Pasture for Life - It Can Be Done The Business Case Jonathan - - PowerPoint PPT Presentation

Pasture for Life - It Can Be Done The Business Case Jonathan Brunyee

Senior Lecturer in Farm Business Management Royal Agricultural University

Most livestock systems are not viable without CAP support

Farm Business Income by Cost Centre 2014/15 (Defra 2015)

Most livestock systems are not viable without CAP support

Farm Business Income by Cost Centre 2014/15 (Defra 2015)

The environmental and social benefits of pasture-based livestock systems are clear… …We believe the business case is strong too.

Gathering The Evidence

• Collated case study info from 12 PFLA farmers

in 2013. Presented ORFC 2014

• Worked with AHDB Stocktake consultants to

gather detailed financial and physical performance data for 2014/15 from eight farms

• Analysed and compared our data to Stocktake

figures – average and top third

Robust Data?

• Broad sample – not just the best!
• Collected by independent consultants
• Stocktake benchmarking system
• Weighted averages
• All internal costs considered (including own labour)

But there is more to do in future…

• Only a small sample
• Mix of upland, lowland, organic, conventional
• Mix of routes to market (stores, processors, direct sales)
• Only one year
• External costs need consideration (CO2 etc)
• And there are three types of farmer…..those that can add up and those that

can’t!

Breeding Sheep Flocks (Non SDA Farms) – Stocktake Only

PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Gross Output 104.04 104.12 Gross Output less Replacement Costs 93.06 92.69 Feed and Forage Costs 14.15 17.76 Vet & Med 6.37 6.61 Other Variable Costs (bedding, ear tags etc.) 6.42 7.80 Total Variable Costs 26.93 32.17 Gross Margin per ewe 66.13 60.51 Labour (paid and unpaid) 20.97 28.29 Machinery Repairs and Contracting 3.48 5.43 Depreciation 5.58 7.31 Other Fixed Costs 8.76 10.91 Total Fixed Costs (before rent) 38.79 51.94 Net Margin per ewe (before rent) 45.33 8.57 Stocking Rate 1.1LU/ha (10 ewes/ha) 1.0LU/ha (9.09 ewes/ha) Net Margin per hectare (before rent) £453 £78

Breeding Sheep Flocks (Non SDA Farms) – With PFLA Figures (3 farms)

PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Gross Output 93.39 104.04 104.12 Gross Output less Replacement Costs 89.27 93.06 92.69 Feed and Forage Costs 7.14 14.15 17.76 Vet & Med 5.09 6.37 6.61 Other Variable Costs (bedding, ear tags etc.) 4.30 6.42 7.80 Total Variable Costs 16.53 26.93 32.17 Gross Margin per ewe 72.74 66.13 60.51 Labour (paid and unpaid) 30.02 20.97 28.29 Machinery Repairs and Contracting 6.23 3.48 5.43 Depreciation 2.50 5.58 7.31 Other Fixed Costs 9.92 8.76 10.91 Total Fixed Costs (before rent) 48.67 38.79 51.94 Net Margin per ewe (before rent) 42.71 45.33 8.57 Stocking Rate 1.1LU/ha (10 ewes/ha) 1.1LU/ha (10 ewes/ha) 1.0LU/ha (9.09 ewes/ha) Net Margin per hectare (before rent) £427 £453 £78

Breeding Sheep Flocks (Non SDA Farms) – Compared to the Average

PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Gross Output 93.39 104.04 104.12 Gross Output less Replacement Costs 89.27 93.06 92.69 Feed and Forage Costs 7.14 14.15 17.76 Vet & Med 5.09 6.37 6.61 Other Variable Costs (bedding, ear tags etc.) 4.30 6.42 7.80 Total Variable Costs 16.53 26.93 32.17 Gross Margin per ewe 72.74 66.13 60.51 Labour (paid and unpaid) 30.02 20.97 28.29 Machinery Repairs and Contracting 6.23 3.48 5.43 Depreciation 2.50 5.58 7.31 Other Fixed Costs 9.92 8.76 10.91 Total Fixed Costs (before rent) 48.67 38.79 51.94 Net Margin per ewe (before rent) 42.71 45.33 8.57 Stocking Rate 1.1LU/ha (10 ewes/ha) 1.1LU/ha (10 ewes/ha) 1.0LU/ha (9.09 ewes/ha) Net Margin per hectare (before rent) £427 £453 £78

