Wednesday, 20 November 2013

Stocktake report provides a benchmark for English beef and sheep enterprises

The key to any successful business is keeping costs down and beef and sheep farms are certainly no exception to this rule. However, where they differ from enterprises in other sectors is that many of their costs are hidden. It’s unlikely, for example, that many farmers would factor in unpaid family labour when calculating their costs, or, for that matter, the depreciation of machinery.

This is where the first edition of Stocktake – or the 11th edition of EBLEX’s Business Pointers – comes in. Over the past 10 years, Business Pointers has firmly established itself as an invaluable reference document for beef and sheep meat producers in England to compare their farming enterprise costs with others in the sector. The report calculates average and top third net margins across every type of cattle and sheep enterprise, factoring in all fixed and variable costs, with the aim of highlighting areas of the business that are performing well and those where there is scope to improve net margins.

The reason for rebranding this year’s report is due to the establishment by EBLEX of an in-house benchmarking system – Stocktake. Whereas Business Pointers data was supplied by an external agency, Stocktake data is collected by dedicated staff within the AHDB market intelligence team, from a range of farm enterprises around England. This means we can now include a wider range of data, especially relating to physical factors, allowing producers to better gauge their performance against these benchmark enterprises. Some of the changes are already evident in the Stocktake report, which splits out results from disadvantaged and severely disadvantaged farms for the first time, and gives additional commentary to help producers make decisions about their businesses.

The benchmarking figures don’t always make for great reading, particularly over recent years when the industry has been blighted by spiraling input costs combined with extremely unpredictable weather, both factors which are out of our control. However, this year’s Stocktake report shows clear improvements in all enterprise net margins between the year to March 2013 and the previous year, due to a number of factors, including higher market prices for some enterprise types.

The report also reveals that top third producers in all beef and sheep enterprises spend significantly less on fixed costs than average performing enterprises. This continues to be a key focus area for producers seeking to improve their net margins, as do physical performance and variable costs. Making sure that performance in these areas is as good as possible should ensure that businesses are best placed to cope with other areas of volatility.

Those who are signed up to the EBLEX Better Returns Programme will have received copies of the Stocktake report with the recent autumn mailing. If you wish to request a free copy, email admin@eblex.ahdb.org.uk. Alternatively, you can download the publication from the EBLEX website.

EBLEX hopes to include data from even more farms in its Stocktake analysis next year, so any English producers who wish to benchmark their own costs and contribute to next year’s report should email wendy.walker@ahdb.org.uk or phone 024 7647 8885.