Scottish Farm Enterprise
Performance Analysis:
Additional Analysis of the 2010-11 Farm
Accounts Survey
Rural and Environment Science and Analytical Services
Agriculture Statistics
30/10/2012
Contents
1 Introduction………………………………………………………………….…………………...…3
1.1 Description of Performance Measures…………………………………………………………..4
1.2 Cautionary Note……………………………………………………………………………………5
2 Market Context……………………………………………………………………………………...6
3 Summary of Results………………………………………………………………………………..9
3.1 Crop Enterprises…………………………………………………………………………………..9
3.2 Livestock Enterprises…………………………………………………………………………….10
4 Crop Enterprise Analysis………………………………………………………………………..11
4.1 Winter Wheat……………………………………………………………………………………..14
4.2 Winter Barley……………………………………………………………………………………..16
4.3 Spring Barley……………………………………………………………………………………..18
4.4 Mixed Barley……………………………………………………………………………………...20
4.5 Winter Oilseed Rape…………………………………………………………………………….22
4.6 Spring Oats……………………………………………………………………………………….24
4.7 Enterprises with less than 5 Holdings in the Quartile Groups……………………………….26
5 Livestock Enterprise Analysis…………………………………………………………………..27
5.1 Dairy Cows………………………………………………………………………………………...30
5.2 Dairy Mixed………………………………………………………………………………………..34
5.3 Beef: Hill Herds……………………………………………………………………………………36
5.4 Beef: Upland Suckler/Herds Selling Claves as Yearling Stores……………………………..38
5.5 Beef: Lowland Suckler Herds……………………………………………………………………40
5.6 Beef: Forward Stores……………………………………………………………………………..42
5.7 Beef: Mixed………………………………………………………………………………………...44
5.8 Beef: Finishing……………………………………………………………………………………..46
5.9 Sheep: Extensive/Hardhill………………………………………………………………………..48
5.10 Sheep: Finished/Store Lamb Production……………………………………………………...50
5.11 Sheep: Lowland (non LFA)……………………………………………………………………..52
5.12 Sheep: Store Lamb Finishing (long keep)…………………………………………………….54
5.13 Enterprises with less than 5 Holdings in the Quartile Groups………………………………56
6 Summary Tables……………………………………………………………………………………57
7 Definition of Terms………………………………………………………………………………...59
8 Related Information………………………………………………………………………………..62
9 Contacts……………………………………………………………………………………………..62
2
Enterprise Performance Analysis 2010/11
1 Introduction
This report outlines the results from the first year of analysis of enterprise output and
associated costs of livestock and crops by Rural and Environment Science and
Analytical Services which is part of the Directorate for Environment and Forestry of the
Scottish Government.
The purpose of this analysis is to provide a basic assessment of financial performance
of the main farm enterprises in Scotland. This will allow individual farmers and others
with an interest in the agricultural industry to compare individual enterprise
performance against industry standards. As this analysis is updated in future years it
will also provide a useful guide to performance over time.
The analysis examines three measures of financial performance, the main measure is
the enterprise gross margin per head/hectare which shows the gross income (before
accounting for fixed costs) from a single unit of output (per head for livestock and per
hectare for crops). Additional measures are the income which shows the overall
balance of the enterprise and the output:input ratio which shows how much gross
return is achieved per pound (£) spent per single unit of output (head/hectare).
Enterprise output includes the market value of the output retained on farm.
The three measures each provide a different insight into the performance of the
enterprise. Taken in isolation, these figures may provide a misleading impression of
the performance of an enterprise relative to high, low or average performers, or to
different enterprises (see description below). It is intended that each measure be
taken into consideration when drawing comparisons based on this analysis.
Results are provided as un-weighted group averages for each enterprise and within
each enterprise (where sample size allows) to identify differences between relatively
high performers (those achieving the 25% highest gross margins), the average for the
whole enterprise group and relatively low performers (those achieving the 25% lowest
gross margins). Although enterprises have been classified as high or low performers
based on their gross margins this does not necessarily mean that high performing
enterprises are being managed more effectively, as the intentions, attitudes, reasons
for farming and factors outside the control of farmers and farm managers has not been
considered in this report.
The report is divided into two sections, the first examines the performance of crop
enterprises and the second examines the performance of livestock enterprises. It is
important to note that the factors affecting enterprise performance differ between crop
and livestock enterprises, and sometimes within these divisions also. The
classification of livestock enterprises is described in table 5.
By comparing enterprise performance it is possible to assess where the performance
of the enterprise is in relation to the range being achieved by other producers.
Whether such comparisons with individual enterprises are appropriate depends on the
motivations, constraints and production methods employed by individual producers,
but can be a useful first step in identifying where improvements in performance may
be achieved through assessment of relative strengths and weaknesses.
3
1.1 Description of Performance Measures
The following hypothetical example aims to demonstrate the differences between the
different measures of performance. Taking two enterprises of the same size, with 50
head of cattle. Enterprise A with a relatively high gross margin, of £100/head, may be
considered to be performing better than enterprise B with a lower gross margin of
£80/head. However, enterprise B may achieve a greater output:input ratio (of £3.25
for every £1 of input, compared to £2.67 for enterprise A), because input costs are
lower than those of enterprise A and enterprise B achieves a greater mark up in prices
achieved for outputs.
This higher output:input ratio can give enterprise B an advantage over enterprise A,
for example in a situation where the desire is to grow the enterprise. Because
enterprise B makes relatively more money for the same size of enterprise and
achieves lower input costs and higher output prices, enterprise B achieves a greater
return per unit cost. Depending on the impact of fixed costs on the enterprise this
could place enterprise B in a stronger position to grow the enterprise through
reinvesting profits to increase stock, despite achieving a relatively lower margin than
enterprise A.
Further to this, a third enterprise (enterprise C) may be considered to be more
profitable than enterprise A or B, despite achieving a lower gross margin and a lower
output:input ratio. Enterprise C may generate a higher income than either enterprise A
or B simply because enterprise C is larger (100 head of cattle compared to 50). After
accounting for fixed costs, if enterprise C is efficiently managed, this may result in
greater profitability.
Table 1.1: Example Enterprise Analysis
Enterprise A
(High GM)
Stock size (head of cattle)
Inputs (£/head)
Outputs (£/head)
Gross Margin (£/head)
Output:Input ratio (£)
Income (£)
Enterprise B
(High Output:Input ratio)
50
60
160
100
2.67
5,000
50
40
130
90
3.25
4,500
Enterprise C
(High Income)
100
60
120
60
2.00
6,000
The enterprise gross margin (per unit of output) is a sign of whether the enterprise is
able to secure a good price for the output it produces relative to the cost of producing
the output. The enterprise income accounts for the overall size of the enterprise
operation, two enterprises might have the same gross margin but if they are operating
on different scales the larger will have a greater income value. Enterprise income
therefore does not measure performance on an equal basis across different
enterprises, but has been included in the report to provide additional contextual
information on enterprise profitability. The enterprise output:input ratio measures the
value of outputs relative to the value of inputs and tells us how well an enterprise
generates profit for every unit of input, this contributes to high profitability when the
value of the output is high. An enterprise might have a high ratio but if the value of the
outputs is low then the enterprise wont generate a high profit.
4
1.2 Cautionary Note
The performance of an enterprise is difficult to assess and relies on a number of
factors that cannot be identified through this analysis: such as natural constraints (e.g.
quality of land, weather, etc.); reason for farming (e.g. financial, personal satisfaction,
etc.); attitudes towards animal welfare or the use of chemical sprays; fixed costs of the
whole farm business; the interaction of other enterprises within the farm business (for
example, livestock farms growing barley for feed will benefit from having their own
source of feed compared to others buying in from elsewhere) and many other factors.
Some factors can be taken into account and we have tried to identify some of these
within the analysis, but there are still many factors affecting enterprise performance
that have not been accounted for here. Even the price achieved for outputs, while
indicative of the relative quality of the outputs, could have little to do with performance,
for example when producers are tied into long term contracts that do not reflect spot
prices available to others; improvements in performance or quality may not be
reflected in the prices achieved since these are fixed in a supply contract. This
analysis takes no account of inflation or commodity price fluctuations.
In this document gross profit of an enterprise is taken to mean the profit generated by
the enterprise before accounting for fixed costs. Grants and subsidies have been
excluded from this analysis, with the exception of the Scottish Beef Calf Scheme
grants which were included in the beef suckler enterprises. In reality, fixed costs and
grants and subsidies would need to be accounted for to determine the profit of the
enterprise; in order to identify enterprise specific costs these have been excluded from
the analysis.
Enterprise data included in the analysis in this report is taken from farms sampled in
the 2010-11 Farm Accounts Survey (FAS). Sample sizes for each enterprise are
included in the respective tables and are also summarised in table 6a. A methodology
and quality note for the FAS, detailing how the survey is run, coverage, use and other
quality information is available at the following internet address,
http://www.scotland.gov.uk/Topics/Statistics/Browse/AgricultureFisheries/PubEconomicReport/methodology.
5
2 Market Context
Enterprise data included in the analysis in this report is taken from farms sampled in
the 2010-11 Farm Accounts Survey (FAS). The period covered by the 2010-11 survey
runs from December 2009 to May 2011, including data for farms with year ends in
November 2010, January 2012, March 2012 and May 2012. It is important to put the
results in the context of the market situation over this period. The charts below show
DEFRA UK price indices with January 2009 set as the base. Price indices have been
included here to provide some general context, more detailed Scottish price data can
be accessed from Quality Meat Scotland (QMS) for livestock data,
http://www.qmscotland.co.uk, and from the Home Grown Cereals Authority (HGCA)
for crops, http://www.hgca.com.
The impact of market prices on the profitability of farm enterprises depends largely on
the timing of purchases and sales and also on the use of contracts which can tie
farmers into different prices compared to spot prices available to others.
Chart 2a below shows the price indices of fertiliser, seed, feedstuffs and veterinary
and medicine costs since early 2009. Most input prices shown here trended upwards
throughout 2010, with costs continuing to rise throughout early 2011. Fertiliser, seed
and feedstuffs in particular rose throughout the autumn months, as costs increased
more steeply at the end of 2010. Veterinary and medicine costs were considerably
higher in 2010, peaking during summer months, than they had been in both the
previous and following year and representing a greater burden on livestock
enterprises in the period covered by this report.
Chart 2a
Average Monthly Input Costs Indices (Base=Jan 2009)
160.0
140.0
Fertiliser
(weighted
average
price)
seed
120.0
100.0
80.0
60.0
feedingstuffs
40.0
20.0
Vet & Med
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
0.0
2009
2010
2011
Chart 2b below shows the price indices of cereals, oilseed rape and ware potato
outputs since early 2009. Crop prices on the whole saw increases throughout 2010
compared to relatively stable prices in the previous year, in particular towards the end
of 2010. High prices for cereals and oilseed rape indicate that gross margins for
6
arable enterprises may rise in 2011, as rises in crop outputs have been relatively
greater than rises in associated input costs. Farmers selling 2010 produce on forward
contracts may have lost out compared to those selling during a rise in prices at the
end of 2010/start of 2011. Ware potato prices in particular saw marked price rises
from June 2010 through to June 2011.
Chart 2b
Average Monthly Crop Price Indices (Base=Jan 2009)
250.0
200.0
Ware
potatoes
150.0
cereals
100.0
50.0
oilseed rape
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
0.0
2009
2010
2011
Chart 2c below shows the price indices of cattle, sheep and milk outputs since early
2009. Milk prices varied relatively little in 2010 compared to 2009 on the whole and
increased steadily throughout 2011, finishing around 20% higher than at the end of
2010. Cattle prices in 2010 were lower than in both the previous and following year
and varied little throughout 2010. Sheep saw a typical rise in price during the start of
2010 with prices falling again in the autumn months. In 2011 there was a
considerable and steep rise in sheep prices which, following a decline over the
summer, rose again towards the end of the year.
7
Chart 2c
Average Monthly Livestock Price Indices (Base=Jan 2009)
180
160
140
milk
120
100
beef
80
60
40
sheep
20
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
0
2009
2010
2011
8
3 Summary of Results
3.1 Crop Enterprises
Overall average gross margins for crop enterprises ranged from £571/hectare for
spring oat enterprises to £1,020 for winter wheat and £4,708/hectare for potato
enterprises (a combination of ware, seed and mixed potato enterprises). Winter wheat
and potato enterprises were the most profitable of crop enterprises.
