September 23, 2011


UK's beef production costs rise



EBLEX annual survey has revealed that beef farmers have experienced production cost rising across all enterprises.


It costs an average of GBP0.14 (US$0.22) per kilogramme (4.6%) more than the previous year to produce one kilogramme of beef. This is driven largely by rising fixed costs, according to figures for the year March 31, 2011. Beef was GBP0.09 (US$0.14) per kilogramme (2.6%) more expensive to produce than 2009/10.


However, April-September 2011 figures to be included in the full Business Pointers report in October are expected to show significant improvements over the previous year's picture, reflecting an upward trend in the markets, especially for cattle. And initial results from analysis of the data suggest all top third producers are showing positive margins after cash costs.


The data was collected for EBLEX from 240 beef and 178 sheep enterprises across England, representing lowland suckler herds, less favoured area suckler herds, extensive finishing and intensive finishing herds for cattle, and lowland, less favoured area and store flocks for sheep.


Mark Topliff, senior analyst with EBLEX, said that there is no doubt that the picture for beef farmers in terms of prices has turned a corner this year and got stronger and stronger. However, that does take a while to filter through and the reality is that costs have been rising as well.


Production costs are up an average of 2.6% per kilogramme for beef farmers.


Looking at some of the specifics, extensive finishing herd results show lower costs in 2010/11 following a year of higher allocated costs. But intensive finishers have had a significant rise in overhead costs, rising on average by 12% with only contractor costs returning a lower figure compared with the previous year.


Topliff added that the Business Pointers data shows that the climate is still difficult for beef farmers so it is essential that they keep a close eye on costs of production to see where efficiencies can be made.

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