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Thirty Years Of Change And No Change - Comparing The SAC Farm Management Handbook Then And Now (Archived Content)

SAC News Release Ref. No: 09N60
Published: 24 Sep 2009

Comparing the new, 30th edition of SAC’s Farm Management Handbook with the edition printed 30 years ago gives a fascinating view of Scottish farming.

Spring barley prices were similar and costs less than half, but as yields were lower the margins were similar to today. Dairy cow outputs are up, but is fertility any better?  Meanwhile hand labour costs for potato harvesting are no longer an item!

The Farm Management Handbook is an essential tool for any progressive farm business. The latest edition is now even more user-friendly, following comments from a user survey. SAC Rural Business Unit has introduced some content changes including new sensitivity analysis to reflect volatility in market prices, information on care farming, and more concise ‘quick reference guides’.  Julian Bell, Head of the SAC Rural Business Unit (RBU), added that as well as a new-look cover reflecting the diversity of topics covered, the Handbook is now ring-bound allowing it to lie flat for ease of reference.

“Input costs and sale prices have remained volatile for most agricultural enterprises,” he said. “Forward budgets are essential for any forward looking farm business. They allow returns to be assessed and enterprise mixes adjusted to strike the right balance between risk and return.”

Margins show reversal of fortunes between the sectors.

In broad terms we have seen a swing in profitability towards livestock and away from crops. Increased margins for beef, sheep and pigs contrast with lower margins for cereals, potatoes and dairy. On the plus side, the sharp fall in input costs has benefited all enterprises.

While most margins remain above the average of the previous four years, further price falls since the FMH went to print could mean that actual margins for 2010 harvest may be lower, particularly for crops.  Abysmal harvest weather this season has further dampened enthusiasm for arable cropping.

Despite higher beef prices, finishers' margins are being hit by the high price of stores.  With many arable producers also fattening store cattle, many are hoping to turn low priced barley to their advantage by converting it into more saleable beef.  Suckler cow margins are expected to improve in 2009/10 as a result of three key factors: high store prices, falling grain prices, and reduced forage costs on the back of lower fertiliser prices.

In the dairy sector a 3ppl fall in the milk price has seen gross margins for most dairy herds reduced by 13% on average. This has particularly affected the gross margins of higher yielding herds (above 8,000 litres / cow).  The fall in the milk price has also led to lower output across all yield levels.

SAC Farm Management Handbook – 2010 v 1980

This year SAC celebrates the 30th edition of the FMH. We have taken this opportunity to look back at key changes across the sectors and any issues for the future.

Cereals
Julian Bell, of the SAC Rural Business Unit commented; “I was stunned to see how little margins for spring barley had changed.”  In 1980 barley prices were similar or even better than today at around £90/t.  In contrast, variable costs were less than half current levels helping to offset yields that were 1t/ha lower (0.4t/ac).  It was also clear why the area of winter crops had climbed, Julian noted.  Spring barley yields have only risen 1t/ha (22%) in 30 years while wheat yields are up by 3t/ha 60%.  Most growers today have the benefit of the single farm payment to fall back on when grain prices are low. Thirty years ago higher intervention prices provided that safety net. Learning to manage market volatility is going to be one of the key challenges of the next 30 years. (Julian Bell, Tel: 07795 302 264)

Dairy
There are many differences with 30 years ago and not all are confined to the gross margin data. “The marketing of milk in the UK has also witnessed extensive change, with the abolition of the Milk Marketing Board”, according to SAC dairy consultant Alastair Beattie. Thirty years ago, the handbook only provided gross margin data for herds yielding up to 6,000 litre yields, whereas today gross margins are available for yields up to 10,000 litres – indicating a much greater range in today’s yields and also reflecting increased output per cow.  “Greater efficiency, but at what cost?” Beattie asks as fertility and welfare require ever greater attention as output rises. (Alastair Beattie, Tel: 07771 797 491)

Beef
Gavin Hill, when considering what the beef sector would have looked like 30 years ago, commented that “we were probably more content then. There was no hassle with passports, paperwork, disease issues and movement restrictions.” He also questioned how far the industry had moved on, noting that rearing numbers have fallen from 94% in 1980 to 92% in 2010. “Have our types of cattle fallen in productivity or is it simply that we have more problems such as fertility in these terminal breeds?” he asked.  Another contributing factor may be that we are working with those types of cattle that are leading to increased calving difficulty. (Gavin Hill, Tel: 07979 245 881)

Pigs
Gavin Dick of the SAC Rural Business Unit noted that the most striking difference over the 30 years is how little the physical performance has changed compared to the financial figures.  Pigs sold/ sow/ annum have increased by 10% over the 30 years, whilst feed use, FCR and mortality have remained relatively static. “Daily liveweight gain, however, has improved by 30% and crucially slaughter weights have improved by 17%,” Gavin added.  (Gavin Dick, Tel: 07825 716 996)

Sheep
Performance is now poorer in the hardest hill areas with a 12% fall in weaning to 65% despite heavier feeding of concentrates. This confirms weather-related problems of management and disease are major issues and explains the retreat from the hills.  Lowland sheep fare better with a doubling in lamb finished prices on similar performance.  Margins are up 20% but this is not nearly enough to pay for higher labour costs.  Wool output per ewe has fallen below the cost of shearing and explains the huge increase in interest in wool-shedding breeds.  Are sheep farmers better off?  No - they too have taken a haircut. (John Vipond, Tel: 07989 863 874)

Potatoes
The handbook no longer includes margins for hand lifted potato crops, 30 years ago these were commonplace. Higher labour costs have dealt with that. Overall costs have risen sharply though output prices have failed to rise as much with  seed potatoes £80 /t in 1980 compared to £140 /t 2009/10. (Mike Inglis, Tel: 07990 771 863)

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News Release Contacts

SAC Contact

Mr Julian Bell
Senior Rural Business Consultant
SAC (Scottish Agricultural College) Work SAC Consulting, Rural Business Unit, Bush Estate,
Penicuik
EH26 0PH
TelWork 0131 535 3438
Fax 0131 535 3431

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News Release Issued By

Mr Ken Rundle
Senior Communications Officer
SAC (Scottish Agricultural College) Work SAC, King's Buildings, West Mains Road,
Edinburgh
EH9 3JG
TelWork 0131 535 4196

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