Where sample sizes were sufficient to allow comparison between high performing and
low performing enterprises, gross margins of high performers were around twice that
of low performers, but for winter oilseed rape and spring oats, high performers
achieved around five times the margins of low performers, showing that the latter are
less competitive.
On average spring oats were the least profitable crop enterprises, though high
performers achieved higher gross margins than that of both winter and spring barley
enterprises. High performing winter oilseed rape enterprises were among the most
profitable crop enterprises, but with low performers achieving average gross margins
around a fifth of those of high performers, these were both the least profitable and
least competitive of low performing crop enterprises.
For crop enterprises the differences in financial performance between high and low
performing enterprises is due to high performers achieving: higher sales prices per
tonne, which is expected to reflect generally higher quality; higher yields, producing a
greater volume of output per hectare; and better management of variable costs. For
spring oats enterprises, variable costs were similar between high and low performers,
but were relatively low compared to other crop enterprises, allowing them to achieve a
greater rate of return for every £1 spent – due to the relatively low costs of inputs.
Overall average rates of return (measured using the output:input ratio) ranged from
£2.50 for every £1 spent for winter barley, to £5.10 for spring oats enterprises. Overall
average income values (accounting for the average size of the enterprises) ranged
from around £9,000 for spring oats to around £51,000 for mixed barley enterprises.
9
3.2 Livestock Enterprises
Overall average gross margins were more variable among livestock enterprises,
ranging from £12/head for short keep store lamb finishing enterprises to £882/head for
dairy enterprises (this equates to an overall gross margin of 12.4 pence per litre).
Dairy cows and dairy followers (£882/head) were the most profitable livestock
enterprises.
Where sample sizes were sufficient to allow comparisons between high and low
performers, we can see that low performing livestock enterprises, compared to high
performers, are considerably less profitable and uncompetitive. Most low performing
beef enterprises (four out of six with sufficient sample sizes) made an average loss,
ranging from -£78/head for finishing enterprises to -£382/head for hill herd enterprises.
Comparative high performing enterprises achieve gross margins between £282/head
and £420/head.
Low performing extensive/hardhill sheep enterprises also made an average loss; £4/head compared to £40/head for high performers. Of those with positive gross
margins, excluding dairy cow enterprises, high performers made between 4 and 16
times the gross margins of low performers. High performing lowland suckler herds
made almost 400 times the margin of low performers, which achieved gross margins
on average of £1/head.
On a per head basis, high performing dairy cow enterprises achieved gross margins
around twice that of low performers, making dairy cow enterprises the most
competitive of livestock enterprises. Low performers achieved an average gross
margin of £612/head (11.4 pence per litre) which is a higher margin even than high
performers in other livestock enterprises, with the exception of dairy followers.
On livestock enterprises the difference in financial performance is due to high
performers achieving: higher sales prices per head, which is expected to reflect
generally higher quality outputs; a greater increase in value due to improved technical
performance; and better management of variable costs. For sheep enterprises and
forward store and mixed beef enterprises, variable costs are relatively similar between
high and low performing enterprises, with differences in gross margins being due
mostly to the value added to stocks and higher sales prices. For dairy cow
enterprises, higher milk yields also contribute to higher gross margins, as well as the
use of more extensive production systems on low performing enterprises.
On average, store lamb finishing enterprises were the least profitable (£12/head for
short keep and £20/head for long keep). Overall, sheep enterprises are considerably
less profitable than beef and dairy enterprises. Despite this, crossbred ewe producing
and store lamb finishing enterprises had the highest average rate of return for every
£1 spent (measured by the output:input ratio) of livestock enterprises – due to
relatively low spend on variable costs.
Overall average rates of return for every £1 spent (measured by the output:input ratio)
ranged from £1.20 for hill suckler herds to £3.10 for cross bred ewe enterprises.
Overall average income values (accounting for the average size of the enterprises)
ranged from around £1,000 for long keep store lamb finishing to around £131,000 for
dairy cow enterprises.
10
4 Crop Enterprise Analysis
This section provides analysis of performance among crop enterprises. Individual
enterprises are provided for each crop grown. Potato enterprises include those
growing ware, seed and mixed potatoes. The outputs of crop enterprises are given as
crop sold (including that used on farm) and crop sold as straw. The main items of
variable expenditure for crop enterprises are: fertiliser, seed and crops sprays, sundry
expenses are also included in variable costs.
Charts 3a, 3b and 3c below show, respectively, the average gross margins, incomes
and output:input ratios for high, average and low performers in each crop group
(where sample sizes allow). Potato enterprises have been excluded from charts 3a
and 3b to make the charts easier to view. Potato enterprises have the highest
average gross margin (£4,078/hectare) and income value (£173,943) of the crop
enterprises. Commentary on gross margin and income results (below) excludes
potato enterprise results.
Gross Margin (Chart 4a)
Average gross margin ranges from £571/hectare for spring oats to £1,020/hectare for
winter wheat. That of high performers ranges from £1,055/hectare for winter barley to
£1,378/hectare for winter wheat, and of low performers from £208/hectare for spring
oats to £697 for winter wheat. Winter wheat enterprises perform relatively well overall,
with the average gross margin for low performing winter wheat enterprises higher than
the overall average for most other crop enterprises. The difference between high and
low performers is greatest for winter oilseed rape, where high performers achieve an
average gross margin almost four times greater than low performers.
Chart 4a
Comparison of Enterprise Performance: Gross Margin
1600
1400
1200
£
1000
High
800
Average
Low
600
400
200
0
winter
wheat
mixed
barley
winter
oilseed
rape
winter oats
spring
barley
Enterprise
11
winter
barley
spring
oats
Income (Chart 4b)
Taking account of the size of enterprises, mixed barley (£51,106) and winter wheat
(£50,001) achieve the highest average incomes. High performing winter wheat
enterprises achieved a considerable advantage with average incomes £23,000 higher
than those of high performers in other crop enterprises. Winter oats (£15,000) and
spring oats (£9,171) achieve the lowest average incomes. Average incomes range
from £9,000 for spring oats to £51,000 for mixed barley.
Chart 4b
Comparison of Enterprise Performance: Revenue
90,000
80,000
70,000
60,000
High
Average
£
50,000
40,000
Low
30,000
20,000
10,000
0
mixed
barley
winter
wheat
spring
barley
winter
barley
winter
oilseed
rape
winter
oats
spring
oats
Enterprise
Output:Input ratio (Chart 4c)
In contrast to gross margin and income results, the group average output:input ratios,
the return achieved per £1 spent, is greatest for spring oats at 3.8, outperforming
potato and winter wheat enterprises. Average ratios range from 2.5 for spring barley
to 3.8 for spring oats. High performing winter oats enterprises achieve considerably
higher ratios (7.1), with a £2 greater return for every £1 spent compared to high
performers in other crop enterprises.
12
mixed
barley
winter
oilseed
rape
winter
barley
spring
barley
winter
oats
winter
wheat
potatoes
spring
oats
OUtput:Input ratio
Chart 4c
Output:Input Performance in Crop
Enterprises
8
7
6
5
4
3
2
1
0
High
Average
Low
Crop Enterprise
13
4.1 Winter Wheat
Table 4.1 provides the enterprise margin data for winter wheat in Scotland on a per
hectare basis for 2010/11.
Yield
The average yield for all enterprises was 8.8 tonnes per hectare. Both the area and
yield were greater for the high performers compared to low performers, with a 33%
larger area in production combined with 30% higher yields, both of which contribute to
a 73% relative increase in production.
Gross Margin
The average enterprise gross margin for winter wheat was £1,020/ha in 2010/11. This
compares to £1,378/ha (35% higher than average) for high performing enterprises and
£697/ha (32% lower than average) for low performing enterprises, a relative difference
of 98%.
Output Value
High performers benefited from relatively higher prices at £166/t, compared to £151/t
on average and £135/t for poor performers, indicating higher quality produce on these
enterprises. Together with higher yields, the higher price means that the total output
value for high performers of £1,809/ha is £351 per hectare greater than the overall
average and £646/ha greater than that of low performers at £1,163/ha, a difference of
56% in output value per hectare between high and low performers.
Variable Costs
The spending breakdown of the variable costs between high and low performing farms
is roughly equivalent, with fertiliser accounting for nearly half the overall variable costs.
Costs per hectare for fertiliser and sundry expenses were roughly consistent at around
£200/ha and £20/ha respectively. Low performers spent £12/ha more than average on
seeds and more than £9/ha more on crop chemicals, while high performers spent less
than average on crop chemicals saving £10/ha. These differences resulted in £34/ha
lower spend on variable costs among high performers (£431/ha) relative to low
performers (£465/ha). There was only a £6/ha difference between high performers
and the average variable cost total of £437/ha.
Other Performance Measures
The overall enterprise income for high performing enterprises is £85,000, compared to
an average of £50,000 and around two and half times that of low performers at
£32,000.. The output:input ratio for high performers is 4.2 meaning that they receive a
return of £4.20 for every £1 spent on inputs. This compares to the average of 3.3 and
2.5 for the low performers.
Summary
High performing winter wheat enterprises are achieving gross margins 35% higher
than the average and 98% higher than the low performing enterprises. This difference
is due to better prices and higher yields resulting in increased production. They also
spend slightly less on variable costs and return £4.20 for every £1 spent compared to
£2.50 for low performers.
14
Table 4.1
Winter Wheat
Per Hectare
Summary Data 2010/11
Number of Enterprises
Enterprise Margin Performance Data
High Performers
All
Low Performers
Area (ha)
Yield (t/ha)
Production (t)
Price (£/t)
Gross Margin (£/ha)
16
61.8
10.1
626
£166
£1,378
64
49.0
8.8
433
£151
£1,020
15
46.4
7.8
363
£135
£697
Value of Crop Output
Value of Straw Sold
Total Output Value
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Variable Costs
GROSS MARGIN
Enterprise Income
£1,668
£140
£1,809
£70
£202
£139
£20
£431
£1,378
£85,162
£1,330
£127
£1,457
£70
£198
£149
£20
£437
£1,020
£50,001
£1,054
£109
£1,163
£82
£203
£158
£21
£465
£697
£32,377
4.2
3.3
2.5
Output/Input Ratio
Chart 4.1a
Winter Wheat: % Spend on Variable Costs: 2010/11
50%
Percentage of Variable Costs (%)
45%
40%
35%
30%
Upper 25%
All
25%
Lower 25%
20%
15%
10%
5%
0%
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Inputs
Chart 4.1b
Winter Wheat: Output, Input & Gross Margin Values: 2010/11
£2,000
£1,500
£/hectare
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Performance Data
15
Gross Margin Value
4.2 Winter Barley
Table 4.2 provides the enterprise margin data for winter barley in Scotland on a per
hectare basis for 2010/11. The low performers (the lower quartile) have less than five
observations and have been removed from the analysis to protect disclosive values.
Yield
The average yield for all enterprises was 6.9 tonnes per hectare. Yields where 15%
more for the high performers compared to the average and the high performing
enterprises also had a smaller area in production than the average (7% less).
However, due to the improved yields, the high performers had 7% more production
(tonnage) than the average.
Gross Margin
The average enterprise gross margin for winter barley was £584/ha in 2010/11. This
compares to £815/ha (40% higher than average) for the high performing enterprises.
Output Value
High performers obtained slightly higher prices at £125/t, compared to £122/t on
average. Combined with the higher yields, the higher price results in a total output
value for high performers of £1,168/ha, being £192/ha greater than the overall
average of £976.
Variable Costs
The breakdown of the spending on variable costs between performance groups is
broadly equivalent, with fertiliser accounting for around half the overall variable costs.
Average fertiliser costs were £200/ha with the average seed cost being £61/ha. High
performers spent £36/ha less on fertilisers at £163/ha but spent £7/ha more than the
average on seeds at £68/ha. The average variable cost was £393/ha with the high
performers spending 10% less.
Other Performances Measures
The overall enterprise income for the high performers is £29,000, compared to an
average of £22,000. This is a 30% improvement on the average. The output:input
ratio for high performers is 3.3 meaning that they receive a return of £3.30 for every £1
spent on inputs. This compares to the average of 2.5.
Summary
High performing winter barley enterprises are achieving gross margins 40% higher
than the average. The difference is due to better prices and higher yields. The smaller
area of the high performers is not restricting overall enterprise income performance
with incomes 30% greater for the high performers than the average. Variable costs
were broadly equivalent across the performance groups.
