e-profit Monitor Analysis Drystock Farms 2012 Teagasc e-profit Monitor Analysis Drystock Farms 2012

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1 e-profit Monitor Anaysis Drystock Farms 2012 Teagasc e-profit Monitor Anaysis Drystock Farms 2012

2 e-profit Monitor Anaysis Drystock Farms 2012 CONTENTS Drystock Farms 2012 Introduction 1 Catte farms - e Profit Monitor Anaysis Comparison of 2011 to Sucking Farms Sucking to Beef Farms Sucking to Weaning/Store Farms Non-Breeding Farms Profit Focus Farms Sheep Farms e Profit Monitor Anaysis Comparison of 2011 to 2012 (Mid-Season Focks) 18 Lowand Sheep 2012 (Mid-Season Focks) 21 Hi Sheep Appendices Appendix 1: Costs breakdown on catte farms 28 Appendix 2: Teagasc / IFJ BETTER Beef 30 Programme 2012 performance Appendix 3: Financia performance on Teagasc 32 BETTER Sheep farms 2012 performance Concusions 35 Acknowedgements 36 AUTHORS TEAGASC SPECIALIST SERVICE

3 e-profit Monitor Anaysis Drystock Farms 2012 Drystock Farms 2012 The Teagasc e-profit Monitor is an internet based system which aows drystock farmers and their advisers to enter physica and financia data on their farm enterprises onine. It is avaiabe through the Teagasc cient site on As an advisory service if we are to give good advice and hep you make sound decisions as to what direction your business shoud take in the future then we need to estabish how the farm is currenty performing. Having a competed eprofit Monitor wi aow us to examine key indicators such as Farm Output, Variabe and Fixed costs and your current Gross Margin per hectare (excuding a premia payments). Having this information wi eave you in the best position to pan for the future and adapt the current farming system to the chaenges ahead. This year s booket summarises the resuts from 1,062 catte farms across the country and 227 owand sheep farms pus 40 hi sheep farms. Within the catte grouping, 847 were categorised as sucking farms and 215 as non-breeding farms. These farms are considered to be among the Top 25% of catte farms in the country when compared with those that are randomy seected for the Teagasc Nationa Farm Survey (NFS). The 227 owand sheep farms are returning a simiar gross margin to the average for sheep farms in the NFS and it is a consistent feature that the sheep farms with profit monitors are no better than the NFS average. Where data is presented in the form of Top or Bottom 1/3s, the farms are ranked on the basis of gross margin excuding premia per hectare. Gross margin excuding premia per hectare is an important indicator because it highights the current eve of technica efficiency at which the enterprise is operating as we as showing the potentia for improvement. There is a high correation between this figure and net profit per hectare. When we refer to premia throughout the anaysis, it refers to the Singe Farm Payment and, where appicabe, the Compensatory Aowance Scheme payment, REPS payments, AWRBS payments on sucker cows, BTAP payments and the Sheep Grassand Scheme. Appendix 2 features the profit monitor resuts for the farms participating in the Teagasc/Irish Farmers Journa BETTER beef programme and shows the progress achieved. This programme has the cear aim of increasing profitabiity on the participating farms (and infuencing other farms) and has a target of f1,000 gross margin per hectare at the end of the three year period. Appendix 3 features the financia performance of the sheep enterprise on farms participating in Teagasc BETTER Sheep programme. Pearse Key, Head of Drystock Knowedge Transfer 1

4 e-profit Monitor Anaysis Drystock Farms 2012 Catte Farms eprofit Monitor Anaysis 2012 Comparison 2011 v 2012 (Catte Farms) TABLE 1 beow represents 306 beef farms (both sucker and non-breeding beef farms) that competed a Teagasc eprofit Monitor for both 2011 and It aows us to compare the physica and financia performance from a matched sampe of farms across the two years. Tabe 1: Comparison of costs and income on the same farms in two years Profit Monitors Catte Farms Matched Sampe (306 Farms) % Change Physica Stocking Rate LU/ha % Liveweight Produced kg/ha kg/lu 590 kg 353 kg 619 kg 350 kg +5% -1% Financia /ha Output Vaue 1,157 1, % Variabe Costs % Gross Margin Exc. Premia % Fixed Costs % Profit Exc. Premia % Tota Premia* % Premia Retained* 106% 118% +12% (* Incudes Singe Farm Payment, REPS, CAS, Sucker Wefare premium & BTAP payment) The main points from TABLE 1 are: Stocking rate increased from 1.67 LU/ha. to 1.77 LU/ha., a 6% increase. The increase in stocking rate meant there was a 5% increase in the amount of beef iveweight produced per hectare across the 306 farms. Gross output vaue per hectare increased by 16% from 2011 to 2012 rising by 183 per hectare. Variabe costs per hectare aso rose by 14% representing an j86 per hectare increase. As a % of gross output variabe costs remained above 50%. 2

5 e-profit Monitor Anaysis Drystock Farms 2012 Due to the gross output per hectare rising by more than the increase per hectare in variabe costs, the gross margin per hectare rose by 18% in the two years or k97 per hectare. Fixed costs per hectare rose by 5% or k25 per hectare. There was a 190% increase in profit excuding premia per hectare between 2011 and 2012 on average across the 306 farms rising from 38 to 110 per hectare. Tota premia retained per hectare rose by 11% due to the increase in profit per hectare. TABLE 2 shows the breakdown of variabe costs per hectare in 2012 compared to 2011 on the 306 farms that competed a Teagasc eprofit Monitor for both years. Tabe 2: Changes in Variabe Costs between 2011 and 2012 Catte Farms Matched sampe 306 farms Variabe Costs / ha Change % Concentrates % Fertiiser % Veterinary % Contractor % Other Variabe Costs % Tota Variabe Costs % The 14% rise in variabe costs per hectare from 2011 to 2012 was mosty due to a 31% rise in the amount spent per hectare on concentrates. The very poor weather conditions in 2012 woud have caused most of the rise in concentrate costs per hectare on beef farms. Fertiiser and veterinary costs per hectare aso rose by 6% and 7%, respectivey. Contractor costs per hectare dropped by 4% between 2011 and

