The new method of reporting English beef cattle production costs
launched today (November 24th) by EBLEX is certain to revive the
debate on the best way for the beef industry to survive decoupling.
NBA chairman, Duff Burrell
Revelations that the average lowland and LFA suckled calf breeders
lost in the region of £350 and £425 a cow over the 2005-2006
financial year will test the courage of an industry that also has
to take on board an average loss for intensive finishers of around £75
a head and a deficit in the region of £260 for finishers with
As a result the National Beef Association is certain that the universal depth
of loss confirmed by these new figures reinforces its original, post-decoupling,
position that only a market average of 250p per dwkg for prime cattle, along
with a determined effort by farmers to improve production efficiency, can secure
The new calculation formula was initiated after the NBA, and others, became frustrated
with the underestimation of production costs, and the continued inclusion of
subsidy income, in the previous costing system.
The decision made by a cross-UK group which included the NBA and many other organisations
- Subsidy income, including SFP, should not be included in farm
- Family labour should be charged at an average rate of £11.18
an hour –
or £28,000 a year.
- The rental value of owned land should be
included at £120
- And a five per cent annual interest on working capital should
also be included.
These revised calculations are judged to be a more accurate
reflection of the beef industry’s true costs of production
and the NBA estimates average birth to slaughter production costs
over 2005-2006 were 260p per dwkg.
It is pleased that the message given by these startling figures is
being taken to retailers and processors to show that current market
income makes beef production unsustainable.
However it is just as important that more farmers take increased
efficiency more seriously and use their SFP as a capital fund
to introduce radical cost savings into their business – instead
of being forced to use it to make up the gap between cost of
production and market income.
Cost saving is most easily achieved by matching production output
with labour so the unit cost is as low as possible. Modifications
that help to shed labour without reducing cattle numbers can include
introducing a quieter type of animal and improving handling systems.
Other important cost reductions can be made through raising cow
fertility – which
will almost certainly include more attention being paid to disease
Shortening finishing times so that stock can be sold at the same
weight perhaps months earlier than is the case at present can produce
equally dramatic cost savings.
The purchase of better bred bulls, cows and store cattle so less
feed and care is wasted on poor performers is also essential.
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