Beef and lamb provide better news – but complacency is still a threat

Beef and sheep farmers can look forward to the future with some confidence as a result of sustained improvements in finished prices and this will bring improved business surpluses despite increased costs.

But after providing that optimistic view of livestock incomes, farm business consultants Andersons are advising producers not to be complacent when appraising their businesses.

“The most successful farmers constantly monitor their activities and are able to make instant and informed decisions. Any beef and sheep business needs to constantly evolve, whether to meet changes in the market place, in response to policy changes or to make best use of available assets,” the firm said.

“The current high market returns provide an ideal opportunity for businesses to make assessment and react accordingly.”

Looking forward, the consultants believe that beef and sheep meat prices are likely to remain “robust” at least in the medium term owing to ongoing supply constraints and changing global market patterns.

A great deal depends in individual farms as to when the stock is marketed as to when they gain the full benefit of the increased cattle prices.

In the lamb market, there is still the seasonal move in prices, but they predict the reduced general supply and continued European demand will mean that lamb returns even in the late season will be significantly better this year and probably next in comparison to previous years.

Despite the optimistic picture, Andersons believe that the majority of livestock based businesses, still rely on income from Single Payment and agri-environment receipts to achieve a business surplus. They warn that in light of the suggested direction of the Common Agricultural Policy after 2013, it would be unwise for any business to assume the current payment levels will remain beyond 2014.

The consultants admit that the buoyant output levels of livestock farms are subdued to some extend by the increasing cost base.

“Year-on-year variable cost rises have been particularly notable, specifically in relation to vet and medicines, concentrates and other sundry livestock costs.”

Overhead costs also continue to increase at the rate of inflation or higher but Andersons believe that many opportunities are present for beef and sheep businesses to improve performance in this area – often through collaboration.