6 e-profit Monitor Anaysis Drystock Farms 2012 TABLE 3 shows the breakdown of fixed costs per hectare in 2012 compared to 2011 on the 306 farms that competed a Teagasc eprofit Monitor for both years. Tabe 3: Changes in Fixed Costs between 2011 and 2012 Catte Farms Matched sampe 306 farms Fixed Costs / ha Change % Hired Labour % O/D, Loan Interest & Bank Charges % Machinery Running Costs % Car / ESB / Phone % Depreciation % Repairs & Maintenance % Insurance Land Lease Other Fixed Costs % Tota Fixed Costs % The 5% rise in fixed costs per hectare was due to a number of different fixed costs rising. Repairs and maintenance costs per hectare rose by the highest amount with a 14% increase. Machinery running costs per hectare rose by 8%. Some of this woud have been due rises in fue costs. Interest per hectare dropped between 2011 and 2012 by 7%. 4

7 e-profit Monitor Anaysis Drystock Farms 2012 Sucking Farms 2012 TABLE 4 shows the anaysis per hectare on 847 beef farms that competed a Teagasc eprofit Monitor for 2012 where a sucker herd was their main beef enterprise. It shows the Average aong with the Top and Bottom 1/3 of farms (based on gross margin excuding premia per hectare). Tabe 4: A Sucking Farms 2012 per hectare anaysis Profit Monitor (847 Farms) Top 1/3 Average Bottom 1/3 Top v Bottom Physica Farm Size ha Stocking Rate LU/ha Liveweight Produced kg/lu 341 kg 307 kg 233 kg +108 Liveweight Produced kg/ha 664 kg 485 kg 294 kg +370 Financia f/ha Gross Output Vaue k1,503 k1,054 k569 +k934 Variabe Costs k693 k585 k488 +k205 Gross Margin k809 k469 k81 +k728 Fixed Costs k127 Net Profit exc. Premia k255 -k26 -k346 +k601 Tota Premia * k618 k566 k508 +k110 Tota Premia Retained * 141% 95% 32% Singe Farm Payment k466 k394 k321 +k145 Singe Farm Payment Retained 187% 137% 51% (* Incudes Singe Farm Payment, REPS, CAS, Sucker Wefare premium & BTAP payment) The main points from TABLE 4 are: The average stocking rate across the 847 sucking farms was 1.58 LU per hectare. The Top 1/3 farms carried an extra 0.69 LU per hectare compared to the Bottom 1/3 farms (1.95 vs LU per hectare). 307 kg of beef iveweight per ivestock unit was produced on average. The Top 1/3 farms produced an extra 108 kg of iveweight for every ivestock unit on the farm compared to the Bottom 1/3 of farms. When the higher stocking rate on the Top 1/3 of farms is combined with the higher beef output per ivestock unit on the same farms the output of iveweight per hectare from the Top 1/3 of farms was more than doube the beef produced per hectare on the Bottom 1/3 of farms. 5

8 e-profit Monitor Anaysis Drystock Farms 2012 The significanty higher kg of beef iveweight per hectare on the Top 1/3 of farms foows through to a higher gross output on these farms compared to the Bottom 1/3 of farms. At a gross output per hectare of 1,503 they were amost 1,000 higher per hectare compared to the Bottom 1/3 at 569 per hectare. On a 40 hectare farm that woud be amost 40,000 extra of a gross output from the farm per year. Whie the Top 1/3 of farms had a significanty higher gross output per hectare compared to the Bottom 1/3 of farms their variabe costs per hectare were ony an extra 205 per hectare (693 vs.488 per hectare). This represents a much more efficient use of variabe costs on the Top 1/3 of farms. For every 1 spent on their variabe costs they achieved 2.17 of a gross output compared to the Bottom 1/3 of farms who ony achieved a gross output of 1.17 for every 1 they spent on variabe costs. Whie the Top 1/3 of farms were operating at variabe costs that were 46% of their farms gross output the equivaent figure on the Bottom 1/3 was a massive 86%. A breakdown of the variabe costs is given in Appendix 1. The average gross margin per hectare from the 847 sucker farms was 469. The Top 1/3 farms had an extra 728 per hectare of a gross margin compared to the Bottom 1/3 due to the higher gross output combined with a modest increase in variabe costs. Due to the higher output the Top 1/3 of farms carried more fixed costs per hectare compared to the Bottom 1/3 of farms (an extra 126 per hectare). With more stock there wi be more housing and machinery costs. This can be seen in the breakdown of the fixed costs in Appendix 1. Net profit excuding premia was on average a oss of 26 per hectare for the 847 farms. The Bottom 1/3 of farms operated at a oss of 346 per hectare compared to the Top 1/3 of farms at a profit of 255 per hectare, a 601 per hectare difference. The Bottom 1/3 of sucking farms ony hed onto 32% of the tota premia that came into their farms with the rest being used to cover farm running costs. The Top 1/3 hed onto a of their premia and had their net profit per hectare to go with it. 6

9 e-profit Monitor Anaysis Drystock Farms 2012 Figure 1 Identifies the key variabes that infuenced gross output and consequenty gross margin per hectare on the sucking farms. Stocking rate was 55% higher on the Top 1/3 of farms compared with the Bottom 1/3. In addition to the higher stocking rate the beef output per ivestock unit was 46% higher on the Top 1/3 with both combining to produce a gross margin 10 times higher on the Top 1/3 of farms. FIGURE 1 Sucking Farms Gross Margin Per Hectare , LU / ha. 1, kg LW per LU LU / ha. 809 Per Hectare LU / ha. 233kg LW per LU kg LW per LU Bottom 1/3 Average Top 1/3 7