Rents vary considerably – grass averages around £267/ha (RICS) BPS and AE payments not included

Breeding Sheep Flocks (Non SDA Farms) – Performance Compared

PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average

Flocks in sample 3 26 80 Average flock size (ewes) (not weighted) 949 759 551 Number of full grass grazing weeks 52 48 47 Scanning % 168% 171% 176% Lambs reared per 100 ewes put to ram 135% 141% 143% Average age at sale (days) 175 155 152 Total DM concentrate fed (kg/ewe) 0kg 23kg 28kg

It Can Be Done - Sheep Overview

Financial Performance

• Higher gross margins - although output (sales per ewe) is down due to lower

lambing and rearing rates, variable costs, particularly concentrate feed purchases, are much lower, resulting in a very healthy gross margin

• Higher fixed costs - higher labour and contracting costs result in increased fixed

costs

• Positive net margin per ewe - pasture fed systems show a bigger net margin per

ewe than the average farms and rival the top third of producers

• Positive net margin per hectare – pasture-fed systems show a bigger net margin

than the average farm. To surpass the top third of producers more work is needed

• n fixed costs and lambs reared.

It Can Be Done - Sheep Overview

Physical Performance

• PFLA farmers are committed to forage-based systems and concentrate use is

eliminated

• Animals graze outside all year round
• Scanning rates are down slightly
• Lambs reared per 100 ewes is less than the average and top third, due to a lower

lambing % and more lamb losses

• Although it takes 20 days longer to finish the PFLA lambs to comparable weights

a longer grazing life can increase the nutrient value of the meat.

Suckler Cows (Non SDA and SDA Farms Combined) – Stocktake Only

PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Stocktake SDA Top Third Stocktake SDA Average

Gross Output 597.99 526.41 649.66 602.13 Gross Output less Replacement Costs 556.84 464.86 613.06 542.92 Feed and Forage Costs 95.44 105.84 81.53 111.43 Vet & Med 27.73 29.15 40.68 39.35 Other Variable Costs 41.46 49.29 43.09 42.83 Total Variable Costs 164.63 184.28 165.30 193.61 Gross Margin per cow 392.21 280.58 447.76 349.31 Labour (paid and unpaid) 114.90 137.65 116.02 119.33 Machinery Repairs and Contracting 63.50 65.71 55.39 68.52 Depreciation 54.75 76.35 76.64 81.15 Other Fixed Costs 84.68 93.92 102.91 107.90 Total Fixed Costs (before rent) 317.83 373.63 350.96 376.90 Net Margin per cow (before rent) 74.38

• 93.05

96.80

• 27.59

Stocking Rate (where a cow plus calf = 1.1 LU)

1.6LU/ha (1.45 cows + calves/ha) 1.3LU/ha (1.18 cows + calves/ha) 1.1LU/ha (1 cow + calf/ha) 1.2LU/ha (1.09 cows + calves/ha)

Indicative Net Margin per ha (before rent) £108

• £110

£97

• £30

Suckler Cows (Non SDA and SDA Farms Combined) – With PFLA Figures (7 farms)

PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Stocktake SDA Top Third Stocktake SDA Average

Gross Output 487.37 597.99 526.41 649.66 602.13 Gross Output less Replacement Costs 436.26 556.84 464.86 613.06 542.92 Feed and Forage Costs 33.53 95.44 105.84 81.53 111.43 Vet & Med 21.07 27.73 29.15 40.68 39.35 Other Variable Costs 37.89 41.46 49.29 43.09 42.83 Total Variable Costs 92.49 164.63 184.28 165.30 193.61 Gross Margin per cow 343.77 392.21 280.58 447.76 349.31 Labour (paid and unpaid) 127.91 114.90 137.65 116.02 119.33 Machinery Repairs and Contracting 71.79 63.50 65.71 55.39 68.52 Depreciation 100.41 54.75 76.35 76.64 81.15 Other Fixed Costs 98.95 84.68 93.92 102.91 107.90 Total Fixed Costs (before rent) 399.06 317.83 373.63 350.96 376.90 Net Margin per cow (before rent)

