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UK beef profitability among lowest in the world

British beef farms are among the world’s least profitable, an international study of performance has showed.

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UK beef profitability among lowest in the world

The average UK beef finishing unit in 2018 made a loss of US$95 per 100 kh deadweight (£76 at current exchange rates), with only Switzerland and Poland turning in a worse performance in group of 30 of the world’s main beef producing countries analysed by the German-based Agri Benchmark costings service.

 

The most profitable country was China, where producers made an average profit of US$200/100kg (£160), with Ukrainian farmers making a US$110/100kg profit (£88). Of the 30 countries, 11 did not make a profit with seven of those in Europe.

 

There is little correlation between profitability and stocking rates in the figures, with land and labour costs having a greater impact on whether a farm makes money or not.

British sheep enterprises also struggled to make a profit in 2018 too, according to the figures, with farms in France, Spain, Australia and New Zealand all making more money.

 

“The majority of a livestock farm’s capital is tied up in land and livestock and costs per unit do not tend to differ radically,” said Michael Haverty of consultants Andersons at a recent seminar.

 

“What is more important is productivity and yield.

 

"The best lowland livestock farms make a 15 per cent return on capital, while for some that figures is minus 30 per cent or less.”

 

AHDB analysis showed the cost of pig meat production in the UK rose by eight per cent in 2018, to £1.47 per kg.

 

The average cost of production in the EU was £1.44 per kg deadweight – a four per cent rise compared with 2017.

The report also revealed that average feed prices were higher, increasing across the 17 participating EU countries by an average of just over nine per cent.

 

The report also revealed a one per cent increase in pigs weaned per sow in the UK’s indoor herd to 27.35.

 

However, as a consequence of the weather in 2018, the UK’s outdoor herds’ performance fell by three per cent to 23.22.

Futures prices mirror tumble in stockmarkets

Futures prices mirror tumble in stockmarkets

Global cattle, pigs and potato futures markets along with share prices have plunged since the beginning of the year, while British on-farm physical commodity prices are largely unchanged.

 

By the first week of March, the EEX April 2020 potato futures price had fallen by 44 per cent and although prices in many European countries fell, British values have actually increased by 8.0 per cent in that time.

It is a similar picture for beef and pigs, with declines on the futures market more in line with a 28 per cent drop on stockmarkets than any changes in physical prices.

 

The Chicago CME live cattle and lean pigs April futures prices both fell by 21 per cent between January 1 and the first week of March, while British deadweight prices were virtually unchanged and Australian beef prices up nearly 60 per cent.

 

There has been less volatility on the grain markets, although March futures are lower than in January with British prices holding up, although that has been driven by the anticipated small 2019 harvest.

 

“The most recent US wholesale beef prices are trending down and there has been a fall in fresh fish and seafood prices,” said Michael Nesbitt, a market analyst at Farmers Guardian’s sister business Urner Barry.

 

“There is so much uncertainty about and physical prices for a whole range of products could be impacted by logistical issues, disruption in production or processing or consumer stockpiling.”

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