10 e-profit Monitor Anaysis Drystock Farms 2012 Sucking to Beef Farms 2012 TABLE 5 shows the anaysis per hectare for 2012 on the 223 sucker farms where the progeny were brought through and finished as beef. It shows the Average aong with the Top and Bottom 1/3 of farms (based on gross margin excuding premia per hectare). Tabe 5: Sucking to Beef Farms 2012 per hectare anaysis Profit Monitor (223 Farms) Top 1/3 Average Bottom 1/3 Top v Bottom Physica Farm Size ha Stocking Rate LU/ha Liveweight Produced kg/lu 364 kg 335 kg 276 kg +88 Liveweight Produced kg/ha 778 kg 583 kg 392 kg +386 Financia f/ha Gross Output Vaue k1,786 k1,273 k772 +k1,014 Variabe Costs k814 k671 k573 +k241 Gross Margin k972 k602 k199 +k773 Fixed Costs k615 k541 k489 +k126 Net Profit exc. Premia k357 k61 -k290 +k647 Tota Premia * k637 k580 k535 +k102 Tota Premia Retained * 156% 110% 46% Singe Farm Payment k496 k430 k370 +k126 Singe Farm Payment Retained 200% 149% 66% (* Incudes Singe Farm Payment, REPS, CAS, Sucker Wefare premium & BTAP payment) The main points from TABLE 5 are: Compared to a sucking farms with a Teagasc eprofit Monitor for 2012 the differences between the Top 1/3 and Bottom 1/3 of farms were even greater when the farms that were bringing the progeny through to beef were ooked at as a separate group. Comparing the Top 1/3 to the Bottom 1/3 per hectare of sucking to beef farms:- Liveweight produced was 386 kg higher Gross Output was 1,014 higher Variabe costs were 241 higher Variabe costs as a % of gross output were 46% compared to 74% 8

11 e-profit Monitor Anaysis Drystock Farms 2012 Gross margin was 773 higher Fixed costs were 126 higher Net profit excuding premia was 647 higher The Bottom 1/3 of sucking to beef farms ony hed onto 46% of the premia that came into their farms whereas the Top 1/3 of sucking to beef farms hed onto a of their premia to add to their net profit of 357 per hectare. Figure 2 Identifies the key variabes that infuenced gross output and consequenty gross margin per hectare on the sucking to beef farms. Stocking rate was 51% higher on the Top 1/3 of farms compared with the Bottom 1/3. In addition to the higher stocking rate the beef output per ivestock unit was 32% higher on the Top 1/3 with both combining to produce a gross margin amost 5 times higher on the Top 1/3 of sucking to beef farms. FIGURE 2 Sucking to Beef Farms Gross Margin Per Hectare LU / ha. 1,200 1, LU / ha. 364 kg LW per LU kg LW per LU Per Hectare LU / ha. 276 kg LW per LU Bottom 1/3 Average Top 1/3 9

12 e-profit Monitor Anaysis Drystock Farms 2012 Sucking to Weaning/Store Farms 2012 TABLE 6 shows the anaysis per hectare for 2012 on the 624 sucker farms where the progeny were sod as either weanings or stores. It shows the Average aong with the Top and Bottom 1/3 of farms (based on gross margin excuding premia per hectare). Tabe 6: Sucking to Store/Weaning Farms 2012 per hectare anaysis Profit Monitor (624 Farms) Top 1/3 Average Bottom 1/3 Top v Bottom Physica Farm Size ha Stocking Rate LU/ha Liveweight Produced kg/lu 319 kg 287 kg 226 kg +93 Liveweight Produced kg/ha 594 kg 436 kg 283 kg +310 Financia/ha Gross Output Vaue 1, Variabe Costs Gross Margin Fixed Costs Net Profit exc. Premia Tota Premia * Tota Premia Retained * 134% 88% 26% Singe Farm Payment Singe Farm Payment Retained 184% 131% 41% (* Incudes Singe Farm Payment, REPS, CAS, Sucker Wefare premium & BTAP payment) The main points from TABLE 6 are: Again there were significant differences in the financia performance per hectare comparing the Top 1/3 with the Bottom 1/3 of sucker farms that sod weanings or stores due to a much higher output of beef produced per hectare (an extra 310 kg of iveweight). The higher output of iveweight per hectare was due to the higher stocking rate (an extra 0.61 ivestock units per hectare) and the extra iveweight produced per ivestock unit (an extra 93 kg). Gross margin per hectare was 670 higher on the Top 1/3 of farms compared to the Bottom 1/3 and they earned an extra 586 per hectare profit excuding premia. The sucker farms seing weanings or stores had a ower gross margin 10

13 e-profit Monitor Anaysis Drystock Farms 2012 and net margin per hectare excuding premia compared to the sucking to beef farms (TABLE 5). Output of beef iveweight per hectare was 147 kg ower on the sucking to weaning / store farms compared to the sucking to beef farms due to a ower average stocking rate (1.52 vs LU per hectare) and a ower amount of beef produced per ivestock unit (287 vs. 335 kg). Gross output on the sucking to weaning / store farms was 328 per hectare ower than the sucking to beef farms due amost entirey to the ower amount of beef iveweight produced per hectare. Variabe costs on the sucking to weaning / store farms were 129 per hectare ower than those on the sucking to beef farms due for the most part to a ower reiance on concentrates. However, as a % of gross output they were higher (57% vs. 53%) on the sucking to weaning / store farms. The sucking to beef farms had a 49% higher gross margin per hectare compared to the sucking to weaning / store farms (602 vs. 404 per hectare) due to their higher output per hectare. Even the though the average fixed costs per hectare on the sucking to weaning / store farms were ower, their net profit excuding premia was sti negative at -68 compared to the 61 per hectare profit on the sucking to beef farms. The sucking to weaning / store farms hed onto 88% of the a the premia that came into their farm in 2012 with the remaining 12% going towards farm running costs. 11