16
Table 4.2
Winter Barley
Per Hectare
Summary Data 2010/11
Number of Enterprises
Area (ha)
Yield (t/ha)
Production (t)
Price (£/t)
Gross Margin (£/ha)
Enterprise Margin Performance Data
All
High Performers
Value of Crop Sold
Straw Sold
Total Output Value
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Variable Costs
GROSS MARGIN
Enterprise Income
5
35.5
8.0
0
£125
£815
18
38.1
6.9
177
£122
£584
£993
£175
£1,168
£68
£163
£101
£21
£353
£815
£28,890
£840
£137
£976
£61
£200
£109
£23
£393
£584
£22,268
3.3
2.5
Output/Input Ratio
Chart 4.2a
Winter Barley: % Spend on Variable Costs: 2010/11
60%
Percentage of Variable Costs (%)
50%
40%
Upper 25%
All
30%
20%
10%
0%
Seeds
Fertilis er
Crop Chem icals
Sundry Expens es
Inputs
Chart 4.2b
Winter Barley: Output, Input and Margin Values: 2010/11
£2,000
£1,500
£/hectare
£1,000
Upper 25%
All
£500
£0
-£500
-£1,000
Output value
Input Value
Performance Data
17
4.3 Spring Barley
Table 4.3 provides the enterprise margin for spring barley in Scotland on a per hectare
basis for 2010/11.
Yield
The average yield for all enterprises was 5.5 tonnes per hectare. Both the area and
the yield were greater for the high performers compared to the low performers, with a
59% larger area in production combined with a 46% higher yield. This results in an
increase in overall production of 132%.
Gross Margin
The average enterprise gross margin for spring barley was £623/ha in 2010/11. This
compares to £869/ha (39% higher than average) for the high performing enterprises
and £366/ha (41% lower than the average margin) for the low performing enterprises,
a relative difference of 137%
Output Value
High performers received higher prices at £144/t, compared to £140/t on average and
£133/t for the low performers. Combined with higher yields, the higher price means
that the total output value for high performers of £1,139/ha is £227 per hectare
greater than the overall average and £466/ha greater than the low performers at
£673/ha, a difference of 69% in output value per hectare between high and low
performers.
Variable Costs
The breakdown of the spend on variable costs between high and low performing
enterprises was broadly equivalent, with fertiliser accounting for almost half of the
overall variable costs. Average fertiliser costs were £141/ha with seed costs of £60/ha.
High performers spent £14/ha (10%) less than the average and low performers £18
(13%) more at £158/ha on fertilisers. The other costs were similar across the groups.
The average variable cost was £289/ha with the high performers spending £19/ha
(6%) less and the low performers £18/ha (6%) more than the average.
Other Performance Measures
The overall enterprise income for high performing enterprises is £44,000, compared to
an average of £26,000 and low performers at £12,000. This is a 277% improvement
on the low performers. The output:input ratio for high performers is 4.2 meaning that
they return £4 for every £1 spent on inputs. This compares to the average of 3.1 and
2.2 for the low performers.
Summary
High performing spring barley enterprises are achieving gross margins 39% higher
than the average and 138% greater than the low performing enterprises. The
difference is due to slightly higher than average prices, better yields and lower costs
per hectare. High performers achieved an additional £2 return for every £1 spent
compared to low performers. Also, the high performers achieve 39% more income
than the average enterprise because of the greater area in production.
18
Table 4.3
Spring Barley
Per Hectare
Summary Data 2010/11
Number of Enterprises
Area (ha)
Yield (t/ha)
Production (t)
Price (£/t)
Gross Margin (£/ha)
Enterprise Margin Performance Data
High Performers
Value of Crop Output
Value of Straw Sold
Total Output Value
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Variable Costs
GROSS MARGIN
Enterprise Income
All
Low Performers
45
50.6
6.4
324
£144
£869
183
42.0
5.5
229
£140
£623
45
31.9
4.4
140
£133
£366
£917
£222
£1,139
£60
£126
£62
£22
£270
£869
£43,982
£762
£150
£912
£60
£141
£66
£22
£289
£623
£26,197
£575
£98
£673
£62
£158
£64
£23
£307
£366
£11,664
4.2
3.2
2.2
Output/Input Ratio
Chart 4.3a
Spring Barley: % Spend on Variable Costs: 2010/11
60%
Percentage of Variable Costs (%)
50%
40%
Upper 25%
30%
All
Lower 25%
20%
10%
0%
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Inputs
Chart 4.3b
Spring Barley: Output, Input & Gross Margin Vakues: 2010/11
£2,000
£1,500
£/hectare
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
£'s Value
19
4.4 Mixed Barley
Table 4.4 provides the enterprise margin data for mixed barley in Scotland on a per
hectare basis for 2010/11.
Yield
The average yield for all enterprises was 6.5 tonnes per hectare. Yields were 37%
higher for the high performers compared to the low performers. The high performing
enterprises had smaller areas in production than both the average and the low
performers, at -14% and -26% respectively. The high performers also had better
production figures producing eight tonnes more than the low performers despite a
greater average area on low performing enterprises.
Gross Margin
The average enterprise gross margin for mixed barley was £749/ha in 2010/11. This
compares to £1,055/ha (41% higher than the average) for the high performing
enterprises and £519/ha (31% lower than average) for low performing enterprises, a
gross margin twice that of low performers.
Output Value
High performers obtained higher prices at £151/t, compared to £144/t on average and
£138 for low performers. Together with higher yields, the higher price results in the
total output value for high performers of £1,339/ha being £292/ha greater than the
overall average, and £503/ha greater than the low performers at £896/ha – a relative
difference between high and low performers of 56%.
Variable Costs
The breakdown of the spend on variable costs between high and low performers
indicates that the enterprises spend between 45% to 48% of their costs on fertilisers.
High performers are also spending proportionately more on crop chemicals. Average
fertiliser costs were £171/ha and crop chemicals £96/ha. Low performers spent £7/ha
more on fertilisers than the average, while high performers spent £15/ha less. High
performers spend £10/ha more on crop chemicals than the average. The average
variable cost was £358/ha with the high performers spending 4% less and the low
performers 5% more per hectare.
Other Performance Measures
The overall enterprise income for high performing enterprises is £62,000, compared to
an average of £51,000 and for low performers of £41,000. This is a 50% improvement
on the low performers. The output:input ratio for high performers is 4.1 meaning that
they receive a return of £4 for every £1 spent on inputs. This compares to the average
of 3.1 and 2.4 for low performers.
Summary
High performing mixed barley enterprises are achieving gross margins 41% higher
than the average and 103% (twice as high) compared to low performing enterprises.
The improved performance is due to higher yields, better prices and reduced variable
costs. High performers achieved an additional £1.70 more per £1 of input than low
performers. The smaller area of the high performers is again not restricting the overall
enterprise income performance with incomes one and half times greater for the high
performers than the low performers.
20
Table 4.4
Mixed Barley
Per Hectare
Summary Data 2010/11
Number of Enterprises
Area (ha)
Yield (t/ha)
Production (t)
Price (£/t)
Gross Margin (£/ha)
Enterprise Margin Performance Data
All
High Performers
Value of Crop Output
Value of Straw Sold
Total Output Value
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Variable Costs
GROSS MARGIN
Enterprise Income
Low Performers
7
58.7
7.8
458
£151
£1,055
30
68.2
6.5
446
£144
£749
8
79.6
5.7
452
£138
£519
£1,166
£233
£1,399
£61
£156
£105
£22
£344
£1,055
£61,900
£940
£167
£1,107
£63
£171
£96
£28
£358
£749
£51,106
£783
£113
£896
£73
£178
£92
£34
£377
£519
£41,313
4.1
3.1
2.4
Output/Input Ratio
Chart 4.4a
Mixed Barley: % Spend on Variable Costs: 2010/00
60%
Percentage of Variable Costs (%)
50%
40%
Upper 25%
30%
All
Lower 25%
20%
10%
0%
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Inputs
Chart 4.4b
Mixed Barley: Output, Input & Gross margin Value: 2010/11
£2,000
£1,500
£/hectare
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
Performance Data
21
4.5 Winter Oil Seed Rape
Table 4.5 provides the enterprise margin data for winter oil seed rape in Scotland on a
per hectare basis for 2010/11.
Yield
The average yield for all enterprises was 3.6 tonnes per hectare. Yields were 73%
greater for the high performers compared to the low performers. The high performing
enterprises also had a slightly larger area in production than the average and 29%
more area than the low performers. The high performers therefore had 123% more
production than the low performers at 130 tonnes compared to 58 tonnes.
Gross Margin
The average enterprise gross margin for winter oil seed rape was £706/ha in 2010/11.
This compares to £1,188/ha (68% higher than average) for the high performing
enterprises and £251/ha (64% lower than average) for the low performing enterprises
– a gross margin for high performers more than four times that of low performers.
Output Value
High performers obtained better prices at £352/t compared to £307/t for the average
and £297/t for the low performers. Combined with higher yields, the higher price
results in the total output value for high performers of £1,550/ha, being £419/ha
greater than the overall average and £798/ha greater than that of low performers at
£752/ha – high performers achieving twice the output value of low performers.
Variable Costs
The breakdown of the spend on variable costs between the high and low performers is
broadly the same, with fertiliser accounting for just under half the overall variable
costs. Average fertiliser costs were £196/ha, with seed at £52/ha and crop chemicals
averaging £153/ha. High performers spent £19/ha less than the average on fertilisers
and £65/ha less than the equivalent low performer. The average variable cost was
£424/ha with high performers spending 15% less than this while low performers spent
18% more at £501/ha.
Other Performance Measures
The overall enterprise income for high performing enterprises is £35,000, compared to
an average of £20,000 and low performers at £6,000. This is almost six times greater
than the low performers. The output:input ratio for high performers is 4.3 meaning that
they receive a return of £4 for every £1 spent on inputs. This compares to the average
of 2.7 and 1.5 for the low performers.
Summary
High performing winter barley enterprises are achieving gross margins 68% higher
than the average and 373% greater than the low performing enterprises. The
difference is due to better prices, higher yields and lower costs. The high performer’s
larger production area means that enterprise income generated is more than twice the
average income and seven times greater than that of low performers. High
performers achieved an additional £2.80 per £1 spent compared to low performers.
22
Table 4.5
Winter Oil Seed Rape
Enterprise Margin Performance Data
Per Hectare
Summary Data 2010/11
Number of Enterprises
Area (ha)
Yield (t/ha)
Production (t)
Price (£/t)
Gross Margin (£/ha)
High Performers
Value of Crop Output
Value of Straw Sold
Total Output Value
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Variable Costs
GROSS MARGIN
Enterprise Income
All
Low Performers
9
29.8
4.4
130
£352
£1,188
35
28.0
3.6
101
£307
£706
9
23.1
2.5
58
£294
£251
£1,540
£10
£1,550
£44
£177
£123
£17
£361
£1,188
£35,344
£1,117
£13
£1,130
£52
£196
£153
£22
£424
£706
£19,757
£748
£3
£752
£61
£242
£184
£14
£501
£251
£5,809
4.3
2.7
1.5
Output/Input Ratio
Chart 4.5a
Winter Oilseed Rape: % Spend on Variable Costs: 2010/11
60%
Percentage of Variable Costs (%)
50%
40%
Upper 25%
All
30%
Lower 25%
20%
10%
0%
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Inputs
Chart 4.5b
Winter Oilseed Rape: Output, Input & Gross Margin Values: 2010/11
£2,000
£1,500
£/hectare
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
Performance Data
23
4.6 Spring Oats
Table 4.6 provides the enterprise margin data for spring oats in Scotland on a per
hectare basis for 2010/11
Yield
The average yield for all enterprises was 4.6 tonnes per hectare. Yields were 121%
greater for the high performers compared to the low performers. High performers had
16% less area than the average enterprise but achieved the most output at 82 tonnes
per enterprise.
Gross Margin
The average enterprise gross margin for spring oats was £571/ha in 2010/11. This
compares to £949/ha (66% higher than average) for the high performing enterprises
and £208/ha (64% lower than average) for low performing enterprises - a relative
difference of more than four times as much between the high and low performers.
