Benchmarking the beef business

Following the Mid-Term Review of the Common Agricultural Policy, farm incomes in future will not be influenced by the payment of direct subsidies. Profitability from 2005 onwards will therefore depend on getting the best returns from the marketplace while at the same time controlling costs of production.

This is a question which every farmer involved in the beef industry must ask themselves. To be able to answer the question realistically farmers must establishtheir costs of production.

At present there is a lot of discussion between farmers regarding what beef price is needed to make livestock production sustainable without subsidies. However, even at current prices there is a massive variation in profitability across suckler and beef herds, with substantial differences in costs of production between the most efficient and least efficient herds (see Table1).

‘Efficient farming’ is a widely used term, but what does it mean? In practical terms at farm level it simply means getting maximum performance from your livestock by doing the right things, at the right time without wasting money in the process. There is no good reason why the massive gap in production efficiency between the top 25 percent and bottom 25 percent of producers highlighted in Table 1 cannot be bridged. However, for those farms in the bottom category it will require some decisive action to be taken in terms of business management.

Table1: Greenmount Beef and Sheep Benchmarking Results 2002/03: Suckler to Beef Herds (all direct subsidies have been omitted from benchmarking figures)

If a producer has no idea how much it is costing to produce beef, then it is impossible to know what price is required to make production financially viable without direct subsidies.

The Greenmount Beef and Sheep Benchmarking Programme is a computerised farm management accounting system that offers farmers the opportunity to record their production costs and compare their results with other similar farms. This is a free and confidential service available to farmers in Northern Ireland, which can be accessed either through contacting your local Beef/Sheep Development Adviser.

Benchmarking helps individual farmers to identify the specific strengths and weaknesses of their business when compared to the ‘best in class’ farms. This information will then help them focus their efforts on the areas of performance that will make the biggest difference to farm profit.

The benchmarking programme has been designed to suit all beef and sheep farm enterprise types including, suckler to weanling herds, suckler to beef/store herds, beef finishing, lamb production etc.

Allister Calvin (left) ,CAFRE Beef and Sheep adviser, Omagh,
discussing Benchmarking results with Alastair Buchanan, Bready, Strabane

All producers will have several key business decisions to take over the next few years and it is important that these decisions are based on sound facts relating to the physical and financial performance of the individual farm business. Benchmarking is a very useful tool to help with this decision making process.