EU beef sector report DG AGRI L3, 4 April 2011

Transcription

1 EU beef sector report 2010 DG AGRI L3, 4 April 2011

2 Structure of this presentation 1. Methodology 2. Beef production costs and margins 3. Income indicators 4. Summary and Conclusions

3 1. Methodology

4 What is FADN (1) The Farm Accountancy Data Network (FADN) is an EUwide system of annual sample surveys that collects structural and accountancy data on farms, with the aim to monitor the income and business activities of agricultural holdings and to evaluate the impacts of the Common Agricultural Policy measures

5 What is FADN (2) Only from farms exceeding a minimum economic size FADN 2007 sample = farms, which represent after extrapolation about 5.4 millions farms out of a total of 14 millions in the whole population in EU-27 However, it covers more than 90% of agricultural production, UAA and LU FADN = only source of harmonised micro-economic farm data for the EU Currently available data from 1989 to 2008 (at the time of writing beef report only 2007 data were available)

6 Estimating beef production costs and margins In FADN most costs refer to the farm as a whole: contribution of each enterprise to the farm income not directly available Costs are allocated to one enterprise using different ratios (ratio of beef output in total farm output, ratio of cattle in total livestock ) New regrouping of costs was performed last year, but the methodology remained unchanged Operating costs (specific and non-specific) Depreciation External factors (rent, wages, interests paid) Family factors (family labour and own capital)

7 Estimate of 2008 and 2009 Latest FADN data = 2007 Estimate for beef output and operating costs based on beef price and input price indices Structures and beef production is assumed unchanged Sources of indices: For the beef price: DG AGRI For purchased feed: DG AGRI FEEDMOD For the other inputs: EUROSTAT databases (Agricultural prices and price indices, EAA Economic Accounts for Agriculture and HICP and GDP inflation rate)

8 Definitions Revenue Value of output Coupled Direct Payments Cost categories Operating costs = specific + non-specific costs Specific costs: feed, animal purchase, other (e.g. veterinary) Non-specific costs: machinery and building upkeep, energy, contract work, taxes, and other direct costs (water, insurance of farm buildings) Depreciation External factors: rent, wages, interest paid Own factors: family labour cost and own capital cost Total Economic cost = Operating costs + depreciation + external factors + own factors Margins* Gross Margin = Revenue Operating costs Net Margin = Revenue Operating costs Depreciation External factors Net Econ. Margin = Revenue Operating costs Depreciation External factors Own factors *All margins can be calculated/presented with or without Coupled Direct Payments

9 Calculation of costs and margins

10 Beef farms analysed Beef specialised farms only (specialisation rate greater than 50%) Three types of specialised beef producers: Breeders Breeders and Fatteners (B&F) Fatteners Margin, cost and income data were analysed, where available, in seven dimensions: EU-wide, by Member States, by regions, LFA classes, herd size, time series and distribution

11 Beef farms representativeness Breeders Breeders and Fatteners Fatteners Farms represented Total beef farms Number Share Number Share Number Share EU % % % EU % % 440 5% EU % % - - EU % % %

12 Beef farms - basic parameters Breeders B&F Fatteners Labour in AWU 1,33 1,28 1,31 Beef specialisation % output 82% 78% 79% Average UAA - ha 72,71 55,29 40,88 Forage crops - ha 63,71 49,41 29,3 Share of forage crops - ha 88% 89% 72% Stocking density - LU/ha 0,99 1,12 1,79 Number of suckler cows Cattle sold - head

13 2. Beef production costs and margins

14 Gross Margin EU-15 and EU per cow and per male sold (for fatteners) Total operating costs Total economic costs Total revenue Breeders B&F Fatteners Breeders B&F Fatteners Gross margin with CP Gross margin EU-15 EU-10 Source: EU FADN - DG AGRI L3, EU Beef farms cost allocation model

15 Revenue and breakdown of costs per cow EU Imputed family factors External factors Depreciation Non specific costs Specific costs Coupled DP Output 0 Revenue Costs Revenue Costs Revenue Costs Breeders B&F Fatteners Source: EU FADN - DG AGRI L3, EU Beef farms cost allocation model

16 Net Margin EU-15 and EU-10 per cow and per male sold (for fatteners) EU-15 EU-10 0 Breeders B&F Fatteners Breeders B&F Fatteners Net margin with CP Net margin Source: EU FADN - DG AGRI L3, EU Beef farms cost allocation model

17 Gross Margin for Breeders by MS per cow Specialist breeders MS are ranked from the highest to the low est Margin w itout CP -98 Total revenue Total operating costs Gross margin with CP Gross margin IT ES BE EU15 EU27 LU FR PT SI DE IE AT UK EU10 SE DK CZ FI Source: EU FADN - DG AGRI L3, EU Beef farms cost allocation model

18 per cow Gross Margin for B&F by MS MS are ranked from the highest to the low est Margin w itout CP Total revenue Total operating costs Gross margin with CP Gross margin IT ES BE LU PT FR EU15 EU27 IE EU10 DE UK CZ SW SI FI Source: EU FADN - DG AGRI L3, EU Beef farms cost allocation model

19 Gross Margin for Fatteners by MS in per male sold Total revenue Total operating costs Margin + CP Margin MS are ranked from the highest to the low est Margin w itout CP IT ES AT DE EU15 EU27 IE EU12 SE FI Source: EU FADN - DG AGRI L3, EU Beef farms cost allocation model

