Beef and sheep farmers have seen production “cost per kilo” figures rise across almost all enterprises according to the latest data from EBLEX.

EBLEX’s Business Pointers benchmarking survey revealed it costs an average of 9.2 pence per kilo (4.6 per cent) more than in the previous year to produce one kilo of beef or of sheep meat, driven largely by rising input costs (manly fixed) costs. The figures, for the year to 31st March 2011, also showed beef was 5.75 pence per kilo (2.6 per cent) more expensive to produce than in 2009/2010 and sheep production costs were up 12.6 pence per kilo (6.6 per cent).

However, EBLEX said its year to date figures (April to September 2011), to be included in the full Business Pointers report in October, are expected to show significant improvements over the previous year’s picture, reflecting an upward trend in the markets, especially for cattle. Furthermore, initial results from analysis of the data suggest all top third producers are showing positive margins after cash costs.

Senior EBLEX analyst Mark Topliff said, “There is no doubt that the picture for beef farmers in terms of prices has turned a corner this year and got stronger and stronger. However, that does take a while to filter through and the reality is that costs have been rising as well. Production costs are up an average of 2.6 per cent per kilo for beef farmers and 6.6 per cent per kilo for sheep farmers, largely down to rising input costs and, in particular, fixed costs.”

He continued, “Looking at some of the specifics, extensive finishing herd results show lower costs in 2010/11 following a year of higher allocated costs. But intensive finishers have had a significant rise in overhead costs, rising on average by 12 per cent with only contractor costs returning a lower figure compared with the previous year.

“In common with intensive cattle finisher, sheep flocks also had a significant rise in costs with average variable costs up around 24 per cent and fixed costs over 10 per cent higher. Major areas of increase came from feed, power and machinery repairs. But replacement costs also saw a noticeable change of 48 per cent in lowland flocks and 15 per cent in LFA flocks.

“The Business Pointers data shows that the climate is still difficult for beef and sheep farmers so it is essential that they keep a close eye on costs of production to see where efficiencies can be made.”

The full cost per kilo data can be viewed at the EBLEX site. The complete Business Pointers data set will also be posted when the report is published next month.