• 55.29

74.38

• 93.05

96.80

• 27.59

Stocking Rate (where a cow plus calf = 1.1 LU)

1.1LU/ha (1 cow + calf/ ha) 1.6LU/ha (1.45 cows + calves/ha) 1.3LU/ha (1.18 cows + calves/ha) 1.1LU/ha (1 cow + calf/ha) 1.2LU/ha (1.09 cows + calves/ha)

Indicative Net Margin per ha (before rent)

• £55

£108

• £110

£97

• £30

Suckler Cows (Non SDA and SDA Farms Combined) – Compared to the Average

PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Stocktake SDA Top Third Stocktake SDA Average

Gross Output 487.37 597.99 526.41 649.66 602.13 Gross Output less Replacement Costs 436.26 556.84 464.86 613.06 542.92 Feed and Forage Costs 33.53 95.44 105.84 81.53 111.43 Vet & Med 21.07 27.73 29.15 40.68 39.35 Other Variable Costs 37.89 41.46 49.29 43.09 42.83 Total Variable Costs 92.49 164.63 184.28 165.30 193.61 Gross Margin per cow 343.77 392.21 280.58 447.76 349.31 Labour (paid and unpaid) 127.91 114.90 137.65 116.02 119.33 Machinery Repairs and Contracting 71.79 63.50 65.71 55.39 68.52 Depreciation 100.41 54.75 76.35 76.64 81.15 Other Fixed Costs 98.95 84.68 93.92 102.91 107.90 Total Fixed Costs (before rent) 399.06 317.83 373.63 350.96 376.90 Net Margin per cow (before rent)

• 55.29

74.38

• 93.05

96.80

• 27.59

Stocking Rate (where a cow plus calf = 1.1 LU)

1.1LU/ha (1 cow + calf/ ha) 1.6LU/ha (1.45 cows + calves/ha) 1.3LU/ha (1.18 cows + calves/ha) 1.1LU/ha (1 cow + calf/ha) 1.2LU/ha (1.09 cows + calves/ha)

Indicative Net Margin per ha (before rent)

• £55

£108

• £110

£97

• £30

Rents vary considerably – grass averages around £267/ha (RICS) BPS and AE payments not included

Suckler Cows (Non SDA and SDA Farms Combined) – Performance Compared

PFLA Average Stocktake Non SDA Top Third Stocktak e Non SDA Average Stocktak e SDA Top Third Stocktak e SDA Average

Herds in sample

7 26 80 13 41

Average herd size (cows)

57 96 83 67 70

Number of full grass grazing weeks

38 35 35 32 30

Scanning %

90% 94% 91% 92% 86%

Calves weaned per 100 cows

83 87 85 88 86

Average age at weaning (days)

259 236 227 232 236

Total DM concentrate fed (kg/ cow)

74 151 59 68

It Can Be Done – Suckler Cow Overview

Financial Performance

• Good gross margins - although output is down the variable costs, particularly

concentrate feed purchases, are much lower, resulting in a competitive gross margin

• Increased fixed costs - higher labour, contracting and depreciation charges result

in increased fixed costs

• Net margin per cow and per hectare – pasture-fed systems echo the industry

average and show a negative net margin. More focus is needed on increasing

• utput and reducing fixed costs in line with the top third of producers

It Can Be Done – Suckler Cow Overview

Physical Performance

• PFLA farmers are committed to forage based systems and concentrate use is

eliminated

• Animals graze outside for a longer period of time than in other systems
• Scanning and weaning rates are down slightly
• It takes over a month longer to wean calves to comparable weights in the PFLA

sample

Beef Finishing (Non SDA Farms) – Stocktake Only

PFLA Average Stocktake Non SDA 16 - 24 Months Stocktake Non SDA Over 24 Months Gross Output 1211.10 1219.68 Gross Output less Replacement Costs 593.86 722.93 Feed and Forage Costs 283.48 248.34 Vet & Med 15.91 14.53 Other Variable Costs (bedding, ear tags etc.) 96.65 94.07 Total Variable Costs 396.04 356.94 Gross Margin per head 197.82 365.99 Labour (paid and unpaid) 90.24 140.69 Machinery Repairs and Contracting 42.26 65.24 Depreciation 82.21 93.49 Other Fixed Costs 136.89 150.97 Total Fixed Costs (before rent) 351.60 450.39 Net Margin per head (before rent)

