Revelations that the average lowland and LFA suckled calf breeders lost in the region of £350 and £425 a cow over the 2005-2006 financial year will test the courage of an industry that also has to take on board an average loss for intensive finishers of around £75 a head and a deficit in the region of £260 for finishers with extensive systems.

As a result the National Beef Association is certain that the universal depth of loss confirmed by these new figures reinforces its original, post-decoupling, position that only a market average of 250p per dwkg for prime cattle, along with a determined effort by farmers to improve production efficiency, can secure industry survival.

The new calculation formula was initiated after the NBA, and others, became frustrated with the underestimation of production costs, and the continued inclusion of subsidy income, in the previous costing system.

The decision made by a cross-UK group which included the NBA and many other organisations was that:

# Subsidy income, including SFP, should not be included in farm output.

# Family labour should be charged at an average rate of £11.18 an hour –

or £28,000 a year.

# The rental value of owned land should be included at £120 per ha.

# And a five per cent annual interest on working capital should also be included.

These revised calculations are judged to be a more accurate reflection of the beef industry's true costs of production and the NBA estimates average birth to slaughter production costs over 2005-2006 were 260p per dwkg .

It is pleased that the message given by these startling figures is being taken to retailers and processors to show that current market income makes beef production unsustainable.

However it is just as important that more farmers take increased efficiency more seriously and use their SFP as a capital fund to introduce radical cost savings into their business – instead of being forced to use it to make up the gap between cost of production and market income.

Cost saving is most easily achieved by matching production output with labour so the unit cost is as low as possible. Modifications that help to shed labour without reducing cattle numbers can include introducing a quieter type of animal and improving handling systems.

Other important cost reductions can be made through raising cow fertility – which will almost certainly include more attention being paid to disease control.

Shortening finishing times so that stock can be sold at the same weight perhaps months earlier than is the case at present can produce equally dramatic cost savings.

The purchase of better bred bulls, cows and store cattle so less feed and care is wasted on poor performers is also essential.

TheBeefSite.com News Desk