14 e-profit Monitor Anaysis Drystock Farms 2012 Figure 3 Identifies the key variabes that infuenced gross output and consequenty gross margin per hectare on the sucking to weaning / store farms. Stocking rate was 49% higher on the Top 1/3 of farms compared with the Bottom 1/3. In addition to the higher stocking rate the beef output per ivestock unit was 41% higher on the Top 1/3 with both combining to produce a gross margin over 12 times higher on the Top 1/3 of sucking to weaning / store farms. FIGURE 3 Sucking to Weaning / Store Farms Gross Margin Per Hectare , LU / ha. 1, kg LW per LU LU / ha. 728 Per Hectare LU / ha. 287 kg LW per LU kg LW per LU 58 0 Bottom 1/3 Average Top 1/3 12

15 e-profit Monitor Anaysis Drystock Farms 2012 Non-Breeding Farms 2012 TABLE 7 shows the anaysis per hectare for 2012 on the 215 beef farms that either did not have sucker cows or where there were some cows they made up a very sma proportion of the beef herd on the farm. It shows the Average aong with the Top and Bottom 1/3 of farms (based on gross margin excuding premia per hectare). Tabe 7: Non Breeding Farms 2012 per hectare anaysis Profit Monitor (215 Farms) Top 1/3 Average Bottom 1/3 Top v Bottom Physica Farm Size ha Stocking Rate LU/ha Liveweight Produced kg/lu 499 kg 397 kg 268 kg +231 Liveweight Produced kg/ha 883 kg 595 kg 364 kg +519 Financia /ha Gross Output Vaue 2,122 1, ,410 Variabe Costs 1, Gross Margin 1, Fixed Costs Net Profit exc. Premia Tota Premia * Tota Premia Retained * 155% 100% 23% Singe Farm Payment Singe Farm Payment Retained 179% 126% 30% (* Incudes Singe Farm Payment, REPS, CAS, Sucker Wefare premium & BTAP payment) The main points from TABLE 7 are: The average stocking rate was 1.50 ivestock units per hectare with the Top 1/3 of farms at 1.77 ivestock units per hectare compared to the Bottom 1/3 at 1.36 ivestock units per hectare. Simiar to the sucker farms the Top 1/3 produced a significanty higher output of beef iveweight per hectare compared to the Bottom 1/3 due to producing amost doube the amount per ivestock unit aong with having a higher stocking rate. The Top 1/3 of non-breeding beef farms produced over haf a ton extra beef iveweight per hectare compared to the Bottom 1/3 of non-breeding beef farms. 13

16 e-profit Monitor Anaysis Drystock Farms 2012 The Top 1/3 of non-breeding beef farms had amost three times the gross output per hectare compared to the Bottom 1/3 of non-breeding beef farms a 2,122 vs. 713). The extra beef produced per hectare was one of the reasons for this but differences in prices paid per kg for bought in stock (caves / weanings / stores) and the seing prices achieved per kg (ive or dead) when they are sod aso heaviy infuence this figure. Even though the variabe costs per hectare were much higher on the Top 1/3 of non-breeding farms compared to the Bottom 1/3 of non-breeding farms (1,084 vs.629) the extra 1,409 per hectare gross output more than compensated for these extra costs to eave a gross margin per hectare of 1,039 on the Top 1/3 of farms compared to just 84 per hectare on the Bottom 1/3 of farms. The variabe costs as a % of gross output on the Top 1/3 of farms was 51% whereas it was 88% on the Bottom 1/3 of farms. A breakdown of the variabe costs is given in Appendix 1. Fixed costs per hectare were ony modesty higher (an extra 125) on the Top 1/3 of non-breeding beef farms compared to the Bottom 1/3 of farms resuting in an 830 per hectare difference in the net margin excuding premia when comparing the Top 1/3 with the Bottom 1/3 of non-breeding beef farms. A breakdown of the fixed costs is given in Appendix 1. The Bottom 1/3 of non-breeding beef farms had a ower premia eve per hectare compared to the Top 1/3 of non-breeding beef farms and ony hed onto 23% of it. The Top 1/3 hed onto a of their premia payments to add to their 405 per hectare net profit. 14

17 e-profit Monitor Anaysis Drystock Farms 2012 Figure 4 Identifies the key variabes that infuenced gross output and consequenty gross margin per hectare on the non-breeding beef farms. Stocking rate was 30% higher on the Top 1/3 of farms compared with the Bottom 1/3. In addition to the higher stocking rate the beef output per ivestock unit was 86% higher on the Top 1/3 with both combining to produce a gross margin over 12 times higher on the Top 1/3 of non-breeding beef farms. FIGURE 4 1,200 1,000 Non-Breeding Beef Farms Gross Margin Per Hectare LU / ha. 499 kg LW per LU 1,039 Per Hectare LU / ha LU / ha. 397 kg LW per LU kg LW per LU 84 0 Bottom 1/3 Average Top 1/3 15

18 e-profit Monitor Anaysis Drystock Farms 2012 Beef Profit Focus Farms TABLE 8 shows the anaysis per hectare from 2010 to 2012 on 53 Beef Profit Focus Farms. These farms were seected in 2011 by their Teagasc advisers as farmers that have a strong interest in increasing their profitabiity per hectare through appying recommended technoogies that that wi boost farm output per hectare. They are a impementing farm pans that were drawn up between them and their adviser, with 2012 being the second year in their five year pan. Tabe 8: Catte Profit Focus Farms 2010 to 2012 per hectare anaysis Profit Monitor (53 Farms) % Change Physica Farm Size ha % Catte ha % Stocking Rate LU/ha % Liveweight Produced kg/lu % Liveweight Produced kg/ha % Financia /ha Gross Output Vaue % Variabe Costs % Gross Margin % Fixed Costs Net Profit exc. Premia Tota Premia * % Tota Premia Retained * 75% 109% 122% Singe Farm Payment % Singe Farm Payment Retained 99% 142% 156% (* Incudes Singe Farm Payment, REPS, CAS, Sucker Wefare premium & BTAP payment) The main points from TABLE 8 when comparing 2012 to 2010 are: Stocking rate has increased by 7% rising from 1.72 to 1.84 ivestock units per hectare. An extra 11% of beef iveweight has been produced per hectare due to an increase in the amount produced per ivestock unit (+3%) and the extra stock carried per hectare (+7%) Gross output per hectare has gone from 892 to 1,330 per hectare, a 49% increase. This is due to the extra beef iveweight produced per hectare and aso a rise in the price of beef over that period. 16