• 153.78
• 84.40

Stocking Rate (where a 12 – 24 month beef animal = 0.65LU) 1.7 LU/ha (2.61 head/ha) 1.4 LU/ha (2.15 head/ha) Indicative Net Margin per ha (before rent)

• £401
• £181.46

Beef Finishing (Non SDA Farms) – With PFLA Figures (3 farms)

PFLA Average Stocktake Non SDA 16 - 24 Months Stocktake Non SDA Over 24 Months Gross Output 1909.54 1211.10 1219.68 Gross Output less Replacement Costs 1303.57 593.86 722.93 Feed and Forage Costs 32.12 283.48 248.34 Vet & Med 10.44 15.91 14.53 Other Variable Costs (bedding, ear tags etc.) 132.79 96.65 94.07 Total Variable Costs £175.35 396.04 356.94 Gross Margin per head 1128.22 197.82 365.99 Labour (paid and unpaid) 128.57 90.24 140.69 Machinery Repairs and Contracting 46.50 42.26 65.24 Depreciation 170.70 82.21 93.49 Other Fixed Costs 215.56 136.89 150.97 Total Fixed Costs (before rent) 561.33 351.60 450.39 Net Margin per head (before rent) 566.89

• 153.78
• 84.40

Stocking Rate (where a 12 – 24 month beef animal = 0.65LU) 0.95 LU/ha (1.46 head/ha) 1.7 LU/ha (2.61 head/ha) 1.4 LU/ha (2.15 head/ha) Indicative Net Margin per ha (before rent) £828

• £401
• £181.46

Beef Finishing (Non SDA Farms) – Compared to the Average

PFLA Average Stocktake Non SDA 16 - 24 Months Stocktake Non SDA Over 24 Months Gross Output 1909.54 1211.10 1219.68 Gross Output less Replacement Costs 1303.57 593.86 722.93 Feed and Forage Costs 32.12 283.48 248.34 Vet & Med 10.44 15.91 14.53 Other Variable Costs (bedding, ear tags etc.) 132.79 96.65 94.07 Total Variable Costs £175.35 396.04 356.94 Gross Margin per head 1128.22 197.82 365.99 Labour (paid and unpaid) 128.57 90.24 140.69 Machinery Repairs and Contracting 46.50 42.26 65.24 Depreciation 170.70 82.21 93.49 Other Fixed Costs 215.56 136.89 150.97 Total Fixed Costs (before rent) 561.33 351.60 450.39 Net Margin per head (before rent) 566.89

• 153.78
• 84.40

Stocking Rate (where a 12 – 24 month beef animal = 0.65LU) 0.95 LU/ha (1.46 head/ha) 1.7 LU/ha (2.61 head/ha) 1.4 LU/ha (2.15 head/ha) Indicative Net Margin per ha (before rent) £828

• £401
• £181.46

Beef Finishing (Non SDA Farms) – Performance Compared

Herds in sample 3 31 17 Average herd size (cattle) 25 63 54 Number of full grass grazing weeks 31 18 30 Average age at start (days) 310 213 189 Average age at sale (days) 700 (23 months) 623 (21 months) 761 (25 months) Finished/Store % 91/9 97/3 89/11 Total DM concentrate fed (kg/head) 1151 737 Average liveweight at start (kg) 239 279 223 Average liveweight at sale (kg) 622 605 609 Daily liveweight gain (kg/day) 0.9 0.8 0.7 Liveweight sale price finished (£ per kg lwt) 3.07 1.99 1.99

It Can Be Done – Beef Finishing Overview

Financial Performance

• Higher output – The PFLA sample includes two organic producers who sell much of

their premium Pasture for Life beef direct to consumers, as well as one conventional farmer selling deadweight to a processor. These routes to market are reflected in a healthy output figure per head

• Excellent gross margins – High output coupled with very low variable costs result in

a substantial gross margin

• Higher fixed costs - Higher labour, depreciation and contracting costs result in

increased fixed costs. This, in-part, reflects the additional costs of direct marketing

• Positive net margin - The Stocktake average and top third producers both show a

negative position at current prices. The Pasture for Life systems show a positive net margin

It Can Be Done – Beef Finishing Overview

Physical Performance

• PFLA farmers are committed to forage based systems and concentrate use is

eliminated

• Daily liveweight gain exceeds the industry top third producers
• Average age of calf at start is higher (longer suckling stage) but comparable

finishing age

• Seeking premium prices results in a higher liveweight sale price per kg.