20 Gross Margin for Breeders by regions per cow Total revenue Total operating costs Gross margin Gross margin with CP Cantabria Tras-os-Montes/Beira interior Basilicata Auvergne Piemonte Aquitaine Pays de la Loire Slattbygdslan Pais Vasco Asturias Castilla-Leon Languedoc-Roussillon Limousin Rhones-Alpes Sardegna Acores Galicia EU27 Midi-Pyrenees Centre Poitou-Charentes MS are ranked from the highest to the low est Margin w ithout CP Basse-Normandie Scotland Bourgogne Navarra Wallonie Corse Sicilia Extremadura Alentejo e do Algarve

21 Gross Margin for B&F by regions Scotland per cow Total revenue Total operating costs Gross margin Gross margin with CP Marche Abruzzo Piemonte Galicia Vlaanderen Extremadura Pais Vasco Wales Pays de la Loire Limousin Poitou-Charentes EU27 Tras-os-Montes/Beira interior Midi-Pyrenees Auvergne England-East England-North England-West Northern Ireland Slattbygdslan

22 Gross Margin for Fatteners by regions in per male sold Total revenue Gross margin Total operating costs Gross margin with CP Piemonte Lombardia Veneto Aragon Niedersachsen Bayern EU27 Nordrhein-Westfalen

23 Gross Margin by LFA category, Breeders per cow Not in LFA Non mountain LFA Mountain LFA Non mountain LFA Mountain LFA EU-27 EU-10 Total revenue Total operating costs Margin + CP Margin

24 Gross Margin by heard size in per cow EU Breeders B&F 0 <= >150 Average Source: EU FADN - DG AGRI L3, EU Beef farms cost allocation model

25 Gross Margin during per cow and per male sold (for fatteners) EU Breeders with DP Breeders B&F with DP B&F Fatteners with DP Fatteners e 2009e

26 3. Income indicators

27 Income indicators Cost categories are differently treated to calculate income indicators Farm Net Value Added (FNVA) EQUALS TO: 1.Total output (total production value), PLUS 2. Direct payments MINUS 3. Intermediate consumption and depreciation MINUS 4. Remuneration of all fixed production factors (owned by the farm or external) Economic profit (EP) EQUALS TO: 1. FNVA MINUS 2. External factors MINUS 3. Balance investments subsidies and taxes MINUS 4. Family factors All Expressed per Annual Work Unit (AWU) to take into account the differences in the total labour force.

28 Income per EU group and type in per AWU Farm Net Value Added Economic profit EU27 EU15 EU10 EU27 EU15 EU10 EU27 EU15 EU10 Breeders B&F Fatteners Balance subsidies and taxes

29 /AWU Farm Net Value Added during Breeders EU15 B&F EU15 Fatteners EU15 All farms EU-15 Breeders EU10 B&F EU10 Fatteners EU10 All farms EU-10

30 4. Summary and Conclusions

31 Summary - Margin Gross Margins Generally not high but they are positive Comparable for breeders and B&F - 310/cow and 297/cow respectively Fatteners margin of 135/male not directly comparable (specific nature of the production expressed in number of males fattened and sold per year) The EU-10 margins were lower than the EU-15 for all three groups (smaller number of cows/cattle per farm and lower prices for beef) Time series data Relative stability in underlying margins Declining values of margins with Coupled Payments (CP) (diminishing DP and price crisis) The average gross margin differs widely between Member States The highest values in Italy ( 739/cow with CP for B&F), Spain and Belgium, The lowest in Finland (- 645/cow without CP for B&F), Czech Republic, Sweden, Denmark, Slovenia and the United Kingdom Net economic margins are negative Apart from some EU regions with favourable natural conditions and special types of product Even for a long time series Family factors, especially labour, are underpaid Negative net margin does not necessarily have to be a major impediment to beef production

32 Summary - Income Farm Net Value Added per Annual Working Unit Takes into account decoupled Direct Payments The highest value for fatteners /AWU (low income per animal but many of them) Breeders and B&F are both at around /AWU The FNVA/AWU for EU-10 much lower than for EU-15 - from to /AWU (labour-intensive processes applied by small farms in the sample) In the EU-15 fatteners get higher-than-average results, breeders and B&F systematically perform less efficiently In the EU-10 breeders achieve higher productivity than the average Economic Profit Takes into account FNVA (above) and estimates of the unpaid family factors Is negative in most cases Analysis shows that B&F face the greatest pressure to exit or change their type of production (the economic profit here is the most negative)

33 Conclusions Poor economic performances Most farmers still stay on in the industry Why? Leaving it would generally mean heavy losses, Alternative forms of income are often limited, So? Strategies to minimise production costs, Underpaying family factors, Subsidising farm production from decoupled payments and other sources of income But: Farming includes difficult to measure benefits (constant contact with nature, independence, housing often in the farm, limited distance between the house and the job, social activities and networking, public recognition and a feeling of the importance of producing food) Farmers adopt a long term income strategy by increasing the farm's assets with a view to supplement their pensions after they retire (in some cases asset values increased by 200% between 2000 and 2007)

34 More information on F.A.D.N website

35 Thank you for your attention