Pasture for Life - It Can Be Done The Business Case Jonathan Brunyee

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 (CO2 etc) • And there are three types of farmer…..those that can add up and those that can’t!

10. Rents vary considerably – grass averages around £267/ha (RICS) BPS and AE payments not included

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 • Animalsgraze 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 valueof the meat.

16. Rents vary considerably – grass averages around £267/ha (RICS) BPS and AE payments not included

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 systemsechothe 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 andconcentrate 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 weightsin the PFLA sample

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,agross margin of £632/headwould 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) • 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 Ryegrass Yarrow Meadow grass Bird’s Foot Trefoil Cocksfoot Buttercup Timothy Red clover Yorkshire Fog White clover Foxtail Lucerne Crested Dog’s tail Purple Moor-grass Chicory Plantain 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

43. 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

47. 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!