The farms in the BETTER Farm NI programme have completed the annual benchmarking review for 2018.

An overview of the financial and physical performance across all of the farms is detailed this week, with a more comprehensive analysis of the individual farms featured over the next two weeks.

Benchmarking data is completed through CAFRE, with the farms using the calendar year to compare data annually, as it suits the systems in place on-farm.

When analysing financial performance, farms are compared on a per-hectare basis. Experience of farm planning would show that you need to look at the farm as a whole, rather than on the more common per-cow basis.

For the majority of farmers, land will be the most limiting and valuable resource within the business.

Therefore, the decisions to alter the farm system must maximise the profit per hectare of land farmed.

Comparisons can be made between different production systems to determine which one will offer the best profit margin per hectare of land farmed.

Gross margin

The financial results published are based on gross margin (GM) per farm, simply because fixed costs vary significantly on individual farms.

Gross margin across the programme farms varies by more than £767/ha between the top and bottom farms. Direct subsidies are excluded when calculating GM.

It is worth making the point that farms with a high GM/ha are not necessarily the most profitable farms, and vice versa.

Output and GM will vary depending on the level of intensification, and therefore proportional analysis is a useful tool.

Ideally, from total output (100%), the GM should account for 60-70% of output to cover fixed costs and leave a profit.

Variable costs should be 30-40% of output. Three of the programme farmers are achieving this balance.

As several farms have been expanding cow numbers, they are yet to reach optimum cattle sales. However, there is still a cost to keeping the additional cows.

Gross margin per hectare is calculated by subtracting variable costs from herd output/sales. Herd output is calculated as the total sales of livestock (prime cattle and cull animals) minus any change in the value of cattle from the beginning to the end of the year, which should include any stock purchases. Variable costs include all forage inputs, such as fertiliser and purchased fodder. Also included are purchased concentrate and additional feed, breeding (AI), veterinary and sundry costs directly associated with the herd (tags, haulage, scanning, etc).

To calculate GM/ha, simply deduct variable costs from total herd output and divide the number of hectares farmed.

Five key lessons from 2018

1. 2017 v 2018 gross margin

Overall gross margin per hectare has increased by £9.55 (1.3%) across the 2018 programme in comparison with 2017. This is a positive increase, but lower than the previous year-on-year increase of 23%. Stocking rate has grown from 1.9 to 2.06 LU/ha (8.5%) and as a result total output rose by £83/ha (6.4%). On the other end of the scale, variable costs increased to £648/ha from £576/ha (12.6%).

2. Fertiliser use up 17%

An increase in fertiliser usage was expected due to rising stocking rates and output. Across all farms, fertiliser use increased by 51t (up 17% from 2017). This results in an higher spend of £19,877. This increase in spend cannot be entirely attributed to higher stocking rates. The dry summer enabled several farmers to carry out more re-seeding than initially planned, and the mild autumn facilitated a third cut of silage. Another key factor is that fertiliser costs increased from £245.86/t to £266.02/t, an 8.2% rise in a single year.

3. Concentrate use rises 16%

As with fertiliser, concentrate cost per tonne increased by 8.88%, rising to £211.93/t from £194.65/t in 2017. With a greater number of cattle being finished, or brought to heavier weights across the farms, concentrate usage has increased from 526t to 612t (16%). The difficult spring led to an increase in concentrate use to extend silage supplies, keeping freshly calved cows on a rising plane of nutrition until they went to grass. Oliver McKenna spent an additional £2,631 on gluten and £1,495 on silage just to get through the tough spring. In the east, the summer drought and lack of grass growth meant Fionbharr Hamill fed an extra 10t of concentrate to maintain cattle at grass.

4. Health plans reducing vet costs

Veterinary costs are down 10.5% to £83.5/ha, as the health plans developed for all farms are paying off. Year-on-year, using preventative medicine and vaccines is resulting in reduced costs. There are no significant differences in breeding and sundry costs.

5. Calving index

One of the key physical benchmarks in any suckler herd is the calving index highlighting cow fertility. The target is an index of 365 days, meaning a calf per cow every year. Across the group the average index was 378 days over a combined 458 cows calved. Calving index ranged from 362 days for Jonathan Blair, to 406 days for Mark Lewis. However, as Mark has moved from a split spring and autumn-calving spread to 100% spring-calving, calving index will be skewed as young autumn-calving cows were held over to join the spring herd.

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