It Can Be Done – Beef Finishing Overview

Financial Performance

• The PFLA average figures for beef finishing show the margins achievable when

direct marketing

• If all finished stock was sold liveweight at the industry average of £1.99/kg, a gross

margin of £632/head would be seen

• If the average fixed costs of £352 were achieved (direct selling costs removed), the

net margin would fall to £105/head

• This is still significantly higher than the industry average (most are losing £84 to

£154/head)

It Can Be Done – Conclusions

Analysis of the economic case (before rent) shows that:

• Lowland Sheep – PFLA farmers can rival the top third of producers with a net

margin of £43/ewe

• Suckler Cows – PFLA farmers echo the industry average and lose money on every

suckler cow with a net margin

• f -£55/head
• Beef Finishing - the average beef farmer loses money on every finished animal.

PFLA farmers can produce a positive net margin between £105 to £567/head, depending on route to market

It Can Be Done – Conclusions

• Reduce feed costs

• Draw on (and rebuild) natural capital

• Produce a quality food product

• Take more control of the value chain

It’s a no brainer (no grainer)

It Can Be Done – Conclusions

An Indicative Whole Farm Net Margin

(200ha Pasture-fed lowland farm v industry average)

Pasture Fed net margin/head Pasture Fed Total Industry Average net margin/head Industry Average Total

1000 ewes

£43 £43,000 £9 £9000

60 sucklers

• £55
• £3,300
• £93
• £5580

60 beef finishers

£105 £6,300

• £84
• £5040

Margin from Production

£46,000

• £1620

Rent/ha

£267

• £53,400

£267 £53,400

BPS/ha

£180 £36,000 £180 £36,000

Whole Farm Net Margin

£28,600

• £19,020
• The average farm is losing money
• The Pasture for Life farm is profitable but still reliant on BPS
• Additional income from direct sales and agri-environment is crucial
• Additional benefits and true costs need to be added – soil carbon,

pollination, economic multipliers, N externalities etc.

It Can Be Done

Rearing livestock on nothing but pasture makes economic sense… but what about the nutritional considerations?

Pasture for Life - It Can Be Done The Nutrition Case Luppo Diepenbroek

Independent Consultant Trading as Straight Line Nutrition Ltd

Nutrition in relation to Pasture for Life

• Plenty of pasture mass and conserved forage availability
• Optimum Intake Factor of pasture and conserved forage
• Balanced mainly on Protein (CP), Fibre (NDF) and Sugar
• Suitable mineral levels
• Old Chinese Proverb: Medicine is used when nutrition fails

Adequate pasture mass? ➔ Measure!

Grass species in the sward

Ryegrass Yarrow Meadow grass Bird’s Foot Trefoil Cocksfoot Buttercup Timothy Red clover Yorkshire Fog White clover Foxtail Lucerne Crested Dog’s tail Purple Moor-grass Chicory Plantain

A rich diversity!

Clover

Ultimate diet test

Low protein, dung is solid

Ultimate diet test High protein, dung is loose

Ultimate diet test Just right!

Pasture management

• Rotational grazing
• Set-stocking
• Rotational grazing in summer, set-stocked in winter
• Mob- grazing
• HLS Standard

All types of pasture management, but leaning towards rotational and mob- grazing!

Pasture Management ➔ Mob- grazing

Pasture Management ➔ Mob- grazing

Conservation of pasture

• Hay
• Haylage
• Silage
• Permanent pasture hay
• Lucerne silage
• Round bale silage
• Round bale hay

All types of pasture conservation!

Clamp silage

Clamp silage

Summary

• Long grazing periods on diverse pastures, provide adequate

growth in cattle and sheep

• When making conserved forage, ensure the sun is shining and the

pasture is clean to increase forage palatability

• Manage the soil, pasture and cattle well and you will be rewarded!
• Managing beef cattle and sheep just on pasture can be done!

Pasture for Life - It Can Be Done The Farmer’s Case Dan Bull

Farm Manager Sheepdrove Organic Farm