Output Value
High performers obtained higher prices at £160/t, compared to £139/t on the average
and £117/t for the low performers. Combined with higher yields, the higher price
means that the total output value for high performers is £1,179/ha , £407/ha greater
than the overall average and £756/ha greater than that of the low performers at
£423/ha, a relative difference between high and low performers of almost three times.
Variable Costs
High performing enterprises are spending 34% of their total costs on fertilisers,
compared to 47% for the average and 55% the low performers. Crop chemical
spending is slightly higher for the high performers at 16% of the total, which is
consistent with the other groups. High performers spend more (15%) on sundry
expenses than the low performers. Average fertiliser costs were £94/ha with sundry
expenses averaging £12/ha. High performers are spending £18/ha less on fertiliser
but £22/ha more on sundry items than the average. The average variable cost was
£201/ha with high performers spending 14% more at £229/ha and low performers also
spending more at £215/ha which is 7% more than the average.
Other Performance Measures
The overall enterprise income for high performing enterprises is £13,000, compared to
an average of £9,000 and low performers at £2,000, more than six times as much as
low performers. The output:input ratio for the high performers is 5.1 meaning that they
receive a return of £5.10 for every £1 spent on inputs. This compares to the average
of 3.9 and 2.0 for the low performers.
Summary
High performing spring oat enterprises are achieving gross margins of 66% higher
than the average and more than four times that of the low performing enterprises. The
difference is due to higher yields and prices rather than savings on input costs, which
means that high performers are using inputs more efficiently. Also, the area in
production appears to have little, or no impact, on the final enterprise income as the
high performers have 16% less area than the average. High Performers achieved an
additional £3.10 for every £1 spent than low performers.
24
Table 4.6
Spring Oats
Per Hectare
Summary Data 2010/11
Number of Enterprises
Area (ha)
Yield (t/ha)
Production (t)
Price (£/t)
Gross Margin (£/ha)
Enterprise Margin Performance Data
All
High Performers
Value of Crop Output
Value of Straw Sold
Total Output Value
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Variable Costs
GROSS MARGIN
Enterprise Income
Low Performers
5
13.5
6.1
82
£160
£949
22
16.1
4.6
74
£139
£571
5
8.9
2.8
25
£117
£208
£941
£237
£1,179
£83
£77
£36
£34
£229
£949
£12,787
£633
£139
£772
£64
£94
£31
£12
£201
£571
£9,171
£323
£100
£423
£67
£119
£25
£4
£215
£208
£1,851
5.1
3.8
2.0
Output/Input Ratio
Chart 4.6a
Spring Oats: % Spend on Variable Costs: 2010/11
60%
Percentage of Variable Costs (%)
50%
40%
Upper 25%
30%
All
Lower 25%
20%
10%
0%
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Inputs
Chart 4.6b
Spring Oats: Output, Input & Gross Margin Valuee: 2010/11
£2,000
£1,500
£/hectare
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
25
4.7 Enterprises with less than 5 Holdings in the Quartile Groups
Table 4.7 provides the overall average enterprise margin data for those activities with
less than five enterprises in the quartile groups on a per hectare basis. The low
sample size makes analysis between the top and bottom performance groups
impractical.
Table 4.7
Enterprise Margin Performance Data
Crops with Less Than 5 Holdings in Quartile
Per Hectare
Summary Data 2010/11
Number of Enterprises
9
22.9
7.0
161
£126
£654
Potatoes (combined)
14
42.7
36.7
1,565
£180
£4,078
£874
£61
£935
£53
£144
£65
£18
£281
£654
£15,000
£5,705
£0
£5,705
£663
£329
£468
£166
£1,627
£4,078
£173,943
3.3
3.5
Winter Oats
Area (ha)
Yield (t/ha)
Production (t)
Price (£/t)
Gross Margin (£/ha)
Value of Crop Sold
Straw Sold
Total Output Value
Seeds
Fertiliser
Crop Chemicals
Sundry Expenses
Variable Costs
GROSS MARGIN
Enterprise Income
Output/Input Ratio
26
5 Livestock Enterprise Analysis
This section provides analysis of performance among livestock enterprises. The
classification of livestock enterprises is given in table 5 below. The output value of
livestock enterprises is calculated as the total sales plus the difference between
closing and opening valuation, minus purchases and breeding livestock appreciation.
For dairy enterprises the value of milk, both sold and used on farm, is also included.
The main items of variable expenditure for livestock enterprises are: concentrate feed
(both purchased and home grown), forage costs (for grazing livestock), roughages,
home grown straw and veterinary and medicine costs. Sundry expenses and keep
taken are also included in variable costs.
Table 5
Enterprise
Classification
Dairy Cows
cows utilised of milk production
Dairy Followers
Dairy Mixed
Beef: Upland Suckler Herds Selling Claves
as Yearling Stores
Beef: Upland Suckler Herds Selling Calves
at Weaning
enterprises where more than 80% of the total average livestock
number are breeding heifers.
enterprises where less than 80% of the total average livestock number
are breeding heifers.
Upland herds selling calves between 10 and 14 months old.
Upland herds selling calves around 6 months old.
Beef: Lowland Suckler Herds
lowland, non-LFA (less favoures areas), herds.
Beef: Finishing
enterprises where more than 75% of young cattle are sold finished.
Beef: Mixed
enterprises where less than 75% of young cattle are sold as stores and
less than 75% are sold finished.
Beef: Forward Stores
enterprises where more than 75% of young cattle are sold as stores.
Beef: Hill Suckler Herds
rough grazing accounts for more than 75% of the enterprise.
Sheep: Crossbred Ewe Production
LFA enterprises where more than 50% of ewe lambs are sold for
breeding.
Sheep: Lowland (non-LFA)
finished and store lambs raised on non-LFA (less favoures areas) land.
Sheep: Finished/Store Lamb Production
finished and store lambs raised on LFA (less favoures areas) land.
Sheep: Store Lamb Finishing (Long Keep)
lambs sold finished, where more than 80% are sold after Christmas.
Sheep: Extensive/Hardhill
enterprises raising Black Face or Cheviot pure breds, where less thatn
110% of lambs are disposed.
Sheep: Store Lamb Finishing (Short Keep)
lambs sold finished, where more than 80% are sold before Christmas.
Charts 5a, 5b and 5c below show, respectively, the average gross margins, incomes
and output:input ratios for high, average and low performers in each livestock group
(where sample sizes allow).
27
Gross Margin (Chart 5a)
Dairy enterprises achieve the highest average gross margins, ranging from £287/head
for mixed dairy enterprises to £882 for dairy cow enterprises. Beef enterprises range
from £72/head (hill suckler herds) to £253/head (upland suckler herds selling calves
as yearling stores). Sheep enterprises achieve the lowest average gross margins
ranging from, £12/head (short keep store lamb finishing) to £71/head (crossbred ewe
production). Despite the relatively high average margins of dairy and some beef
enterprises, there are some considerable differences between high and low
performers; high performing dairy follower enterprises achieved an average margin
almost 8 times greater than low performers (with an average margin of £136/head).
High performing beef hill suckler herds achieved an average margin of £410/head,
compared to -£378/head for poor performers. Low performing beef finishing, mixed
and forward store enterprises also made losses (between -£78/head and -£121/head).
Chart 5a
High
Average
Beef: Mixed
Beef: Forward
Stores
Beef: Hill Suckler
Herds
Sheep: Crossbred
Ewe Production
Sheep: Lowland
(non-LFA)
Sheep:
Finished/Store
Sheep: Store
Lamb Finishing
Sheep:
Extensive/Hardhill
Sheep: Store
Lamb Finishing
Beef: Finishing
Dairy Mixed
Beef: Upland
Suckler Herds
Beef: Upland
Suckler Herds
Beef: Lowland
Suckler Herds
Low
Dairy Followers
1400
1200
1000
800
600
400
200
0
-200
-400
-600
Dairy Cows
£
Comparison of Enterprise Performance: Gross Margin
Enterprise
Income (Chart 5b)
Taking account of the size of enterprises, dairy cow (£131,000) and dairy follower
(£37,000) enterprises achieved the highest average incomes, while beef and lamb
enterprises were less clearly separated than when examining gross margins – due to
the relatively larger size of some lamb enterprises. Beef hill suckler herds (£2,700)
and short keep store lamb finishing (£1,900) enterprises achieved the lowest average
incomes.
28
Chart 5b
High
Average
Enterprise
Beef: Mixed
Sheep: Store
Lamb Finishing
Beef: Forward
Stores
Beef: Hill Suckler
Herds
Sheep: Store
Lamb Finishing
Beef: Finishing
Dairy Mixed
Sheep:
Finished/Store
Beef: Upland
Suckler Herds
Sheep: Lowland
(non-LFA)
Beef: Upland
Suckler Herds
Beef: Lowland
Suckler Herds
Sheep:
Extensive/Hardhill
Low
Dairy Followers
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
-20000
-40000
Dairy Cows
Sheep: Crossbred
Ewe Production
£
Comparison of Enterprise Performance: Revenue
Output:Input Ratio (Chart 5c)
Despite achieving the lowest average gross margin values, lamb enterprises had a
higher rate of return for every £1 spent on the enterprise. Average ratios ranged from
1.2 for beef hill suckler herds to 3.1 for crossbred ewe production. Even low
performers in crossbred ewe production saw an average return of 2.5, a higher rate of
return than the overall average for either dairy or beef enterprises. Dairy cow and
dairy follower enterprises achieved returns of around £2 for every £1 spent.
Chart 5c
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
High
Average
29
Beef: Finishing
Beef: Hill Suckler
Herds
Beef: Mixed
Dairy Mixed
Enterprise
Beef: Lowland
Suckler Herds
Beef: Forward
Stores
Beef: Upland
Suckler Herds
Sheep:
Extensive/Hardhill
Beef: Upland
Suckler Herds
Dairy Followers
Sheep:
Finished/Store
Sheep: Lowland
(non-LFA)
Dairy Cows
Low
Sheep: Crossbred
Ewe Production
Sheep: Store
Lamb Finishing
Sheep: Store
Lamb Finishing
Outpu:Input Ratio
Comparison of Enterprise Performance: Output:Input Ratio
5.1 Dairy Cows
Table 5.1 provides the enterprise margin data for dairy cows in Scotland on a per/litre
and per/head basis in 2010/11.
Yield
The average yield per cow, for all enterprises, was 7,192 litres. High performers had
yields 3% higher than the average at 7,427 l/cow and low performers 18% less at
5,904 l/cow. Yields were 26% less for the low performers compared to the high
performers. The high performing enterprises had a herd size 7% less than the average
but 23% more than the low performers.
Gross Margin
The average enterprise gross margin for dairy cows was 12.35 ppl or £882 per head in
2010/11. On a ppl basis, this compares to 15.49p (25% higher than average) for the
high performing enterprises and 11.39p (8% lower than average) for the low
performing enterprises – a relative improvement for the high performers of 36%. The
gross margin per hectare was £2,000 for the high performers and £1,300 for the low
performers.
Output Value
The price per litre of milk sold is broadly consistent at 24.5 ppl across the enterprises.
However, the output value on a ppl basis did show differences. High performers
achieved 23.86 ppl (3.8% above the average) after sales, purchase and valuation
changes. This compares to the average output value of 22.99 ppl and 22.47 ppl
(2.26% less than average) for the low performers.
Variable Costs
The relative breakdown of costs on a ppl basis indicates that all the enterprises have
broadly similar cost structures, with purchased concentrates accounting for 60% of
total variable costs. Average purchased concentrate costs were 6.24 ppl with high
performers spending 21% less at 4.93 ppl than the average, while low performers
spent 3% more at 6.44 ppl. The average variable cost was 10.64 ppl with the high
performers spending 21% less at 8.37 ppl and the low performers 4% more at 11.08
ppl.
Other Performance Measures
The overall enterprise income for high performing enterprises is £156,000, compared
to an average of £130,000 and for low performers of £67,000. This is a 132%
improvement on the low performers. Total production in litres was 1.01 million for high
performers, 1.06 million at the average and 0.65 million litres for the low performers.
The input output ratio for the high performers is 2.8 meaning that they receive £2.80
for every £1 spent on inputs. This compared to the average of 2.2 and 2 for the low
performers.
30
Summary
High performing dairy enterprises are achieving gross margins 25% higher than the
average and 36% higher than the low performing enterprises on a ppl basis. Although
not shown, the average area of the high and low performers was similar at around 120
hectares. However, the area each cow has is greater for the low performers (around
20%) indicating that this group are more likely to be engaged in extensive production
systems than the high performers.
