Livestock Event 2016: Business challenge looms for smaller, mixed family farms

Mixed family farms should look at whether simplifying their businesses could generate a better financial return, according to consultant Andersons.

Its Meadow Farm, a 154ha mixed model, is forecast to record a £201/ha loss from production in 2016-17, the company revealed at the Livestock Event (6 July).

This is better than in 2015-16, when the business made a £238/ha loss from production, but still results in a loss of £19/ha after subsidy payments are taken into account.

See also: All the latest news from the Livestock Event

If beef prices improve next year, the position for 2017-18 is forecast to improve so the business makes its first business surplus since 2014-15. However, this will only amount to £36/ha.

This notional business is mainly grassland with some arable cropping. There is a 60-cow suckler herd, a dairy bull beef enterprise and a 500-ewe breeding flock.

‘Too many things at too small a scale’

Richard King, head of business research at the farm business consultant, said the key point about Meadow Farm, like many similar businesses, was that its overhead structure was too large for the output the business was achieving. This meant the level of return was not sustainable.

“Fundamentally, Meadow Farm does too many things at too small a scale. We are not saying big is better, but you need to get to a minimum efficiency scale of an enterprise before it makes sense and none of its enterprises are at that level.

“They key is deciding what you are good at and doing more of it and less of what you are perhaps not so good at.”

Options to improve

Mr King said, for Meadow Farm, options included closing the bull beef enterprise and selling the suckler calves as stores. They had also looked at contracting out the arable side and expanding the sheep flock, which helped to cut labour and machinery costs.

As a traditional business, the farm could also be well placed to join the Countryside Stewardship scheme, which would be another way of boosting income, he said.

“A beef and sheep farm, with a bit of arable, is never going to generate the sort of income that covers the overheads this sort of business is running. You need to make it a simpler business to get rid of those overheads.”

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