2. Pasture for Life - It Can Be Done The Business Case Jonathan Brunyee Senior Lecturer in Farm Business Management Royal Agricultural University

3. Most livestock systems are not viable without CAP support Farm Business Income by Cost Centre 2014/15 (Defra 2015)

4. Most livestock systems are not viable without CAP support Farm Business Income by Cost Centre 2014/15 (Defra 2015)

5. The environmental and social benefits of pasture-based livestock systems are clear… …We believe the business case is strong too.

6. Gathering The Evidence Collated case study info from 12 PFLA farmers in 2013. Presented ORFC 2014 Worked with AHDB Stocktake consultants to gather detailed financial and physical performance data for 2014/15 from eight farms Analysed and compared our data to Stocktake figures – average and top third

7. Robust Data? Broad sample – not just the best! Collected by independent consultants Stocktake benchmarking system Weighted averages All internal costs considered (including own labour) But there is more to do in future… Only a small sample Mix of upland, lowland, organic, conventional Mix of routes to market (stores, processors, direct sales) Only one year External costs need consideration (CO 2 etc) And there are three types of farmer…..those that can add up and those that can’t!

8. Breeding Sheep Flocks (Non SDA Farms) – Stocktake Only PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Gross Output104.04104.12 Gross Output less Replacement Costs93.0692.69 Feed and Forage Costs14.1517.76 Vet & Med6.376.61 Other Variable Costs (bedding, ear tags etc.)6.427.80 Total Variable Costs26.9332.17 Gross Margin per ewe66.1360.51 Labour (paid and unpaid)20.9728.29 Machinery Repairs and Contracting3.485.43 Depreciation5.587.31 Other Fixed Costs8.7610.91 Total Fixed Costs (before rent)38.7951.94 Net Margin per ewe (before rent)45.338.57 Stocking Rate 1.1LU/ha (10 ewes/ha) 1.0LU/ha (9.09 ewes/ha) Net Margin per hectare (before rent)£453£78

9. Breeding Sheep Flocks (Non SDA Farms) – With PFLA Figures (3 farms) PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Gross Output93.39104.04104.12 Gross Output less Replacement Costs89.2793.0692.69 Feed and Forage Costs7.1414.1517.76 Vet & Med5.096.376.61 Other Variable Costs (bedding, ear tags etc.)4.306.427.80 Total Variable Costs16.5326.9332.17 Gross Margin per ewe72.7466.1360.51 Labour (paid and unpaid)30.0220.9728.29 Machinery Repairs and Contracting6.233.485.43 Depreciation2.505.587.31 Other Fixed Costs9.928.7610.91 Total Fixed Costs (before rent)48.6738.7951.94 Net Margin per ewe (before rent)42.7145.338.57 Stocking Rate 1.1LU/ha (10 ewes/ha) 1.1LU/ha (10 ewes/ha) 1.0LU/ha (9.09 ewes/ha) Net Margin per hectare (before rent)£427£453£78

10. Breeding Sheep Flocks (Non SDA Farms) – Compared to the Average PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Gross Output93.39104.04104.12 Gross Output less Replacement Costs89.2793.0692.69 Feed and Forage Costs7.1414.1517.76 Vet & Med5.096.376.61 Other Variable Costs (bedding, ear tags etc.)4.306.427.80 Total Variable Costs16.5326.9332.17 Gross Margin per ewe72.7466.1360.51 Labour (paid and unpaid)30.0220.9728.29 Machinery Repairs and Contracting6.233.485.43 Depreciation2.505.587.31 Other Fixed Costs9.928.7610.91 Total Fixed Costs (before rent)48.6738.7951.94 Net Margin per ewe (before rent)42.7145.338.57 Stocking Rate 1.1LU/ha (10 ewes/ha) 1.1LU/ha (10 ewes/ha) 1.0LU/ha (9.09 ewes/ha) Net Margin per hectare (before rent)£427£453£78 Rents vary considerably – grass averages around £267/ha (RICS) BPS and AE payments not included

11. Breeding Sheep Flocks (Non SDA Farms) – Performance Compared PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Flocks in sample32680 Average flock size (ewes) (not weighted)949759551 Number of full grass grazing weeks524847 Scanning %168%171%176% Lambs reared per 100 ewes put to ram135%141%143% Average age at sale (days)175155152 Total DM concentrate fed (kg/ewe)0kg23kg28kg

12. It Can Be Done - Sheep Overview Financial Performance Higher gross margins - although output (sales per ewe) is down due to lower lambing and rearing rates, variable costs, particularly concentrate feed purchases, are much lower, resulting in a very healthy gross margin Higher fixed costs - higher labour and contracting costs result in increased fixed costs Positive net margin per ewe - pasture fed systems show a bigger net margin per ewe than the average farms and rival the top third of producers Positive net margin per hectare – pasture-fed systems show a bigger net margin than the average farm. To surpass the top third of producers more work is needed on fixed costs and lambs reared.