There is no evidence of high-input systems in this sample as the variable costs for the
high and low performers are almost the same at around £650-£690 per head. The top
performers are saving £53 per head on concentrates, but spending an extra £34 per
head on roughages and forage. Veterinary and medicine costs are 20% per head
lower for the high performers, at around £31 per head.
In this sample, the higher enterprise income performance is due to much higher milk
yields and cost savings rather than sale prices.
31
Table 5.1
Per Head & PPL
Summary Data
Number of Enterprises
Herd Size
Yield per cow
Gross Margin per litre (ppl)
Gross Margin per head (£/hd)
Milk sold
Milk used on farm
Livestock sales
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Output Value
Dairy Cows
Enterprise Margin performance Data
High Performers
9
136
7,428
15.49
£1,151
ppl
£/head
24.45
£1,842
0.36
£27
3.02
£218
27.43
£2,086
13.19
£985
4.17
£325
12.43
£917
0.17
£27
23.86
£1,802
All
36
148
7,192
12.35
£882
ppl
£/head
24.35
£1,756
0.46
£30
3.27
£224
27.58
£2,011
13.62
£968
4.83
£354
12.98
£910
0.39
£31
22.99
£1,683
Low Performers
9
110
5,904
11.39
£612
ppl
£/head
24.78
£1,410
0.73
£39
3.91
£198
28.58
£1,646
15.98
£910
5.28
£319
16.35
£910
0.45
£22
22.47
£1,306
homegrown concentrates
purchased concentrates
roughages
homegrown straw
keep taken
vet & med
0.19
4.93
0.68
0.04
0.09
0.38
£14
£389
£51
£3
£5
£31
0.53
6.24
0.58
0.08
0.08
0.64
£36
£476
£45
£5
£6
£50
0.83
6.44
0.45
0.14
0.12
0.57
£42
£414
£31
£7
£9
£38
Sundry Livestock expenses
Forage Costs
Variable Costs
GROSS MARGIN
Enterprise Income
Output/Input Ratio per head
0.93
1.14
8.37
15.49
£73
£87
£652
£1,151
1.28
1.2
10.64
12.35
£95
£89
£801
£882
1.33
1.2
11.08
11.39
£80
£72
£694
£612
£156,472
2.8
32
£130,771
2.1
£67,408
1.9
Chart 5.1a
Dairy Cows: % Spend on Variable Costs: 2010/11
Percentage of Variable Costs (%)
70%
60%
50%
Upper 25%
40%
All
Lower 25%
30%
20%
10%
Co
st
s
Fo
ra
ge
ex
pe
ns
es
ed
m
Su
nd
r
y
Li
v
es
to
ck
ve
t&
ta
ke
n
ke
ep
n
st
ra
w
ge
s
ho
m
eg
ro
w
ro
ug
ha
te
s
co
nc
en
tra
pu
rc
ha
se
d
ho
m
eg
ro
w
n
co
nc
en
tr a
te
s
0%
Inputs
Chart 5.1b
Dairy Cows: Output, Input & Gross Margin Values: 2010/11
30.00
25.00
20.00
Pence per Litre
15.00
10.00
Upper 25%
All
Lower 25%
5.00
0.00
-5.00
-10.00
-15.00
Output value
Input Value
Gross Margin Data
Performance Data
33
5.2 Dairy Mixed (Dairy & Beef Cattle combined)
Table 5.2 provides the enterprise margin data for dairy and beef cattle combined on a
per head basis.
Sales, Purchases and Valuations
The average sale price for dairy mixed enterprises was £840 per head and the
average herd size was 110. High performers sold at £881/head (5% more than the
average) while low performers received £613/head (27% less than the average. At the
end of the period, the value per head had doubled for high performers, compared to
68% for the average and 61% for the low performers, indicating better technical
achievement for the high performing enterprises.
Gross Margin
The average enterprise gross margin for dairy and beef cattle combined was £287 per
head in 2010/11. Gross margins are significantly different across the performance
groups. Here, the lower performers are returning a gross margin of £36 per head
compared to the high performers which are returning almost 16 times more at £569
per head.
Output Value
High performers have improved a 5% premium on sales price to a 29% higher output
value (per head) on the average output value at £750/head. Low performers obtained
24% less than the average at £570/head.
Variable Costs
The breakdown of the relative percentage of costs indicates that all enterprises are
spending approximately 40% of the total on purchased concentrates, even though the
actual values vary. High performers spend £153/head (14% less than the average),
while the low performers spend £224/head which is 25% above the average value of
£179/head. The average variable cost was £463/head which compares to £400/head
(14% lower than the average) for the high performers and £535/head (15% higher
than the average) – a relative difference of 25% between the high and low performers.
Other Performance Measures
The overall enterprise income for high performing enterprises is £66,000, compared to
an average of £32,000 and £4,000 for the low performers. This is 16 times that of low
performers. The output:input ratio for high performers is 2.4 meaning that they receive
£2.40 for every £1 of inputs. This compares to 1.6 for the average and 1 for the low
performers.
Summary
High performing mixed dairy enterprises achieved gross margins twice that of the
average and 16 times that of low performing enterprises, which made on £36/head.
Herd size is similar in each category, with little impact on differences in income. The
high performers are obtaining higher prices for their livestock, improving their physical
performance and minimising the cost leading to a much higher enterprise gross
margin.
34
Table 5.2
Dairy Mixed & Dairy Beef (combined)
Per Head
Summary Data 2010/11
Number of Enterprises
Herd size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Enterprise Margin Performance Data
High Performers
6
117
£881
£/head
£1,054
£122
£844
£0
£969
£0
£38
£153
£19
£15
£8
£36
£48
£84
£400
£569
£66,242
2.4
All
23
110
£840
£/head
£1,014
£145
£959
£0
£750
£0
£49
£179
£33
£10
£15
£32
£65
£80
£463
£287
£31,669
1.6
Low Performers
6
112
£613
£/head
£886
£166
£762
£0
£571
£0
£29
£224
£59
£7
£19
£35
£67
£96
£535
£36
£4,059
1.1
Chart 5.2a
Dairy Mixed: % Spend on Variable Costs: 2010/11
45%
Percentage of Variable Costs (%)
40%
35%
30%
25%
Upper 25%
All
20%
Lower 25%
15%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.2b
Dairy Mixed: Output, Input & Gross Margin Values: 2010/11
£2,000
£1,500
£/head
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
Performance Data
35
5.3 Beef: Hill Herds (Sucklers)
Table 5.3 provides the enterprise margin data for beef hill herds in Scotland on a per
head basis in 2010/11.
Sales, Purchases and Valuations
The average sale price for beef hill herds was £562 per head and the average herd
size was 37. High performers sold at £603/head (7% more than the average) while low
performers received £426/head (24% less than the average). At the end of the period,
the value per head had increased 64% for the high performers, compared to 45% for
the average and 28% for the low performers, indicating better technical achievement
for the high performers.
Gross Margin
Gross margins are significantly different across the performance groups. The average
enterprise gross margin for beef hill herds was £72 per head in 2010/11. This
compares to £410/head (almost six times the average) for the high performing
enterprises, while low performing enterprises made an average loss of -£410/head.
Output Value
High performers have improved on a 7% premium on sales price to a 25% higher
output value (£679 per head) on the average value of £542/head. Low performers
obtained 25% less than the average at £408/head.
Variable Cost
The breakdown of the relative percentage of costs indicates that different structures
exist. High performers spend relatively less on purchased concentrates and
roughages than average or low performers. Proportionally, high performers are
spending 14 % of total costs on veterinary and medicine while low performers 9%.
The average variable cost was £470/head which compares to £269/head (43% lower
than the average) for the high performers and £789/head (68% higher than the
average) for the low performers.
Other Performance Measures
The overall enterprise income for high performing enterprises is £16,000, five times
greater than the overall average of £3,000. Low performers made an average loss in
income of -£12,000. This is a 233% improvement on the low performers.
The output:input ratio for the high performers is 2.5 meaning that they receive £2.50
for every £1 of inputs. This compares to 1.1 for the average and 0.5 for the low
performers, which is a loss of 50p for every £1 spent
Summary
High performing beef hill herd enterprises are achieving gross margins six times
higher than average. It is costing the low performing enterprises almost double to
produce cattle than the price they receive, this is mostly due to high variable costs
which mean that they receive only 50p return for every £1 spent, compared to a return
of £2.50 for high performers and £1.10 on average. They are spending considerably
more on purchased concentrates and roughages than the other groups. Herd size
does not appear to be a factor. The overall average gross margin for hill herd
enterprises is fairly low at £72/head.
36
Table 5.3
Per Head
Summary Data 2010/11
Number of Enterprises
Beef: Hill Herds
Enterprise Margin Performance Data
Herd size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
High Performers
6
40
£603
£/head
£1,175
£77
£989
£33
£679
All
25
37
£562
£/head
£1,225
£103
£1,113
£29
£542
Low Performers
7
30
£426
£/head
£1,469
£139
£1,315
£33
£408
£18
£71
£15
£20
£0
£31
£38
£76
£269
£410
£16,302
2.5
£7
£194
£109
£8
£6
£35
£54
£58
£470
£72
£2,675
1.2
£0
£408
£247
£0
£4
£32
£73
£24
£789
-£381
-£11,350
0.5
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Chart 5.3a
Beef Hill Herds: % Spend on Variable Costs: 2010/11
Percentage of Variable Costs (%)
60%
50%
40%
Upper 25%
All
30%
Low er 25%
20%
10%
0%
Homegrow n
concentrates
Purchased
concentrates
Roughages
Homegrow n
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.3b
Beef Hill Herd: Output, Input & Gross Margin Values: 2010/11
£2,000
£1,500
£/head
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
Performance Data
37
5.4 Beef: Upland suckler/herds selling calves as yearling stores (c.12 months)
Table 5.4 provides the enterprise margin data for beef upland sucklers herds selling
calves as yearlings in Scotland on a per head basis in 2010/11.
Sales, Purchases and Valuations
The average sale price for this enterprise was £638 per head and the average herd
size was 90. High performers sold at £685/head (7% more than the average) while low
performers received £629/head (1% less than the average). At the end of the period,
the value per head had increased by 54% for the high performers, compared to 46%
for the average and 42% for the low performers, indicating better technical
achievement for the high performing enterprises. High performers spend 14% less on
purchases than the average, saving £11 per head.
Gross Margin
Gross margins are significantly different across the performance groups. The average
enterprise gross margin was £253/head in 2010/11. This compares to £442/head
(75% higher than the average) for the high performing enterprises and £68/head (73%
lower than the average) for the low performing enterprises.
Output Value
High performers have improved on a 7% premium on the sale price to a 22% higher
output value (£749 per head) on the average value of £613/head. Low performers
obtained 14% less than the average at £525/head.
Variable Cost
The breakdown of the relative percentage of costs indicates that all enterprises are
spending approximately 25% of the total on purchased concentrates, even though the
actual values vary. High performers spend £84/head (12% less than the average)
while low performers spend £110/head (14% above the average). The average
variable cost was £360/head which compares to £306/head (15% lower than the
average) for the high performers and £457/head (27% higher than the average) for the
low performers.
Other Performance Measures
The overall enterprise income for high performing enterprises is £50,000, compared to
an average of £23,000 and £5,000 for the low performers, a income value for high
performers 10 times that of low performers. The output:input ratio for high performers
is 2.4 meaning that they receive £2.40 for every £1 of inputs. This compares to 1.7 for
the average and 1.1 for the low performers.
Summary
High performing enterprises are achieving gross margins 75% higher than the average
and more than six times that of the low performing enterprises. Herd size will have an
effect on enterprise income as high performing herds are 25% larger than the average
and 60% larger than low performers. Regarding gross margins, the high performers
receive higher prices per animal, add more value through improved technical
performance and have lower variable costs. High performing enterprises achieved an
additional return of £1.30 on average for every £1 spent compared to low performers.