19 e-profit Monitor Anaysis Drystock Farms 2012 Variabe costs have aso risen from 566 to 702 per hectare. However, with a 438 rise in gross output per hectare the extra 136 in variabe costs is more than covered giving an increase in gross margin per hectare of 300. This represents a 92% increase in gross margin per hectare in a two year period. The variabe costs as a % of gross output fe from 63% in 2010 to 53% in There was a very sma (+ 4%) increase in fixed costs which meant that most of the extra gross margin was retained as extra profit per hectare. Net profit per hectare excuding premia rose by 282 per hectare. Across the average farm size of 57 hectares this comes to an increase of over 16,000 in net profit. Premia retained on the farm rose from 75% in 2010 to retaining a of it in 2012 aong with a net profit per hectare of 129. Figure 5 Identifies the key variabes that infuenced gross output and consequenty gross margin per hectare on the Beef Profit Focus Farms. From 2010 to 2012 stocking rate increased by 7% and beef output per ivestock unit increased by 3%. Gross margin per hectare increased by 92%. FIGURE 5 1,000 Beef Profit Focus Farms Gross Margin Per Hectare LU / ha LU / ha. 325 kg LW per LU Per Hectare LU / ha. 315 kg LW per LU kg LW per LU

20 e-profit Monitor Anaysis Drystock Farms 2012 Sheep Farms e Profit Monitor Anaysis 2012 Comparison of 2011 to 2012 (Mid-Season Focks) TABLE 9 beow provides a comparison of 49 sheep farms that competed a profit monitor for both 2011 and 2012 (mainy mid season owand focks). It aows us to compare the physica and financia performance from a matched sampe of farms across two years. Tabe 9: Comparison of costs and income on same sheep farms over two years Profit Monitors Matched sampe for 2011 & 2012 (49 farms) mid season owand focks Difference Change % Physica data Stocking rate LU/ha % Ewes to ram % Lambs reared per ewe joined to % ram Lambs reared per hectare Ewe ambs retained % Financia (d) Average amb price d105 d98 -d7-7% Gross Output per ha d1227 d1152 -d75-6% Variabe Costs per ha d546 d588 +d42 +8% Gross Margin per ha d681 d563 -d118-17% Fixed Costs per ha d490 d462 -d28-6% Net Margin per ha d190 d101 d89-47% The farms contained in this anaysis have predominanty mid season owand enterprises. In terms of output, there was a decrease in ambs reared per ewe to ram (-3%). However, stocking rate increased (+3%). The combination of these factors ed to a sma increase in the number of ambs reared per hectare from 12.5 to There was a 7% decine in average amb price. Consequenty gross output decreased by 6% or d75 per hectare. In the 49 focks, ewe numbers increased by 10% from 196 to 216 which is in ine with an overa increase in sheep numbers throughout the 18

21 e-profit Monitor Anaysis Drystock Farms 2012 country in recent years and indicates an increased confidence in sheep farming over that period. However, the number of ewe ambs retained as repacements decreased by 11% indicating concerns farmers may have once again over the future potentia for sheep. This may aso have arisen due to scarce grass suppies in ate summer and autumn Variabe costs increased by 8% over the year (see Tabe 10). Whie most individua costs had modest increases, the greatest monetary increase was in the cost of concentrates which increased by 21% from d178 to d215 per hectare. The decrease in output combined with the increase in variabe costs resuted in a decine in gross margin by d118 per hectare (17%). A detaied anaysis of the fixed costs is presented in Tabe 11. Overa fixed costs decreased by 6% in The main savings arose in depreciation with sma reductions in most other areas. However, much of the savings were canceed out by an increase of 13% on hired abour. The combined effect of the factors outined above resuted in the net profit decining in 2012 by d89 per hectare. This represented a 47% decine from d190 to d101 per hectare, eaving a sma profit being achieved from production. TABLE 10 demonstrates price changes in some of the major input costs on sheep farms that competed a profit monitor in both 2011 and Tabe 10: Changes in Variabe Costs between 2011 and 2012 Matched sampe 49 farms Variabe Costs d / ha Change % Concentrates d178 d % Fertiiser & Lime d119 d123 +3% Veterinary d94 d98 +4% Contractor d76 d71-7% Straw d17 d22 +29% Tota Variabe Costs d546 d588 +8% 19

22 e-profit Monitor Anaysis Drystock Farms 2012 A of the main variabe cost items increased except for contractor charges which were down by 7%. The greatest percentage increase arose in the cost of straw. This is ikey to refect the difficuty caused by very wet weather throughout 2012, eading to a scarcity of quaity straw and a scarcity of winter feed. Concentrate cost aso rose significanty by 21%. This is ikey to be due to an increase in the price of concentrates pus additiona quantities used. Extra concentrates were required due to grass scarcity and poor grazing conditions particuary in the autumn of 2012 as we as poor quaity and scarce suppies of winter feed. TABLE 11 examines how fixed costs have changed from 2011 to Overa spending on fixed costs for this group of farms has decreased by 6%. Tabe 11: Changes in Fixed Costs between 2011 and 2012 Matched sampe 49 farms Fixed Costs d / ha Change % Hired Labour d48 d54 +13% O/D, Loan Interest & Bank Charges d19 d17-11% Car / ESB / Phone d60 d57-5% Depreciation d84 d60-29% Repairs & Maintenance d59 d56-5% Insurance d31 d32 +3% Land Lease d53 d51-4% Tota Fixed Costs d490 d462-6% 20

