Forage and concentrate costs key for spring calving beef suckler margins

Hugely variable costs, particularly for forage and concentrates, were the drivers behind whether spring calving suckler herds achieved a gross margin of £724/cow, or a loss of £464/cow in 2021, according to interim findings from the QMS Sustainable Producer Groups benchmarking project.

The project, which runs across two years, involved 26 businesses across four groups providing economic and carbon footprint data for comparison. Each member was given an Economic Performance summary, a Carbon Audit report and a group summary, and has met several times to compare results and discuss ways to improve returns. The initiative aimed to help participants develop their businesses to reduce environmental impact while improving their economic resilience.

Spring calving suckler herds formed one of the larger groups in the project, and report author, Lesley Wylie, SAC Consulting beef specialist, said the wide range of results indicated that there were learning and improving opportunities for all in the group.

The results showed that low forage cost and concentrate costs are significant drivers of profitability, with some businesses achieving high net margins excluding labour, despite a poor herd production year. With the range in concentrate cost from £6.28/cow to £214.88/cow and forage costs ranging from zero to £207/cow, there is opportunity to learn from those with low costs to improve herd profitability, said Ms Wylie. “With greater fertiliser and concentrate feed prices seen in 2022, feed and forage costs will become a greater driver in the next dataset,” she added.

“It is tricky to compare the datasets, but the top performing businesses were making best use of grass, while some are also trying to reduce their wintering period by using forage crops and byproducts.”

The top spring calving herds were low cost operations but high output, with a decent rearing percentage (112% compared with an average of 92%) producing a high revenue per calf (£336.10 was the top result, compared with an average of £236.66)

Higher vet and medicine cost does not necessarily relate to greater herd profitability, she said; the business with the highest veterinary and medicine cost (£121.43/cow) was in the bottom five for gross margin.

The project has also highlighted some subjectivity in fixed cost allocation, clouding data interpretation, so these will not be collected for the next dataset, while rent costs also affected results. Similarly, while output is estimated based on calf weight at year-end and value per kilogram, weights quoted ranged from 230kg to 400kg and priced at £1 to £3.36/kg. This reflects different calving times, weaning times and markets, but will also skew results. Labour costs, too, were an area of discussion, with some allocating a full time salary to the herd, while others attributed zero cost. Work will be done across all these areas to make future comparison more valuable, said Ms Wylie.

Bruce McConachie, QMS Head of Industry Development said: “Beef producers are under extreme pressure today and the work that these groups have done goes a long way to establishing how improving your environmental efficiency can often improve your financial performance.”

The main objectives of the Sustainable Producer Group benchmarking project are to:

• Help farmers understand relationship between carbon, meat production and profit.

• Benchmark financial and environmental data.

• Give feedback and discuss development strategies within groups

Ms Wylie said that despite the mainly negative net margins in the first year, the data has helped farmers look at their own businesses. “Discussions between the businesses have been really good – and the process of comparison can be very helpful,” said Ms Wylie.

The interim report, produced by SAC Consulting, can be found here:

https://www.qmscotland.co.uk/sites/default/files/qms_interim_report_final.pdf

A detailed financial breakdown for each category can be found here:

https://www.qmscotland.co.uk/sites/default/files/interim_report_appendix_1_final.pdf

A second and final report on the project is due to be published later this year.