38
Table 5.4
Beef: Upland suckler/herds selling calves
Per Head
as yearling stores (c.12 months)
Summary Data 2010/11
Number of Enterprises
Herd size
Total sales
Enterprise Margin Performance Data
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
High Performers
35
113
£685
£/head
£1,494
£63
£1,327
£41
£749
All
143
90
£638
£/head
£1,342
£74
£1,261
£34
£613
Low Performers
35
70
£629
£/head
£1,177
£87
£1,164
£30
£525
£23
£84
£26
£17
£8
£32
£38
£80
£306
£442
£49,816
2.4
£24
£96
£42
£17
£10
£37
£46
£87
£360
£253
£22,770
1.7
£48
£110
£64
£29
£12
£41
£59
£94
£457
£68
£4,770
1.1
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Chart 5.4a
Beef Calves 12 months: % Spend on Variable Costs: 2010/11
30%
Percentage of Variable Costs (%)
25%
20%
Upper 25%
15%
All
Lower 25%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.4b
Beef Calves 12 months: Output, Input & Gross Margin Values: 2010/11
£2,000
£1,500
£/head
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
Performance Data
39
5.5 Beef: Lowland suckler/herds
Table 5.5 provides the enterprise data for beef lowland suckler herds in Scotland on a
per head basis in 2010/11.
Sales, Purchases and Valuations
The average sale price for beef lowland suckler herds was £716 per head and the
average herd size was 72. High performers sold at £759/head (6% more than the
average) while low performers received £569/head (20% less than the average. At the
end of the period, the value per head had increased by 49% for high performers,
compared to 44% for the average and 32% for the low performers.
Gross Margin
The average enterprise gross margin was £217 per head in 2010/11. This compares
to £397/head (83% higher than the average) for the high performing enterprises and
£1/head for the low performing enterprises.
Output Value
High performers have improved on a 6% premium on sale price to a 16% higher
output value (per head) of £741/head against the average value of £636/head. In
contrast low performers achieved a lower sales price and a lower output value
compared to the average.
Variable Cost
The breakdown of the relative percentage of costs indicates one main difference in the
spending. Low performers spend a higher proportion of total costs on purchased
concentrates (accounting for around a third of input costs for low performers,
compared to less than a fifth of that of high performers). High performers are spending
14% of total costs on veterinary and medicine compared to low performers at 9%. The
average variable cost was £422/head which compares to £344/head (18% lower than
average) for the high performers and £466/head (10% higher than the average) for the
low performers.
Other Performance Measures
The overall enterprise income for the high performing enterprises is £32,000,
compared to an average of £15,000 and £31 for the low performers. This is a large
improvement on the low performers. The output:input ratio for the high performers is
2.2 meaning that they receive £2.20 for every £1 of inputs. This compares to 1.5 for
the average and 1.0 for the low performers (a return equal to that of their spend on
variable costs).
Summary
High performing enterprises are achieving gross margins 83% higher than the average
and much higher than the low performers. The poor returns for the low performers can
be seen with the decline in the value between the output value of £467/head and the
final enterprise gross margin of just £31/head. Across this enterprise category value is
lost between sales, output and enterprise income. This indicates low levels of physical
performance. However, the top performers have a price and cost advantage over the
others.
40
Table 5.5
Beef: Lowland suckler/herds
Per Head
Summary Data 2010/11
Number of Enterprises
Enterprise Margin Performance Data
Herd size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
High Performers
11
81
£759
£/head
£1,521
£70
£1,435
£34
£741
All
42
72
£716
£/head
£1,424
£134
£1,331
£35
£639
Low Performers
11
48
£569
£/head
£1,420
£216
£1,254
£52
£467
£33
£66
£21
£42
£13
£47
£33
£89
£344
£397
£32,247
2.2
£45
£92
£40
£59
£12
£40
£36
£99
£422
£217
£15,680
1.5
£45
£140
£45
£50
£6
£42
£45
£94
£466
£1
£31
1.0
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Chart 5.5a
Beef Lowland Suckler Herds: % Spend on Variable Costs: 2010/11
35%
Percentage of Variable Costs (%)
30%
25%
20%
Upper 25%
All
Lower 25%
15%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.5b
Beef Lowland Suckler Herds: % Spend on Variable Costs: 2010/11
£2,000
£1,500
£1,000
£/head
Upper 25%
All
£500
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
Perfromance Data
41
5.6 Beef: Forward stores
Table 5.6 provides the enterprise data for beef forward store cattle in Scotland on a
per head basis in 2010/11.
Sales, Purchases and Valuations
The average sale price was £761 per head and the average herd size was 66. High
performers sold at £888/head (17% more than the average) while low performers
received £675/head (11% less than the average). At the end of the period, the value
per head had increased by 50% for the high performers, compared to 29% for the
average and only 9% for the low performers who experienced a fall in value from the
sale price, once purchases and valuations were taken into account.
Gross Margin
Gross margins are significantly different across the performance groups. The average
enterprise gross margin for beef forward stores was £72 per head in 2010/11. This
compares to £283/head (four times higher than the average) for the high performing
enterprises and -£121/head, a loss for the low performing enterprises.
Output Value
High performers have improved on a 17% premium on the average sale price to an
89% higher output value (per head), compared to the average output value of
£239/head. Low performers who sold at 11% less than the average price were 69%
below the average output value. This indicates a large loss of value due to purchases
and valuation changes.
Variable Cost
The breakdown of the relative percentage of costs indicates that the high performers
are spending relatively less on purchased concentrates (20% of total costs), than the
average (30% of total costs) or low performers (39% of total costs). However, they are
spending relatively more on other items. The average variable cost was £166/head
which comparers to £168/head (1% lower than the average) for the high performers
and £196/head (18% higher than the average) for the lower performers.
Other Performance Measures
The enterprise income for the high performing enterprises is £16,000, more than three
times the average of £5,000. Low performers made a loss of £7,000. The output:input
ratio for the high performers is 2.7 meaning that they receive £2.70 for every £1 of
inputs. This compares to 1.4 for the average and 0.4 for the low performers, which is a
loss of 60p for every £1 spent.
Summary
High performing enterprises are achieving gross margins four times higher than the
average. The main advantage the high performance enterprises have is that they are
achieving higher prices and minimising the negative effect of purchases and valuation
changes which are the cause of the low performers negative gross margin. It would
appear that the high performers are adding considerably more value to their stock
than average and low performers.
42
Table 5.6
Per Head
Summary Data 2010/11
Number of Enterprises
Beef: Forward stores
Enterprise Margin Performance Data
Herd size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
High Performers
15
57
£888
£/head
£470
£529
£378
£0
£451
£0
£15
£35
£21
£15
£8
£14
£28
£32
£168
£283
£16,012
2.7
All
58
66
£761
£/head
£298
£539
£282
£0
£239
£0
£16
£51
£15
£10
£9
£10
£25
£30
£166
£72
£4,792
1.4
Chart 5.6a
Beef Forward Stores: % Spend on Variable Costs: 2010/11
45%
Percentage of Variable Costs (%)
40%
35%
30%
25%
Upper 25%
All
20%
Lower 25%
15%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.6b
Beef Forward Stores: Output, Input & Gross Margin Values: 2010/11
£2,000
£1,500
£/head
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
Performance Data
43
Low Performers
15
55
£675
£/head
£252
£521
£331
£0
£75
£0
£8
£77
£17
£10
£10
£9
£30
£35
£196
-£121
-£6,642
0.4
5.7 Beef: Mixed
Table 5.7 provides the enterprise data for beef mixed herds in Scotland on a per head
basis for 2010/11.
Sales, Purchases and Valuations
The average sale price was £806/head and the average herd size was 96. High
performers had a smaller average herd size of 56. High performers sold at £902/head
(12% more than the average) while low performers received £682/head (15% less
than the average). At the end of the period, the value per head had increased by 64%
for the high performers, compared to 38% for the average and 18% for the low
performers.
Gross Margin
The average enterprise gross margin for beef mixed herds was £89 per head in
2010/11. This compares to £283/head (three times higher) for the high performing
enterprises and to a loss of -£115/head for the low performing enterprises.
Output Value
High performers improved on a 12% premium on the average sale price to a 50%
higher output value (per head) on the average output value of £337/head. Low
performers who sold at 15% less than the average price were 57% below the average
output value. This indicates a substantial loss of value due to purchases and
valuation changes.
Variable Cost
The breakdown of the relative percentage of costs indicates that the low performers
are spending proportionately more on home grown concentrates compared to the high
performers. High performers spend 28% of their total costs on purchased
concentrates compared to 34% for the low performing enterprises, but spent more on
forage costs. The average variable cost was £248/head, which compares to
£224/head (10% lower than the average) for the high performers and £261/head (5%
higher than the average) for the low performers.
Other Performance Measures
The enterprise income for the high performing enterprises is £16,000, compared to an
average of £9,000 and a loss of £10,000 for the low performers. The output:input ratio
for the high performers is 2.3 meaning that they receive £2.30 for every £1 of inputs.
This compares to 1.4 for the average and 0.6 for the low performers, which is a loss of
40p for every £1 spent.
Summary
High performing enterprises are achieving gross margins 218% higher than the
average. The high performers are again not only obtaining higher prices but are
minimising the effect of purchases and valuation changes. As in forward store
enterprises, it would appear that the high performers are adding more value to their
stock than the average and low performers.
44
Table 5.7
Per Head
Summary Data 2010/11
Number of Enterprises
Beef: Mixed
Enterprise Margin Performance Data
High Performers
9
56
£902
£/head
£397
£415
£377
£0
£507
£0
£24
£62
£10
£12
£7
£14
£43
£52
£224
£283
£15,738
2.3
Herd size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
All
36
96
£806
£/head
£420
£503
£386
£0
£337
£0
£45
£79
£19
£15
£6
£13
£31
£39
£248
£89
£8,544
1.4
Chart 5.7a
Beef Mixed: % Spend on Variable Costs: 2010/11
40%
Percentage of Variable Costs (%)
35%
30%
25%
Upper 25%
20%
All
Lower 25%
15%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.7b
Beef Mixed: Output,Input & Gross margin Values: 2010/11
£2,000
£1,500
£/head
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
Performance Values
45
Low Performers
9
86
£682
£/head
£290
£539
£288
£0
£146
£0
£62
£90
£11
£19
£3
£14
£26
£37
£261
-£115
-£9,901
0.6
5.8 Beef Finishing
Table 5.8 provides the data for beef finishing herds in Scotland on a per head basis for
2010/11.
Sales, Purchases and Valuations
The average sale price for beef finishing herds was £1,047 and the average herd size
was 118. High performers sold at £1,052/head while low performers received
£964/head (8% less than the average). At the end of the period, the value per head
had increased by 47% for the high performers, 34% for the average and 24% for the
low performers, indicating that the high performers added value more value.
Gross Margins
The average enterprise gross margin for beef finishing herds was £92 per head in
2010/11. This compares to £282/head (three times higher than the average) for the
high performing enterprises, while low performing enterprises made an average loss
of -£78/head.
Output Value
High performers improved on no price premium on the average sale price to a 29%
higher output value (per head) on the average output value of £422/head. Low
performers who sold at 8% less than the average price were 26% below the average
output value. This indicates a loss of value due to purchases and valuation changes
for the low performers.
Variable Cost
The breakdown of the relative percentage of costs indicates that the enterprise groups
are broadly consistent in the spending patterns. The high performers spend
proportionally less on concentrates, but more on forage than the others. The average
variable cost was £330/head, which compares to £263/head (20% lower than the
average) for the high performers and £391/head (19% higher than the average) for the
low performers.
Other Performance Measures
The enterprise income for the high performers is £31,000, almost three times more
than the overall average of £11,000, while low performers made an average loss of
£9,000. This is a 465% improvement on the low performers. The output:input ratio for
the high performers is 2.1 meaning that they receive £2.10 for every £1 of inputs. This
compares to 1.3 for the average and 0.8 for the low performers, which is a loss of 20p
for every £1 spent.
Summary
High performing enterprises are achieving gross margins three times higher than the
average. The high performers are saving money on all of the variable cost items
compared to the other groups, including a £88 a head saving on concentrates and
roughages alone when compared to low performers. With sale prices being
reasonably consistent it is concluded that the improved margins are achieved by more
effective use of purchases, stock improvements and better cost control.