23 e-profit Monitor Anaysis Drystock Farms 2012 Lowand Sheep 2012 (Mid-Season Focks) TABLE 12 shows the anaysis for the 2012 eprofit Monitor for sheep and is based on the returns of 227 sheep farms that were primariy invoved in mid- season amb production. Farms are ranked on the basis of gross margin per hectare, excuding premia and divided into the Top 1/3, Average and Bottom 1/3. Tabe 12: Sheep per Hectare Anaysis 2012 (227 farms) Top 1/3 Average Bottom 1/3 Physica Performance Fock size Stocking rate(lu/ha) Ewes/ha Lambs reared per ewe to ram Lambs reared per hectare Financia Performance d/ha Gross output d1394 d957 d529 Variabe costs d573 d486 d415 Gross margin d820 d471 d114 Fixed costs d600 d450 d291 Net profit exc premia d220 d21 -d176 Net profit incude a premia* d635 d430 d276 % Premia* retained 209% 105% 61% Average amb price d / head d98 d95 d86 (* Incudes Singe Farm Payment, REPS, CAS, Sheep Grassand Scheme) 21

24 e-profit Monitor Anaysis Drystock Farms 2012 Average fock size for the Top 1/3 was over 87% (85 ewes) greater than fock size for the Bottom 1/3. The Top 1/3 aso had a significanty higher stocking rate at 10 ewes per hectare compared to 6 ewes per hectare for the Bottom 1/3. Furthermore, there was an extra 0.33 ambs reared per ewe put to the ram for the Top 1/3. The combined effect of the higher stocking rate and higher weaning rate resuted in 7.6 extra ambs reared per hectare. This was argey what ed to the higher output figure of an extra d865 per hectare and is the foundation for the higher gross margin and higher profit achieved. The average gross margin was d471 per hectare. However, the gross margin per hectare for the Top 1/3 at d820 was d706 higher than that of the Bottom 1/3. The gross margin per hectare for the Top 1/3 in 2012 was more than seven times greater than that of the Bottom 1/3. Whie a farmers operated in the same market, farmers in the Top 1/3 were paid d12 per amb more than farmers in the Bottom 1/3. 22

25 e-profit Monitor Anaysis Drystock Farms 2012 Figure 6 shows the variation in gross margin across the three groups. It identifies the key variabes that infuenced gross output and consequenty margin per hectare on the 227 sheep farms. The main contributing factors infuencing the difference in gross margin per hectare were: 1. Lambs reared per ewe to the ram 1.43 for the Top 1/3 compared with 1.11 for the Bottom 1/3. 2. Higher stocking rate, 10 ewes compared with 6 ewes per hectare. 3. Lambs weaned per hectare, 14.3 compared with Higher amb price, d98 compared with d86 FIGURE 6 1,200 Lowand Sheep - Gross Margin Per Hectare Ewes/Ha Per Hectare 1, Ewes/Ha 1.30 Lambs/ewe Lambs/ewe Ewes/Ha 1.11 Lambs/ewe Bottom 1/3 Average Top 1/3 23

26 e-profit Monitor Anaysis Drystock Farms 2012 TABLE 13 shows the output, costs and margins on a per ewe basis for owand sheep farms that competed a profit monitor for Farms are categorised as Top 1/3, Average and Bottom 1/3, ranked on the basis of gross margin per hectare. Tabe 13: Per ewe to the ram anaysis 2012 (227 farms) Top 1/3 Average Bottom 1/3 Physica Performance Lambs reared per ewe to ram Financia Performance d /Ewe Gross Output d139 d124 d88 Variabe Costs d57 d63 d69 Gross Margin d82 d61 d19 Fixed Costs d60 d58 d48 Nett Profit exc Premia d22 d3 -d29 Average Lamb Price d / head d98 d95 d86 Output per ewe for the Top 1/3 was d51 higher than for the Bottom 1/3. An extra 0.32 ambs weaned per ewe to the ram increased output by d31/ ewe. There was a further increase due to an extra d12 per amb worth d13 per ewe. The four main variabe costs incuding purchased feed, fertiizer and ime, veterinary costs and contractor costs accounted for over 87% of tota variabe costs. Variabe costs per ewe were highest for the Bottom 1/3 at d69. When combined with the ower weaning % for the Bottom group it resuted in variabe costs per amb being over d22 greater than the variabe cost per amb for the Top 1/3. The average gross margin per ewe was d61. There was a arge variation with the Top 1/3 achieving a gross margin per ewe of d83 with just d19 achieved for the Bottom 1/3. In the average fock of 151 ewes, a farm in the Top 1/3 was achieving an extra gross margin of d9,362 over a fock of the same size in the Bottom 1/3. Fixed costs per ewe were d12 higher for farms in the Top 1/3 compared with those in the Bottom 1/3. However, when examined on a per amb basis, the fixed costs per amb were actuay marginay ower for the Top 1/3, with d42, d45 and d43 per amb for the Top, Average and Bottom 1/3, respectivey. 24

27 e-profit Monitor Anaysis Drystock Farms 2012 The net profit excuding premia was d22 per ewe for the Top 1/3, d3 per ewe for the Average and a oss of d29 per ewe for the Bottom 1/3. This represented a difference of d51 between the Top and Bottom 1/3 farms. Based on these figures sheep farmers in the Top 1/3 with the average ewe fock of 151 were achieving an extra profit of d2,869 compared to the Average and over d7,700 more than farmers in the Bottom 1/3. Costs per Ewe TABLE 14 shows the breakdown of the major variabe and fixed costs on a per ewe basis for the owand focks with a profit monitor for Tabe 14: Major costs per ewe to ram anaysis 2012 (227 farms) Top 1/3 Average Bottom 1/3 Tota Variabe Costs (d/ewe) (of which) Purchased Feed Fertiiser Veterinary Contractor Other Tota Fixed Costs (d/ewe) (of which) Machinery Running Labour Land Lease Depreciation Buidings Depreciation Machinery Repairs & Maintenance Car, ESB & Phone farm share Interest Other Purchased feed was the argest singe variabe cost on sheep farms in The average cost per ewe was d24. This equates with over d18 per amb weaned. Farms in the Top 1/3 spent approximatey d4 ess and those in the Bottom 1/3 spent approximatey d7 more per amb weaned compared with the average farms. The high eve of expenditure on purchased feed is of particuar concern given the abiity of Irish farms to grow grass, which is a much cheaper feed. 25

