Huge differences in the variable costs, particularly for forage and concentrates, were the main reasons behind spring calving suckler herds producing positive or negative gross margins per cow in 2021, according to interim findings from the QMS Sustainable Producer Groups benchmarking project.

The results which saw individual gross margins of £724/cow, or a loss of £464/cow, highlighted that low forage cost and concentrate costs are significant drivers of profitability, with some businesses achieving high net margins excluding labour, despite a poor herd production year.

Lesley Wylie, SAC Consulting beef specialist, said the wide range of results indicated that there were learning and improving opportunities for all in the group when the range in concentrate cost varied from £6.28/cow to £214.88/cow and forage costs ranging from zero to £207/cow.

“With greater fertiliser and concentrate feed prices seen in 2022, feed and forage costs will become a greater driver in the next dataset,” she added.

“It is tricky to compare the datasets, but the top performing businesses were making best use of grass, while some are also trying to reduce their wintering period by using forage crops and byproducts.”

The top spring calving herds were low cost operations but high output, with a decent rearing percentage (112% compared with an average of 92%) producing a high revenue per calf (£336.10 was the top result, compared with an average of £236.66)

Higher vet and medicine cost does not necessarily relate to greater herd profitability, she said; the business with the highest veterinary and medicine cost (£121.43/cow) was in the bottom five for gross margin.

The project also highlighted some subjectivity in fixed cost allocation, clouding data interpretation, so these will not be collected for the next dataset, while rent costs also affected results.

Similarly, while output is estimated based on calf weight at year-end and value per kilogram, weights quoted ranged from 230kg to 400kg and priced at £1 to £3.36/kg. This reflects different calving times, weaning times and markets, but will also skew results.

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Labour costs, too, were an area of discussion, with some allocating a full time salary to the herd, while others attributed zero cost. Work will be done across all these areas to make future comparison more valuable, said Ms Wylie.

She added that despite the mainly negative net margins in the first year, the data has helped farmers look at their own businesses. “Discussions between the businesses have been really good – and the process of comparison can be very helpful.

The project, which runs across two years, involved 26 businesses across four groups providing economic and carbon footprint data for comparison. Each member was given an Economic Performance summary, a Carbon Audit report and a group summary, and has met several times to compare results and discuss ways to improve returns.

The initiative aimed to help participants develop their businesses to reduce environmental impact while improving their economic resilience.