46
Table 5.8
Beef: Finishing
Per Head
Summary Data 2010/11
Number of Enterprises
Enterprise Margin Performance Data
Herd size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
High Performers
22
110
£1,052
£/head
£659
£572
£594
£0
£545
All
90
118
£1,047
£/head
£623
£592
£656
£0
£422
Low Performers
23
109
£964
£/head
£640
£561
£730
£0
£313
£73
£59
£12
£21
£11
£15
£25
£47
£263
£282
£31,136
2.1
£89
£89
£14
£39
£7
£14
£30
£49
£330
£92
£10,900
1.3
£113
£104
£15
£41
£7
£17
£42
£53
£391
-£78
-£8,536
0.8
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Chart 5.8a
Beef Finishing: % Spend on Variable Costs: 2010/11
35%
Percentage of Variable Costs (%)
30%
25%
20%
Upper 25%
All
Lower 25%
15%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.8b
Beef Finidhing: Output,Input & Margin Values: 2010/11
£2,000
£1,500
£/head
£1,000
Upper 25%
£500
All
Lower 25%
£0
-£500
-£1,000
Output value
Input Value
Gross Margin Data
Perfrormance Data
47
5.9 Sheep: extensive/hardhill
Table 5.9 provides the enterprise data for extensive hardhill sheep flocks in Scotland
on a per head basis for 2010/11.
Sales, Purchases and Valuations
The average sale price was £48 per head and the average flock size was 708. High
performers had a larger average flock size of 876. High performers also sold at
£76/head (58% more than the average) while low performers received £24/head (50%
less than the average). At the end of the period the value per head had increased by
77% for the high performers, compared to 71% for the average and 52% for the low
performers. The low performers are spending proportionally more on replacements at
20% when the average was 12% of the sales price.
Gross Margin
The average gross margin for extensive hardhill sheep flocks was £18 per head in
2010/11. This compares to £40/head (twice as much as the average) for the high
performing enterprises and a loss of -£4/head for the low performing enterprises.
Output Value
High performers reversed a 58% premium on the average sale price down to a lower
figure of 47% for the output value per head based on the average output value of
£47/head. Low performers who sold at 50% less than the average price narrowed the
gap to 41% below the average output value to actually increase the value per head
from a sales price of £24/head, to an output value of £28/head.
Variable Cost
The breakdown of the relative percentage of costs indicates that the enterprises are
consistent with their spending patterns, though high performers are spending
proportionally more on purchased concentrates and sundry expenses than the
average and low performers. The average variable cost was £28/head, which
compares to £29/head (2% higher than the average) for the high performers and
£32/head (12% higher than the average) for the low performers.
Other Performance Measures
The flock size in the high performing enterprises (and others) obviously impacts on the
enterprise income. The enterprise income for the high performing enterprises is
£35,000, compared to an average of £13,000 and a loss of £3,000 for the low
performers. The input/input ratio for the high performers is 2.4 meaning that they
receive £2.40 for every £1 on inputs. This compares to 1.7 for the average and 0.9 for
the low performers which is a loss of 10p for every £1 spent.
Summary
High performing enterprises are achieving gross margins twice as high as the
average. The high performing enterprises profitability comes from the higher prices
and increased flock sizes of this group. Small changes in the value of purchases and
valuations however, will have a greater overall effect with such large flock sizes.
48
Table 5.9
Sheep: extensive/hardhill
Per Head
Summary Data 2010/11
Number of Enterprises
Flock size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Enterprise Margin Performance Data
High Performers
11
876
£76
£/head
£89
£13
£77
£7
£69
£0
£1
£10
£1
£0
£2
£4
£6
£4
£29
£40
£34,987
2.4
All
45
708
£48
£/head
£71
£6
£59
£7
£47
£0
£0
£9
£1
£0
£2
£5
£6
£5
£28
£18
£13,057
1.7
Low Performers
11
667
£24
£/head
£66
£5
£49
£8
£28
£0
£0
£8
£1
£0
£4
£4
£5
£7
£32
-£4
-£2,656
0.9
Chart 5.9a
Sheep Extensive/Hardhill: % Spend on Variable Costs: 2010/11
40%
Percentage of Variable Costs (%)
35%
30%
25%
Upper 25%
20%
All
Lower 25%
15%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.9b
Sheep Extensive/Hardhill: Output, Input & Gross Margin Values: 2010/11
£200
£175
£150
£125
£/head
£100
Upper 25%
£75
All
Lower 25%
£50
£25
£0
-£25
-£50
Output value
Input Value
Gross Margin Data
Performance Data
49
5.10 Sheep: Finished/store lamb production
Table 5.10 provides the enterprise data for finished/store lamb production in Scotland
on a per head basis for 2010/11.
Sales, Purchases and Valuations
The average sale price was £98/head and the average flock size was 511. High
performers had a smaller average flock size of 488. High performers sold at
£124/head (27% more than the average) while low performers received £73/head
(25% less than the average). At the end of the period, the value per head had more
than doubled for the high performers, compared to 98% for the average and 81% for
the low performers.
Gross Margin
The average enterprise gross margin for finished/store lamb production was £46 per
head in 2010/11. This compares to £74/head (62% higher than the margin) for the
high performing enterprises and £17/head (63% lower than the average) for the low
performing enterprises.
Output Value
High performers marginally improved on a 27% premium on the average sale price to
a 28% higher output value (per head) compared to the average output value of
£88/head. Low performers who sold at 25% less than the average price were 27%
below the average output value.
Variable Cost
The breakdown of the relative percentage costs indicates that all enterprises have
broadly the same cost structure with purchased concentrates accounting for around
32% of total costs and forage around 20%. The average variable cost was £42/head,
which compares to £39/head (8% lower than the average) for the high performers and
£47/head (12% higher than the average) for the low performers.
Other Performance Measures
The enterprise income for the high performing enterprises is £36,000, compared to an
average of £23,000 and four times greater than that of low performers at £8,000.
The output:input ratio for the high performers is 3.2 meaning that they receive £3.20
for every £1 of inputs. This compares to 2.1 for the average and 1.4 for the low
performers.
Summary
High performing enterprises are achieving gross margins 62% higher than the
average. As the flock sizes are comparable across the groups it is the higher sales
prices that have the most influence on the gross margin. The cost of purchases and
valuation changes are in, relative terms, consistent across the enterprises.
50
Table 5.10
Sheep: Finished/store lamb production
Per Head
Summary Data 2010/11
Number of Enterprises
Flock size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Enterprise Margin Performance Data
High Performers
30
488
£124
£/head
£91
£20
£75
£8
£112
£0
£0
£13
£1
£0
£2
£6
£7
£8
£39
£74
£35,951
2.9
All
114
511
£98
£/head
£88
£17
£73
£8
£88
£0
£2
£13
£1
£0
£3
£6
£7
£9
£42
£46
£23,293
2.1
Chart 5.10a
Sheep Finished/Store Lamb: % Spend on Variable Costs: 2010/11
35%
Percentage of Variable Costs (%)
30%
25%
20%
Upper 25%
All
Lower 25%
15%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.10b
Sheep Finished/Store Lamb: Outout, Input & Gross Margin Values: 2010/11
£200
£175
£150
£125
£/head
£100
Upper 25%
£75
All
Lower 25%
£50
£25
£0
-£25
-£50
Output value
Input Value
Gross Margin Data
Peformance Data
51
Low Performers
29
494
£73
£/head
£79
£17
£62
£9
£64
£0
£3
£15
£2
£1
£4
£7
£7
£9
£47
£17
£8,377
1.4
5.11 Sheep: Lowland (non LFA)
Table 5.11 provides the enterprise data for lowland (non-LFA) sheep in Scotland on a
per head basis in 2010/11.
Sales, Purchases and Valuations
The average sale price was £126/head and the average flock size was 312. High
performers sold at £142/head (13% more than the average) while low performers
received £134/head (7% more than the average). At the end of the period, the value
per head had increased by 80% for the high performers, compared to 83% for the
average and 77% for the low performers, indicating even performance across the
groupings.
Gross Margin
The average gross margin for lowland non-LFA sheep was £53 per head in 2010/11.
This compares with £89/head (66% more than the average) for the high performing
enterprises and £22/head (60% lower than the average) for the low performing
enterprises.
Output Value
High performers slightly improved on a 13% premium on the average sale price to a
16% higher output value (per head) on the average output value of £110 per head.
Low performers who sold at 7% more than the average price were 1% below the
average output value. The low performers loss of value is because of valuation
changes.
Variable Cost
The breakdown of the relative percentage of costs indicates that high performers
spend proportionally more on veterinary and medicine, around 20% of variable costs
compared to 13% for the average; other costs are similar in percentage terms, though
low performers spent proportionally more on purchased concentrates. The average
variable cost was £57/head, which compares to £39/head (32% lower than the
average) for the high performers and £87/head (54% more than the average) for the
low performers.
Other Performance Measures
The enterprise income for the high performing enterprises is £27,000, compared to an
average of £17,000 and three times greater than that of low performers at £9,000,
despite smaller average flock sizes on high performing enterprises. The output:input
ratio for the high performers is 3.3 meaning that they receive £3.30 for £1 of inputs.
This compares to 2.1 for the average and 1.2 for the low performers.
Summary
High performing enterprises are achieving gross margins 66% higher than the
average. The high performers are maximising the prices for their livestock, replacing
their livestock and increasing its value. Combined with reducing variable costs, this
gives the high performing enterprises a competitive advantage over the others.
52
Sheep: Lowland (non LFA)
Per Head
Summary Data 2010/11
Flock size
Enterprise Margin Performance Data
Table 5.11
Flock size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
High Performers
9
303
£142
£/head
£150
£47
£113
£5
£128
All
39
312
£126
£/head
£126
£26
£107
£8
£110
Low Performers
10
423
£134
£/head
£125
£11
£129
£11
£108
£0
£13
£1
£1
£0
£8
£7
£8
£39
£89
£26,945
3.3
£3
£19
£2
£2
£3
£7
£11
£9
£57
£53
£16,707
1.9
£3
£34
£6
£3
£4
£9
£15
£14
£87
£22
£9,101
1.2
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Chart 5.11a
Sheep Lowland (Non LFA): % Spend on Variable Costs: 2010/11
45%
Percentage of Variable Costs (%)
40%
35%
30%
25%
Upper 25%
All
20%
Lower 25%
15%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.11b
Sheep Lowland (Non LFA): Output, Input & Gross Margin Values: 2010/11
£200
£175
£150
£125
£100
£/head
£75
Upper 25%
£50
All
£25
Lower 25%
£0
-£25
-£50
-£75
-£100
-£125
Output value
Input Value
Gross Margin Data
Performance Data
53
5.12 Sheep: Store lamb finishing (long keep)
Table 5.12 provides the enterprise data for store lamb finishing (long keep) enterprises
in Scotland on a per head basis for 2010/11.
Sales, Purchases and Valuations
The average sale price was £73/head and the average flock size was 325. High
performers sold at £93/head (28% more than the average) while low performers
received £49/head (33% less than the average). At the end of the period the value per
head had increased 63% for the high performers, compared to 46% for the average
and 32% for the low performers. The closing valuation for low performers is small, at
£16/head, adding little value to an already inferior price.
Gross Margin
The average enterprise gross margin for store lamb finishing (long keep) enterprises
was £20 per head in 2010/11. This compares to £37/head (91% higher than average)
for the high performing enterprises and £6/head (68% lower than the average) for the
low performers.
Output Value
High performers improved on a 28% premium on the average sale price to a 57%
higher output value (per head) compared to the average output value of £30/head.
Low performers who sold at 33% less than the average price were 49% below the
average output value. The low performing enterprises are purchasing replacements at
similar values as the other enterprises, but not achieving the higher sales price.
Variable Cost
The breakdown of the relative percentage of costs indicates that the high performers
are spending 46% of total variable costs on purchased concentrates compared to 38%
for the low performers. High performers are also spending proportionally more on
forage at 19% of total costs compared to 7% for the low performers. The average
variable cost was £11/head, which compares to £11 for the high performers and
£9/head (14% higher than the average) for the low performers.
Other Performance Measures
The enterprise income for the high performing enterprises is £9,000, compared to an
average of £6,000 and £1,000 for the low performers. The output:input ratio for the
high performers is 4.5 meaning that they receive £4.50 for every £1 of input. This
compares to 2.8 for the average and 1.7 for the low performers.
Summary
There are considerable differences in flock size across the enterprises. High
performing enterprises are achieving gross margins almost twice as high as the
average and more than six times that of low performers. High performers achieved an
additional return close to £3 per £1 spent compared to low performers. The price
obtained is the main factor in being profitable with purchases and valuation changes
having a secondary effect. Variable costs are similar and are not a distinct influence
on the gross margin.