28 e-profit Monitor Anaysis Drystock Farms 2012 Contractor costs were d5 per ewe more on the Bottom 1/3 farms compared to farms in the Top 1/3, whie fertiiser and veterinary costs were simiar on a per ewe basis across a three groups. Machinery running costs were the singe biggest fixed cost on sheep farms in Combined with machinery depreciation, they accounted for amost 26% of tota fixed costs. Other significant fixed costs incuded buiding depreciation, repairs & maintenance, and ease and car, eectricity & phone with the atter being higher on the Bottom 1/3 of farms than either the Average or the Top 1/3. The tota annua cost of maintaining a ewe was d117 in both the Top and Bottom 1/3 of farms and d121 for the Average farms. When these are examined on a per amb basis, the cost of producing a amb was d82, d93 and d105 for the Top, Average and Bottom groups, respectivey. 26

29 e-profit Monitor Anaysis Drystock Farms 2012 Hi Sheep 2012 TABLE 15 detais the hi sheep anaysis from profit monitors for Tabe 15: Hi sheep per ewe to ram anaysis 2012 (40 farms with Profit Monitor) Physica Average Fock Size 178 Lambs reared per ewe joined to ram 0.98 Average Lamb Price (d/head) 67 Financia d/ewe Output 58 Purchased feed 13 Fertiizer and Lime 8 Vet 6 Contractor 3 Other 5 Tota Variabe Costs 35 Gross Margin 23 Tota Fixed Costs 25 Net Profit Exc Premia -2 Average performance was 0.98 ambs reared per ewe joined to the ram. Average amb price was d67. Average gross margin was d23 per ewe. As with the owand focks, the four main variabe costs of purchased feed, fertiizer and ime, veterinary costs and contractor costs accounted for over 87% of tota variabe costs. Simiar to the owand focks, purchased feed was the singe argest variabe cost on hi sheep farms and accounted for over 37% of tota variabe costs. Output per ewe, for this group of hi sheep farms, was approximatey 47% of the output eve achieved on the 227 owand sheep focks in However, variabe costs per ewe were over 55% of the variabe costs on average of the owand focks. Correspondingy, the gross margin of d23 per ewe on the hi sheep focks was ess than 38% of the gross margin per ewe of the owand ewes. The average tota fixed costs for the hi sheep farms, was d25 per ewe, eaving a net oss excuding premia of d2 per ewe. 27

30 e-profit Monitor Anaysis Drystock Farms 2012 Appendices Appendix 1 Tabe 1: Major Costs on Sucking Farms 2012 (847 Farms) Top 1/3 Average Bottom 1/3 Tota Variabe Costs d/ha d/kg iveweight Of which: Feed d/ha d/kg iveweight Fertiiser & Lime d/ha d/kg iveweight Contractor d/ha d/kg iveweight Vet/Meds/AI d/ha d/kg iveweight Tota Fixed Costs d/ha d/kg iveweight Of which: Land Renta d/ha d/kg iveweight Machinery Running d/ha d/kg iveweight Hired Labour d/ha d/kg iveweight Depreciation d/ha d/kg iveweight Interest d/ha d/kg iveweight 693 d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d

31 e-profit Monitor Anaysis Drystock Farms 2012 Tabe 2: Major Costs on Non Breeding Farms 2012 (215 Farms) Tota Variabe Costs d/ha d/kg iveweight Of which: Feed d/ha d/kg iveweight Fertiiser & Lime d/ha d/kg iveweight Contractor d/ha d/kg iveweight Vet/Meds/AI d/ha d/kg iveweight Tota Fixed Costs d/ha d/kg iveweight Of which: Land Renta d/ha d/kg iveweight Machinery Running d/ha d/kg iveweight Hired Labour d/ha d/kg iveweight Depreciation d/ha d/kg iveweight Interest d/ha d/kg iveweight Top 1/3 Average Bottom 1/ d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d

32 e-profit Monitor Anaysis Drystock Farms 2012 Appendix 2 Teagasc / Farmers Journa BETTER Beef Farms - Profit Monitor 2011 & Overa Overa Existing 27New Existing 27 New Anaysis Anaysis 8 Farms Farms 8 Farms Farms (n=35) (n=35) Farm Size Ha Stocking Rate LU/Ha Output KgLw/Ha Output Kg/LU Gross Output d/ha Variabe Costs d/ha Gross Margin d/ha Main Points Stocking rate across a the farms increased by 0.1 ivestock units per hectare or 5.4%. The existing eight farms from Phase 1 were stocked consideraby higher at 2.2 ivestock units per hectare compared to the new farms in the programme. In a difficut year kiograms of beef iveweight produced per hectare increased by 74 kg or 12% across a the farms. Overa beef iveweight produced per ivestock unit aso increased by 7% from 325 kg to 347 kg. Gross output per hectare has increased from d1223 to d1453 per hectare, an increase of 16%. The new farms showed a more significant increase of 23% going from d1127 to d1388 per hectare. The existing 8 farms were starting off from higher output and higher stocking rate per hectare. 30

33 e-profit Monitor Anaysis Drystock Farms 2012 In the overa programme variabe costs increased from d664 to d813 per hectare, an increase of 22%. Variabe costs per hectare were high on the new farms as they accounted for 59% of gross output. The existing farms showed a much better eve of cost contro as variabe costs ony accounted for 47% of gross output. The increase in variabe costs refected the increases in the cost and usage of concentrates in Earier housing of stock and higher suppementation eves saw feed costs rise from d195 per hectare in 2011 to d308 per hectare in Gross margin has improved across a the farms from d559 in 2011 to d640 per hectare in This represents an increase of 14%. The major improvements came from the new farms with an increase of 19% in gross margin where it increased from d475 to d564 per hectare. 31

