In our third and final instalment of Teagasc/Irish Farmers Journal BETTER farm beef challenge e-Profit Monitor analysis for 2018, we put the final pieces of the financial jigsaw together.

Two weeks ago we reported that despite 2018 being a tough year for our programme farmers, overall on-farm production was up. Average output per hectare increased by 126kg/ha to 859kg/ha, while the group stocking rate jumped from 1.9LU/ha to 2.2LU/ha.

However, despite the increase in productivity, the average gross margin for the year is down 13% to €610/ha.

As reported last week, this is primarily due to variable costs spiralling out of control in an attempt to withstand the challenging weather conditions. The main factor was feed costs, which jumped a staggering 68%.

This week we look at the final element of financial performance – net margins.

Overall

Table 1 provides a breakdown of net margins by system, as well as the group’s overall net margin. As a group, the net margin per hectare is coming in at €38, with the range being from €710/ha to -€707/ha. Last year, the average net margin was at €94/ha, signalling a 59% drop year on year.

Ranking the average net margins per hectare by system reveals a mirror image of the ranking by gross margin. Under-20-month bull operators had the highest net margin (€160/ha) in 2018, while weanling producers again fell to the bottom of the pile (€-291/ha).

Going a step further, we calculated what the group was netting on a per-cow basis. Looking across all 26 monitor farms, the average net margin per suckler cow was €29. Last year it was €112/cow. Given that the average herd size within the programme is 55 cows, the average net margin per farm was €1,595. It is worth noting that this variable again contained a significant range.

The best net margin within the group was €533/cow, but on the flip-side, 12 farmers had negative per-cow margins.

Of course, all net margin figures shown here exclude the single farm payment and subsidies. On average, the total of premiums and subsidies (such as ANC and BDGP) are worth €104/ha or €99/cow to each farm.

However, given the low levels of bottom-line net profit recorded across a countrywide representative group, the dependence that farmers within the beef sector, and particularly suckling, have to place on these external supports is a concern.

Full-time farmers

Table 2 details the 2018 profit monitor results based on working capacity – full-time or part-time farming.

For full-time farmers, it is encouraging to see that the net margin obtained per hectare and per suckler cow is significantly higher than that of their part-time counterparts.

However, with the average net margin per cow at €61/ha, average subsidies at €99/cow and the average herd size at 65 cows, €10,400 per farm is still a low return for a full-time operator, albeit, with the single farm payment still to be included.

It is no surprise that as we look at Table 3, farms with heavy soils recorded the highest net margins at €169/ha and €130/cow. Gross margins were high on these farms as they achieved high output and low variable costs due to ideal summer weather conditions.

For these farms it is a stark, but much deserved, difference from the margins of 2017 where the net margin per hectare was -€88 and per cow was -€94. 2018 had the opposite effect on dry farms; €186/ha fell to €116/ha and €169/cow fell to €102/cow.

Finally, Table 4 breaks down net margins by farm size, with those in the 41ha to 60ha bracket achieving the highest margins per hectare and per cow of €111 and €48, respectively.