13. It Can Be Done - Sheep Overview Physical Performance PFLA farmers are committed to forage-based systems and concentrate use is eliminated Animals graze outside all year round Scanning rates are down slightly Lambs reared per 100 ewes is less than the average and top third, due to a lower lambing % and more lamb losses Although it takes 20 days longer to finish the PFLA lambs to comparable weights a longer grazing life can increase the nutrient value of the meat.

14. Suckler Cows (Non SDA and SDA Farms Combined) – Stocktake Only PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Stocktake SDA Top Third Stocktake SDA Average Gross Output597.99526.41649.66602.13 Gross Output less Replacement Costs556.84464.86613.06542.92 Feed and Forage Costs95.44105.8481.53111.43 Vet & Med27.7329.1540.6839.35 Other Variable Costs41.4649.2943.0942.83 Total Variable Costs164.63184.28165.30193.61 Gross Margin per cow392.21280.58447.76349.31 Labour (paid and unpaid)114.90137.65116.02119.33 Machinery Repairs and Contracting63.5065.7155.3968.52 Depreciation54.7576.3576.6481.15 Other Fixed Costs84.6893.92102.91107.90 Total Fixed Costs (before rent)317.83373.63350.96376.90 Net Margin per cow (before rent)74.38-93.0596.80-27.59 Stocking Rate (where a cow plus calf = 1.1 LU) 1.6LU/ha (1.45 cows + calves/ha) 1.3LU/ha (1.18 cows + calves/ha) 1.1LU/ha (1 cow + calf/ha) 1.2LU/ha (1.09 cows + calves/ha) Indicative Net Margin per ha (before rent) £108-£110£97-£30

15. Suckler Cows (Non SDA and SDA Farms Combined) – With PFLA Figures (7 farms) PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Stocktake SDA Top Third Stocktake SDA Average Gross Output487.37597.99526.41649.66602.13 Gross Output less Replacement Costs436.26556.84464.86613.06542.92 Feed and Forage Costs33.5395.44105.8481.53111.43 Vet & Med21.0727.7329.1540.6839.35 Other Variable Costs37.8941.4649.2943.0942.83 Total Variable Costs92.49164.63184.28165.30193.61 Gross Margin per cow343.77392.21280.58447.76349.31 Labour (paid and unpaid)127.91114.90137.65116.02119.33 Machinery Repairs and Contracting71.7963.5065.7155.3968.52 Depreciation100.4154.7576.3576.6481.15 Other Fixed Costs98.9584.6893.92102.91107.90 Total Fixed Costs (before rent)399.06317.83373.63350.96376.90 Net Margin per cow (before rent)-55.2974.38-93.0596.80-27.59 Stocking Rate (where a cow plus calf = 1.1 LU) 1.1LU/ha (1 cow + calf/ha) 1.6LU/ha (1.45 cows + calves/ha) 1.3LU/ha (1.18 cows + calves/ha) 1.1LU/ha (1 cow + calf/ha) 1.2LU/ha (1.09 cows + calves/ha) Indicative Net Margin per ha (before rent) -£55£108-£110£97-£30

16. Suckler Cows (Non SDA and SDA Farms Combined) – Compared to the Average PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Stocktake SDA Top Third Stocktake SDA Average Gross Output487.37597.99526.41649.66602.13 Gross Output less Replacement Costs436.26556.84464.86613.06542.92 Feed and Forage Costs33.5395.44105.8481.53111.43 Vet & Med21.0727.7329.1540.6839.35 Other Variable Costs37.8941.4649.2943.0942.83 Total Variable Costs92.49164.63184.28165.30193.61 Gross Margin per cow343.77392.21280.58447.76349.31 Labour (paid and unpaid)127.91114.90137.65116.02119.33 Machinery Repairs and Contracting71.7963.5065.7155.3968.52 Depreciation100.4154.7576.3576.6481.15 Other Fixed Costs98.9584.6893.92102.91107.90 Total Fixed Costs (before rent)399.06317.83373.63350.96376.90 Net Margin per cow (before rent)-55.2974.38-93.0596.80-27.59 Stocking Rate (where a cow plus calf = 1.1 LU) 1.1LU/ha (1 cow + calf/ha) 1.6LU/ha (1.45 cows + calves/ha) 1.3LU/ha (1.18 cows + calves/ha) 1.1LU/ha (1 cow + calf/ha) 1.2LU/ha (1.09 cows + calves/ha) Indicative Net Margin per ha (before rent) -£55£108-£110£97-£30 Rents vary considerably – grass averages around £267/ha (RICS) BPS and AE payments not included