34 e-profit Monitor Anaysis Drystock Farms 2012 Appendix 3 Teagasc BETTER Farm Sheep Programme The main objective of the Teagasc BETTER Farm Sheep programme is to provide foca points to faciitate the improvement of technoogy adoption at farm eve. The programme began with the recruitment of 3 hi focks in the autumn of 2008 with owand focks recruited thereafter. In the past 2 seasons the programme has expanded with the addition of 7 owand focks. In tota for the season there are 10 owand focks and 3 his focks invoved in the programme. Context The focks invoved in the programme are ocated throughout Ireand and vary consideraby in size, and type and indeed scope for improvement. The geographic spread and constraints of each farming system are refective of the chaenges faced by sheep producers nationay. However despite this, the focus on each of the farms was the same: highight how productivity, efficiency and utimatey profitabiity coud be improved though adopting technoogy. Pan to improve A 3 to 5 year pan was deveoped to increase productivity and efficiency on each of these farms with the hep of the farmer, oca adviser, sheep speciaist and research staff. The pan identified key areas where improvements coud be made and highighted how the use of certain technoogies coud faciitate this. The areas addressed are equay appicabe to any commercia farm. Many of these technoogies and messages reate to: fock size and stocking rate, breeding poicy, breeding management, ewe management, grassand management, amb performance, parasitic gastro-enteritis (PGE) contro. To quantify the progress made on the farms a comprehensive account of anima and financia performance on each farm was maintained. Resuts The resuts from the origina focks 4 owand and 3 hi focks that have been in the programme for 4 years show how simpe changes to each farming system can infuence productivity and utimatey the profitabiity of the sheep enterprise. To date, reative to the first year of the project (the 2008/09 season) the number of ambs weaned per ewe joined in the owand focks has increased by 0.27, due to an increased itter size (+0.22) and increasing the percentage of ewes ambed (+4.4%). 32

35 e-profit Monitor Anaysis Drystock Farms 2012 Simiary, for the hi focks, the number of ambs weaned/ewe joined has increased by 0.14, due to a combination of increased itter size (+0.17) and a substantia improvement in percentage of ewes that ambed (+5.3%). A summary of the impact of these changes on the fock s financia margin is presented in Tabe 1 for Lowand focks and in Tabe 2 for the Hi focks Tabe 1. Financia performance of the Lowand BETTER Farm Focks d per hectare) 2009 (Year 1) 2012 (Year 4) Change (%) Gross output Variabe costs Gross margin Tabe 2. Financia performance of the Hi BETTER Farm Focks (d per ewe) 2009 (Year 1) 2012 (Year 4) Change (%) Gross output Variabe costs Gross margin Despite a difficut season in 2012 the financia gain reative to the first year of the programme is substantia and highights the benefits of adopting a 3 to 5 year pan for a sheep enterprise. For both the owand and hi systems productivity on either a per ewe or per hectare basis is the key driver of profitabiity. Accessibiity The programme has expanded consideraby for the 2014 season. For interested groups there is an opportunity to see eary amb, mid-season and hi focks in various stages of transition in the programme. In addition there are a number of integrated sheep and beef systems that wi highight the options that exist for drystock producers. These farms are avaiabe for visiting groups during the season. To arrange a visit to these farms pease contact your oca advisor. 33

36 e-profit Monitor Anaysis Drystock Farms 2012 Further detais of the programme, the farms invoved and reguar updates are avaiabe on the Sheep BETTER Farm Webpage better_farms/sheep/ Ciaran Lynch. 34

37 e-profit Monitor Anaysis Drystock Farms 2012 Concusions This booket summarises the eprofit Monitor resuts from over 1,000 catte and 200 sheep farmers for It is very cear across a the beef and sheep enterprises examined that increased profitabiity in the drystock sector has to come from increasing the kiograms of beef and amb produced per hectare whie at the same time controing the costs that go towards deivering this output. The differences in output from the 2012 eprofit Monitor resuts between the Top and Bottom 1/3 of farmers were huge:- Sucking Farms (847) Doube the iveweight produced per hectare resuting in 10 times the gross margin per hectare Non-Breeding Beef Farms (215) Over haf a ton extra iveweight produced per hectare resuting in over 12 times the gross margin per hectare Lowand Sheep Farms (227) Over doube the number of ambs produced per hectare resuting in over 7 times the gross margin per hectare High output of beef and amb iveweight per hectare comes from a combination of good cow and ewe fertiity, ow mortaity, high iveweight gain both at grass and indoors and by maximising the stocking rate that your farm can hande. Drystock farmers who adopt the different technoogies that improve each of these components see for themseves the increased output that their farms are capabe of and the positive affect this has on their bottom ine. The Teagasc / Farmers Journa BETTER Beef and the Teagasc BETTER Sheep Programmes were estabished to demonstrate that where technoogies to increase farm output were put in pace on beef and sheep farms the reward woud be seen in the financia performance of these farms. The resuts to date from both these very successfu programmes ceary show that where output is increased margins wi aso increase. Competing a Teagasc eprofit Monitor and comparing their resuts to the figures in this booket is the first step that drystock farmers need to take if they are serious about increasing their profitabiity into the future. 35

38 e-profit Monitor Anaysis Drystock Farms 2012 Acknowedgements Teagasc sincerey thanks a those invoved in the coection and inputting of a the data used in compiing this report on the Drystock Profit Monitor farms for A specia word of thanks to a the drystock farmers for their hep and co-operation in making avaiabe both the financia and physica information needed. Thanks aso to the advisors and technicians who coected much of the data and to Kevin Connoy, Financia Management Speciaist, for his overa co-ordination of the epm system. Thanks to Karen Dukeow for editing the catte section, Frank Hynes for writing the sheep section, Aidan Murray for his contribution on the Teagasc/Irish Farmers Journa BETTER Farm Beef Programme and Ciaran Lynch for his contribution on the Teagasc BETTER Sheep Programme. Thanks to Andrew Deane and Therese Dempsey for editing and formatting the booket. 36