Time to look at how business has performed

The tups are out, and so the start of November signals the end of our old farming year and the beginning of a new one. It is a good time to stand back and look at how the business has performed over the year. Of course, it has been a challenging 12 months in terms of what Mother Nature threw at us – a prolonged and bitter winter, juxtaposed with a long dry summer.

That said, and I might be alone in my thinking, but I would take this year’s weather over the usual wet winter followed by a wet summer.

Lamb prices seem to have held if not improved slightly on the year and we are confident that if we continue to push physical performance then financial performance will improve and we can continue to justify keeping sheep. The cattle enterprise however provides more of a headache.

I’m not going to reveal how much profit or loss our sheep and cattle enterprises makes, but to illustrate a point I will quote the QMS 2017 Cattle and Sheep Profitability Report. In the 2017 survey, only 36% of suckler cow herds achieved a positive net margin, excluding financial support. For the top third of LFA suckler cow herds this equated to £33/cow.

If these figures don’t scare you, they do scare me. Even if I could claim to be in the top third of cattle producers I would need at least 900 cows to earn a fairly average salary.

By comparison, the survey of upland sheep producers revealed that 68% were achieving a positive net margin excluding financial support. For the top third of producers surveyed this equated to £17/ewe.

This margin still is not enough to make anyone rich, but it is better than cattle with significantly less requirement for capital investment.

The question is, where do we go from here? Our business is sustainable only thanks to financial support.

The role that we play as farmers in contributing to the wider rural economy is recognised and as such I do have faith that support will continue, but I also believe that it is likely to decrease significantly in the long term. We cannot afford to be complacent.

With individual cows costs of between £700-£1000/annum, there will be no place for cows which under perform. We need to consider our policy of selling calves at 12-18 months and whether greater margins can be made by selling them at weaning. We also need to focus on our breeding, aiming for store cattle with enough shape and frame to entice buyers, while at the same time running a cow that is hardy enough and low maintenance enough to make economical use of the resources on our farm. We perhaps need to capitalise on our high health status and consider whether a premium can be obtained by producing bulling heifers – certainly our favoured breed of cow, the Saler, seems to be a very popular cross at the moment.

So, what does all this mean for our cows?

Well, we have invested a lot of time effort and money to get to the stage, so we are not ready to give up yet, but we will be monitoring costs closely over the next couple of years.

It’s hard not to enjoy working with cattle. For me, there is an affinity that I will never have with sheep, so I think they will have a place here as long as I am farming, but I can see the possibility of it being on a hobby basis only.

Picture: PA. Cows grazing in their field silhouetted against the sunrise.