Beef and sheep cost warnings with rents at £400/acre
© Tim Scrivener Buoyant beef and sheep values mean that livestock producers are now regularly outbidding dairy farmers in parts of the UK in the quest to acquire rented ground.
While land and rental prices are buoyant across the country, in Ulster, good-quality “multicut-type” ground has doubled in value to frequently exceed £740/ha (£300/acre) a year.
Remarkably, some dairy farmers are being outbid by beef and sheep enterprises who are paying rents of £988/ha (£400/acre) a year.
See also: Farmland values continue to rise in early 2023
Agricultural lettings and land sales specialist Robert Mawhinney, of SRM Auctions, says this could spell trouble for some businesses, particularly with an uncertain subsidy picture beyond 2024.
He therefore advises ambitious beef and sheep enterprises to crunch the numbers carefully before bidding against dairying and renewables businesses.
“I don’t know how sustainable that is to graze livestock long term,” said Mr Mawhinney.
“Maybe for one year as a small percentage of your acreage, but at a bigger scale it’s a massive cost. Some sheep farmers are prepared to pay over the odds to expand flock size.”
He said land sale prices had seen a five-year rise of good silage ground from £22,239/ha (£8,000-£10,000/acre) to as much as £50,000/ha (£20,000/acre). This had supported rental values as some landlords wanted a greater return on their investment.
Advice when assessing rented ground
- Check it’s worth it A beef/sheep farmer paying £740/ha (£300/acre) should expect soil health information (pH), a good ley and maintained fencing.
- Don’t forget to add contracting costs Land is often a lesser cost compared to contracting and slurry spreading. A field yielding 8t dry matter (DM)/ha at £700/ha rent is already costing 8.75p/kg DM.
- Location Distance and haulage is a major cost today at about £40/hour. A 30-40% increase in contracting costs has been muted this year. If silage contracting is more than £90/acre, where does this leave your silage cost? A 2,500gal tanker doing six loads an hour may only do two loads an hour to a field three miles away. Does the site have a nearby organic manure source to take advantage of?
- Rental ratio One productive field yielding 18t freshweight of silage a year over three cuts should not harm margins, but once the owned-to-rented ratio reaches 50:50 it might be wise to reassess and downsize.
- What is your hourly farming wage? Record hours spent farming, travelling to leased ground. What is the £/hour figure? Is the extra ground leaving you better-off?
Source: John Moore and Rachel Megarrell, beef and sheep advisers at the College of Agriculture Food and Rural Enterprise