17. Suckler Cows (Non SDA and SDA Farms Combined) – Performance Compared PFLA Average Stocktake Non SDA Top Third Stocktake Non SDA Average Stocktake SDA Top Third Stocktake SDA Average Herds in sample 726801341 Average herd size (cows) 5796836770 Number of full grass grazing weeks 3835 3230 Scanning % 90%94%91%92%86% Calves weaned per 100 cows 8387858886 Average age at weaning (days) 259236227232236 Total DM concentrate fed (kg/cow) 0741515968

18. It Can Be Done – Suckler Cow Overview Financial Performance Good gross margins - although output is down the variable costs, particularly concentrate feed purchases, are much lower, resulting in a competitive gross margin Increased fixed costs - higher labour, contracting and depreciation charges result in increased fixed costs Net margin per cow and per hectare – pasture-fed systems echo the industry average and show a negative net margin. More focus is needed on increasing output and reducing fixed costs in line with the top third of producers

19. It Can Be Done – Suckler Cow Overview Physical Performance PFLA farmers are committed to forage based systems and concentrate use is eliminated Animals graze outside for a longer period of time than in other systems Scanning and weaning rates are down slightly It takes over a month longer to wean calves to comparable weights in the PFLA sample

20. Beef Finishing (Non SDA Farms) – Stocktake Only PFLA Average Stocktake Non SDA 16 - 24 Months Stocktake Non SDA Over 24 Months Gross Output1211.101219.68 Gross Output less Replacement Costs593.86722.93 Feed and Forage Costs283.48248.34 Vet & Med15.9114.53 Other Variable Costs (bedding, ear tags etc.)96.6594.07 Total Variable Costs396.04356.94 Gross Margin per head197.82365.99 Labour (paid and unpaid)90.24140.69 Machinery Repairs and Contracting42.2665.24 Depreciation82.2193.49 Other Fixed Costs136.89150.97 Total Fixed Costs (before rent)351.60450.39 Net Margin per head (before rent)-153.78-84.40 Stocking Rate (where a 12 – 24 month beef animal = 0.65LU) 1.7 LU/ha (2.61 head/ha) 1.4 LU/ha (2.15 head/ha) Indicative Net Margin per ha (before rent)-£401-£181.46

21. Beef Finishing (Non SDA Farms) – With PFLA Figures (3 farms) PFLA Average Stocktake Non SDA 16 - 24 Months Stocktake Non SDA Over 24 Months Gross Output1909.541211.101219.68 Gross Output less Replacement Costs1303.57593.86722.93 Feed and Forage Costs32.12283.48248.34 Vet & Med10.4415.9114.53 Other Variable Costs (bedding, ear tags etc.)132.7996.6594.07 Total Variable Costs£175.35396.04356.94 Gross Margin per head1128.22197.82365.99 Labour (paid and unpaid)128.5790.24140.69 Machinery Repairs and Contracting46.5042.2665.24 Depreciation170.7082.2193.49 Other Fixed Costs215.56136.89150.97 Total Fixed Costs (before rent)561.33351.60450.39 Net Margin per head (before rent)566.89-153.78-84.40 Stocking Rate (where a 12 – 24 month beef animal = 0.65LU) 0.95 LU/ha (1.46 head/ha) 1.7 LU/ha (2.61 head/ha) 1.4 LU/ha (2.15 head/ha) Indicative Net Margin per ha (before rent)£828-£401-£181.46

22. Beef Finishing (Non SDA Farms) – Compared to the Average PFLA Average Stocktake Non SDA 16 - 24 Months Stocktake Non SDA Over 24 Months Gross Output1909.541211.101219.68 Gross Output less Replacement Costs1303.57593.86722.93 Feed and Forage Costs32.12283.48248.34 Vet & Med10.4415.9114.53 Other Variable Costs (bedding, ear tags etc.)132.7996.6594.07 Total Variable Costs£175.35396.04356.94 Gross Margin per head1128.22197.82365.99 Labour (paid and unpaid)128.5790.24140.69 Machinery Repairs and Contracting46.5042.2665.24 Depreciation170.7082.2193.49 Other Fixed Costs215.56136.89150.97 Total Fixed Costs (before rent)561.33351.60450.39 Net Margin per head (before rent)566.89-153.78-84.40 Stocking Rate (where a 12 – 24 month beef animal = 0.65LU) 0.95 LU/ha (1.46 head/ha) 1.7 LU/ha (2.61 head/ha) 1.4 LU/ha (2.15 head/ha) Indicative Net Margin per ha (before rent)£828-£401-£181.46

23. Beef Finishing (Non SDA Farms) – Performance Compared Herds in sample33117 Average herd size (cattle)256354 Number of full grass grazing weeks311830 Average age at start (days)310213189 Average age at sale (days) 700 (23 months) 623 (21 months) 761 (25 months) Finished/Store %91/997/389/11 Total DM concentrate fed (kg/head)01151737 Average liveweight at start (kg)239279223 Average liveweight at sale (kg)622605609 Daily liveweight gain (kg/day)0.90.80.7 Liveweight sale price finished (£ per kg lwt)3.071.99

