among sheep farmers, although the position in the beef sector remained challenging.
“Calving and lambing was a more positive period than in 2013 and mortality rates at birth were much reduced, while among sheep flocks ewe prolificacy was much improved,” said Ashworth.
“Additionally, feed and forage was in much better supply and animals thrived better than in 2013 and the increased availability of feed and forage contributed to animals generally being sold at higher weight.”
The general improvement in ewe prolificacy during 2014 meant sheep farmers were better positioned to benefit from output than cattle enterprises, the report said.
“Only 29% of store cattle finishers achieved a positive net margin, down from 72% the previous year, while among rearer-finishers the number achieving positive margins halved in comparison to 2013,” said Ashworth.
For store cattle producers, where sale prices were similar to a year earlier, the more extensive units struggled to maintain margins.

In contrast, margins improved among ewe flocks. The report said the proportion of hill ewe flocks making a positive net margin lifted from 10% in 2013 to 15% in 2014.
Upland flocks recorded a positive net margin at 68% while low-ground flocks saw a positive net margin at 75%. Store lamb finishers held relatively steady at 75%.
“Hill flocks reported considerable improvement in ewe productivity from the depressed levels of the 2013 lamb crop. A lower level of ewe replacement and some improvement in store lamb returns led to some growth in output,” said  Ashworth.

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