‘Pasture for Life’ makes good financial sense

A recent research project called ‘Sustainable Ecological and Economic Grazing Systems: Learning from Innovative Practitioners’ (SEEGSLIP) has highlighted the positive effects feeding no grain to cattle and sheep can have on enterprise Gross Margins.

Fifty-six Pasture-Fed Livestock Association (PFLA) members were interviewed on all aspects of their farming systems, including their finances. Their Gross Margin figures (Output minus Variable Costs) have been compared to the Farm Business Survey (FBS) for England.

Breeding sheep flocks

The top PFLA sheep farms are making more Gross Margin at £132/head than the top FBS farmers at £93/head.

PFLA farms based in the uplands have a much better Gross Margin at £70/head than the average upland farm in the FBS survey at £21/head.

Table 1

Pasture for Life Gross Margin (GM) comparison for Breeding Sheep Flocks with Farm Business Survey (FBS)

£/ewePFLA AverageLowlandUplandBottomTopFBS Lowland FBS LFA 
(<250m)(>250m)33%33%Av. TopAv. Top
Output98103825014412515684149
Total Variable Costs/head141411171253534254
Gross Margin/head8489703313258932178
Number of farms2419588277725314
Number of ewes330265574162124290280545307

The main reason for these results is that the variable costs on the PFLA farms is much lower than for the FBS farms – at £14/head average for PFLA, compared to £53/head for the lowland FBS average and top farms (Table 1 in orange). These costs would include concentrate feed and vet and med bills.

Suckler beef farms

The output from the PFLA suckler beef farms is almost double that of the benchmarked FBS farms at £1,158/head for the average compared to £516 and £540 for the FBS averages for lowland and upland systems.

Table 2

Pasture for Life Gross Margin (GM) comparison for Suckler Beef with Farm Business Survey (FBS)

£/cowPFLA AverageLowlandUplandBottomTopFBS Lowland FBS LFA 
(<250m)(>250m)33%33%Av. TopAv. Top
Output1158118310297181706516663540623
Total Variable Costs/head193202150254150216185214143
Gross Margin/head9659818794641556241470221422
Number of farms3731612122957014235
Number of suckler cows515246514336344139

The probable reason for this is that the PFLA farms are selling their calves finished, whereas the FBS farms are selling six-month-old stores for other farmers to finish.

However, despite PFLA farms keeping their cattle six months longer or more, the variable costs across all the systems were remarkably similar, from £193/head for the PFLA average and £216/£214 for the FBS averages for lowland and upland.

In essence, PFLA farmers are achieving twice as much output for the same amount of variable costs.

When looking at an enterprise level – the FBS lowland farms are achieving an income of just £18,576 (£516 x 36 cows), whilst the PFLA farms are gaining £59,058 (1,158 x 51 cows).

Beef finishers

Output from the PFLA farms finishing beef animals is significantly lower than the FBS documented enterprises at £458/head compared to £548/head. This will probably be because the PFLA cattle are native breeds and their growth is not being pushed on by grain feeding.

Table 3.

Pasture for Life Gross Margin (GM) comparison for Beef Finishers with Farm Business Survey (FBS)

      
£/headPFLA AverageBottomTopFBS Finishing from the suckler herd
33%33%Average Top
Output458185712548764
Total Variable Costs/head542481309323
Gross Margin/head404161631238441
Number of farms93322963
Herd size81661288080

However, once again there is wide variation in the variable costs between the two approaches, with PFLA costs sitting at £54/head compared to £309/head for the FBS sample. This will be due to PFLA animals being fed no expensive grain or concentrates.

This leads to the PFLA farms having a much healthier average Gross Margin of £404/head, as opposed to the FBS farms at an average of £238.

More research

The research was carried out by the UK centre for Ecology and Hydrology (UKCEH), Lancaster University, Natural England and SRUC, and led by Dr Lisa Norton of UKCEH. The project was funded by the Biotechnology and Biological Sciences Research Council (BBSRC), the Economic and Social Research Council, the Natural Environment Council and Scottish Government.

Now the PFLA is looking to gather and produce enterprise costings data down to Net Margin level, to highlight differences in fixed costs between 100% pasture-fed farmers and conventional lamb and beef producers.

Read more in the July 2021 issue of Direct Driller magazine http://www.directdriller.com/latest-issue/

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