54
Table 5.12
Sheep: Store lamb finishing (long keep)
Per Head
Summary Data 2010/11
Number of Enterprises
Flock size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Enterprise Margin Performance Data
High Performers
7
239
£93
£/head
£31
£48
£28
£0
48
£0
£1
£5
£0
£0
£0
£1
£2
£2
£11
£37
£8,902
4.5
All
25
325
£73
£/head
£23
£44
£21
£0
30
£0
£1
£4
£0
£0
£1
£1
£2
£1
£11
£20
£6,344
2.8
Chart 5.12a
Sheep Store Lamb (Long Keep): % Spend on Varible Costs: 2010/11
50%
45%
Percentage of Variable Costs (%)
40%
35%
30%
Upper 25%
25%
All
Lower 25%
20%
15%
10%
5%
0%
Homegrown
concentrates
Purchased
concentrates
Roughages
Homegrown
straw
Keep taken
Vet & med
Sundry
Livestock
expenses
Forage Costs
Inputs
Chart 5.12b
Sheep Store Lamb (Long Keep): Output, Input & Gross Margin Values: 2010/11
£50
£/head
£25
Upper 25%
£0
All
Lower 25%
-£25
-£50
Output value
Input Value
Gross Margin Data
Performance Data
55
Low Performers
6
174
£49
£/head
£16
£41
£8
£0
16
£0
£0
£4
£0
£1
£2
£1
£2
£1
£9
£6
£1,083
1.7
5.13 Enterprises with less than 5 Holdings in the Quartile Groups
Table 5.13 provides the overall average enterprise margin data for those activities with less than five enterprises in the quartile
groups on a per head basis. The low sample size makes analysis between the top and bottom performance groups impractical.
Table 5.13
Per Head
Summary Data 2010/11
Number of Enterprises
Enterprise Margin Performance Data
Livestock Enterprises with Less Than 5 Holdings in Quartile Group
Herd size
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Total Output Value
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
Dairy Followers
Beef: Suckler Calves (6m)
Sheep: Crossbred Ewe
Store Lamb (short keep)
12
61
£1,250
£/head
£1,517
£173
£1,291
£0
1,303
10
75
£655
£/head
£1,234
£116
£1,176
£23
574
£0
£29
£91
£45
£4
£18
£25
£57
£85
£354
£220
£16,411
1.6
10
807
£117
£/head
£101
£22
£76
£14
105
10
156
£74
£/head
£13
£52
£17
£0
18
£0
£1
£1
£0
£0
£0
£1
£2
£1
£6
£12
£1,865
3.0
£32
£216
£49
£3
£120
£47
£114
£104
£686
£617
£37,455
1.9
56
£1
£9
£0
£1
£3
£7
£8
£5
£34
£71
£57,205
3.1
6 Summary Tables
Table 6a
SUMMARY OF ENTERPRISE GROSS MARGINS 2010/11
2010/11
Winter Wheat
Winter Barley
Spring Barley
Mixed Barley
Winter Oil Seed Rape
Winter Oats
Spring Oats
All Potatoes (combined)
High
1,373
815
869
1,055
1,188
*
949
*
GROSS MARGIN
Overall
£ per Hectare
Average
1,020
584
623
749
706
654
571
4,078
Dairy Cows
Dairy Followers
Dairy Mixed & Dairy Beef (combined)
Beef: Hill Herds
Beef: Upland suckler/herds selling calves at weaning (6 months)
Beef: Upland suckler/herds selling calves as yearling stores (12 months)
Beef: Lowland suckler/herds
Beef: Forward stores
Beef: Mixed
Beef: Finishing
High
1,151
*
569
410
*
442
397
283
283
282
£ per Head
Average
882
617
287
72
220
253
217
72
89
92
Low
612
*
36
-381
*
68
1
-121
-115
-78
40
*
74
89
*
37
18
71
46
53
12
20
-4
*
17
22
*
6
Top 25%
Sheep: Extensive/hardhill
Sheep: Crossbred Ewe Production
Sheep:Finished/store lamb production
Sheep: Lowland (non LFA)
Sheep: Store Lamb finishing (short keep)
Sheep: Store Lamb finishing (long keep)
* removed less than five holding
57
Bottom 25%
Low
697
*
366
519
251
*
208
*
Table 6b
SAMPLE SIZE BY ENTERPRISE 2010/11
2010/11
Top 25%
SAMPLE SIZE
Overall
Bottom 25%
High
All
Low
16
5
45
7
9
*
5
*
64
18
183
30
35
9
22
14
Dairy Cows
Dairy Followers
Dairy Mixed & Dairy Beef (combined)
Beef: Hill Herds
Beef: Upland suckler/herds selling calves at weaning (6 months)
Beef: Upland suckler/herds selling calves as yearling stores (12 months)
Beef: Lowland suckler/herds
Beef: Forward stores
Beef: Mixed
Beef: Finishing
9
*
6
6
*
35
11
15
9
22
Average
36
12
23
25
10
143
42
58
36
90
Sheep: Extensive/hardhill
Sheep: Crossbred Ewe Production
Sheep:Finished/store lamb production
Sheep: Lowland (non LFA)
Sheep: Store Lamb finishing (short keep)
Sheep: Store Lamb finishing (long keep)
11
*
30
9
*
7
45
10
114
39
10
25
Winter Wheat
Winter Barley
Spring Barley
Mixed Barley
Winter Oil Seed Rape
Winter Oats
Spring Oats
All Potatoes (combined)
High
* removed less than five holding
58
15
*
45
8
9
*
5
*
Low
9
*
6
7
*
35
11
15
9
23
11
*
29
10
*
6
7 Definition of Terms
Table 7a – Crops
Area (ha)
Yield (t/ha)
Production (t)
The area of the crop enterprise in hectares
Total production divided by crop area
Area (hectares) times average yield (tonnes per hectare)
Price (£/t)
Gross Margin (£/ha)
Sales of crops plus the value of closing stocks and value transferred out to other
enterprises.
The sum of gross output less replacement and variable costs
Value of Crop Output
Value of Straw Sold
Total Output Value
The total value of crops produced by the enterprise. Any difference between the
opening valuation of any stocks of previous crops and their ultimate disposal
value (sales, used on farm and any end-year stocks) is included in total farm
output
Monetary value of straw sold
Value of crop and straw output
Fertiliser
Expenditure on purchased seeds adjusted for changes in stocks. Home-grown
seed is included and charged at estimated market price. Any seeds from current
crops and sown, are included in the closing valuation of the crop and hence in
enterprise output.
This includes lime, fertilisers and other manures, and is adjusted for changes in
stock. Fertilisers sown for next year's crops are treated as if they were still in store
and are included in the closing valuation
Crop Chemicals
This includes costs of pre-emergent sprays, fungicides, herbicides, dusts and
insecticides and other crop sprays.
Sundry Expenses
These comprise all crop inputs not separately specified, e.g. marketing charges,
packing materials, British Potato Council levy, baling twine and wire (though not
fencing wire)
Variable Costs
GROSS MARGIN
Enterprise Income
Output/Input Ratio
These are taken to be costs of feed, veterinary fees and medicines, other
livestock costs, seeds, fertilisers, crop protection and other crop costs.
The sum of gross output less replacement and variable costs
Area of enterprise in hectares multiplied by the gross margin value
Ratio of production output to what is required to produce it (inputs)
Seeds
59
Table 7b – Dairy
Number of Enterprises
Herd Size
Yield per cow
Gross Margin per litre (ppl)
Gross Margin per head (£/hd)
Count of separate enterprises in the sample
The average number of dairy cows in the milking herd over the year
Annual herd production in litres divided by the average number of cows in the herd
Enterprise Output less the Variable Costs of the enterprise in pence per litre
Enterprise Output less the Variable Costs of the enterprise in £'s per head
Milk sold
Milk used on farm
Livestock sales
Total sales
Closing valuation
Total purchases
Opening valuation
Blsa
Value of milk sold in ppl or £/head
The value of milk and milk products fed on the farm (excluding direct suckling)
Value of livestock sold (per head)
Value of milk sold in ppl or £/head plus, milk used on farm and livestock sales
Value of livestock at the end of the accounting period
Average value of livestock purchases on a £ per head basis
Value of livestock at the start of the accounting period
The change in value of breeding livestock between the opening and closing value
that is due to general market price changes rather than changes in the quality or age
of the herd.
Output Value
The total sales of livestock and livestock products including part of the valuation
change
home grown concentrates
purchased concentrates
roughages
This includes ex-farm value of all home produced cereals, beans, milk (excluding
direct suckling), etc. fed on the farm both from the current and previous years' crops.
This represents expenditure on feeds and feed additives
Feed high in fibre (greater than 18% crude fibre); tends to be bulky, coarse and low
in energy, hay, straw or other coarse feed fed to cattle
home grown straw
keep taken
vet & med
Sundry Livestock expenses
Value of straw consumed
Charges for grazing (seasonal)
This consists of veterinary fees and the cost of all medicines.
This comprises straw bought specifically for costs bedding materials, breeding costs
(including AI and stud fees), miscellaneous dairy expenses, disinfectants, marketing
and storage costs of animal products, Milk Development Council levy and other
livestock costs not separately identified.
Forage Costs
Variable Costs
Value of fodder crops such as hay, silage, root crops and maize
These are taken to be costs of feed, veterinary fees and medicines, other livestock
costs, seeds, fertilisers, crop protection and other crop costs.
GROSS MARGIN
Enterprise Income
Output/Input Ratio per head
Enterprise Output less the Variable Costs of the enterprise
Gross margin times the herd size
Output value divided by the variable cost (ppl basis)
60
Table 7c – Livestock (excluding Dairy)
Number of Enterprises
Herd size
Total sales
Count of separate enterprises in the sample
The average herd size
Value of livestock sold (per head)
Closing valuation
Total purchases
Opening valuation
Blsa
Value of livestock at the end of the accounting period
Average value of livestock purchases on a £ per head basis
Value of livestock at the start of the accounting period
The change in value of breeding livestock between the opening and closing
value that is due to general market price changes rather than changes in the
quality or age of the herd.
Total Output Value
Homegrown concentrates
Purchased concentrates
Roughages
Homegrown straw
Keep taken
Vet & med
Sundry Livestock expenses
Forage Costs
VARIABLE COSTS
GROSS MARGIN
Enterprise Income
Output/Input Ratio
The total sales of livestock and livestock products including part of the
valuation change
This includes ex-farm value of all home produced cereals, beans, milk
(excluding direct suckling), etc. fed on the farm both from the current and
previous years' crops.
This represents expenditure on feeds and feed additives
Feed high in fibre (greater than 18% crude fibre); tends to be bulky, coarse and
low in energy, hay, straw or other coarse feed fed to cattle
Value of straw consumed
Charges for grazing (seasonal)
This consists of veterinary fees and the cost of all medicines.
This comprises straw bought specifically for costs bedding materials, breeding
costs (including AI and stud fees), miscellaneous dairy expenses, disinfectants,
marketing and storage costs of animal products, Milk Development Council levy
and other livestock costs not separately identified.
Value of fodder crops such as hay, silage, root crops and maize
These are taken to be costs of feed, veterinary fees and medicines, other
livestock costs, seeds, fertilisers, crop protection and other crop costs.
Enterprise Output less the Variable Costs of the enterprise
Gross margin times the herd size
Output value divided by the variable cost (per head basis)
61
8 Related Information
Results from all Scottish Government agricultural surveys can be accessed
here:
http://www.scotland.gov.uk/Topics/Statistics/Browse/AgricultureFisheries/Publications
Quality Meat Scotland (QMS) publish their own enterprises margin analysis of
Scottish livestock enterprises. These results contain more technical detail of
livestock enterprises and include net as well as gross margins, though
enterprise results are based on typically smaller sample sizes. QMS
enterprise analysis can be accessed here:
http://www.qmscotland.co.uk/index.php?option=com_remository&func=startd
own&id=889
The Department for Environment, Food and Rural Affairs (DEFRA) in England
and the Department of Agriculture and Rural Development (DARD in Northern
Ireland routinely publish results of enterprise margin analysis, these can be
accessed from the websites below:
England (DEFRA)
http://www.fbspartnership.co.uk/index.php?id=1530
Northern Ireland (DARD)
www.dardni.gov.uk/ni-farm-performance-indicators-2010-11.pdf
9 Contacts
We welcome comments on the content and format of this report, which can
be sent to:
Email: agric.stats@Scotland.gsi.gov.uk
Tel: 0300 244 9718
62