24. It Can Be Done – Beef Finishing Overview Financial Performance Higher output – The PFLA sample includes two organic producers who sell much of their premium Pasture for Life beef direct to consumers, as well as one conventional farmer selling deadweight to a processor. These routes to market are reflected in a healthy output figure per head Excellent gross margins – High output coupled with very low variable costs result in a substantial gross margin Higher fixed costs - Higher labour, depreciation and contracting costs result in increased fixed costs. This, in-part, reflects the additional costs of direct marketing Positive net margin - The Stocktake average and top third producers both show a negative position at current prices. The Pasture for Life systems show a positive net margin

25. It Can Be Done – Beef Finishing Overview Physical Performance PFLA farmers are committed to forage based systems and concentrate use is eliminated Daily liveweight gain exceeds the industry top third producers Average age of calf at start is higher (longer suckling stage) but comparable finishing age Seeking premium prices results in a higher liveweight sale price per kg.

26. It Can Be Done – Beef Finishing Overview Financial Performance The PFLA average figures for beef finishing show the margins achievable when direct marketing If all finished stock was sold liveweight at the industry average of £1.99/kg, a gross margin of £632/head would be seen If the average fixed costs of £352 were achieved (direct selling costs removed), the net margin would fall to £105/head This is still significantly higher than the industry average (most are losing £84 to £154/head)

27. It Can Be Done – Conclusions Analysis of the economic case (before rent) shows that: Lowland Sheep – PFLA farmers can rival the top third of producers with a net margin of £43/ewe Suckler Cows – PFLA farmers echo the industry average and lose money on every suckler cow with a net margin of -£55/head Beef Finishing - the average beef farmer loses money on every finished animal. PFLA farmers can produce a positive net margin between £105 to £567/head, depending on route to market

28. It Can Be Done – Conclusions Reduce feed costs Draw on (and rebuild) natural capital Produce a quality food product Take more control of the value chain It’s a no brainer (no grainer)

29. It Can Be Done – Conclusions An Indicative Whole Farm Net Margin (200ha Pasture-fed lowland farm v industry average) Pasture Fed net margin/head Pasture Fed Total Industry Average net margin/head Industry Average Total 1000 ewes £43£43,000£9£9000 60 sucklers -£55-£3,300-£93-£5580 60 beef finishers £105£6,300-£84-£5040 Margin from Production £46,000-£1620 Rent/ha £267-£53,400£267£53,400 BPS/ha £180£36,000£180£36,000 Whole Farm Net Margin £28,600-£19,020 The average farm is losing money The Pasture for Life farm is profitable but still reliant on BPS Additional income from direct sales and agri-environment is crucial Additional benefits and true costs need to be added – soil carbon, pollination, economic multipliers, N externalities etc.

30. It Can Be Done Rearing livestock on nothing but pasture makes economic sense… but what about the nutritional considerations?

31. Pasture for Life - It Can Be Done The Nutrition Case Luppo Diepenbroek Independent Consultant Trading as Straight Line Nutrition Ltd

32. Nutrition in relation to Pasture for Life Plenty of pasture mass and conserved forage availability Optimum Intake Factor of pasture and conserved forage Balanced mainly on Protein (CP), Fibre (NDF) and Sugar Suitable mineral levels Old Chinese Proverb: Medicine is used when nutrition fails

33. Adequate pasture mass?  Measure!

34. Grass species in the sward RyegrassYarrow Meadow grassBird’s Foot Trefoil CocksfootButtercup TimothyRed clover Yorkshire FogWhite clover FoxtailLucerne Crested Dog’s tailPurple Moor-grass ChicoryPlantain A rich diversity!

37. Clover

38. Ultimate diet test Low protein, dung is solid

39. Ultimate diet test High protein, dung is loose

40. Ultimate diet test Just right!

41. Pasture management Rotational grazing Set-stocking Rotational grazing in summer, set-stocked in winter Mob- grazing HLS Standard All types of pasture management, but leaning towards rotational and mob- grazing!

42. Pasture Management  Mob-grazing

44. Conservation of pasture Hay Haylage Silage Permanent pasture hay Lucerne silage Round bale silage Round bale hay All types of pasture conservation!

45. Clamp silage

49. Summary Long grazing periods on diverse pastures, provide adequate growth in cattle and sheep When making conserved forage, ensure the sun is shining and the pasture is clean to increase forage palatability Manage the soil, pasture and cattle well and you will be rewarded! Managing beef cattle and sheep just on pasture can be done!

51. Pasture for Life - It Can Be Done The Farmer’s Case Dan Bull Farm Manager Sheepdrove Organic Farm