Food & Farming update

    A lot has been written about the cereals and oilseed markets, and quite rightly so with feed wheat hitting £200/tonne and OSR £420/tonne. This is creating exceptional returns in the arable sector.  With tight supply factors around the world these returns are here for a while.

    So while the arable sector is enjoying good returns, one sector’s boom often spells out bust for others. Livestock feed costs have raced up, driven by cereal prices. The problem for livestock producers has been further exaggerated by other costs like labour, fuel, fertiliser and straw continuing to rise, all set against a background of static sale prices.

    Beef, sheep and dairy producers were already suffering with tight forage supplies from a dry spring. Vastly increased feed prices and usage on the back of a hard cold spell will prove hard for producers.

    Wheat and protein price accounts for approximately 60% of the total cost of production for egg, poultry and pig producers. This means that even the most efficient pig or poultry producer will be struggling to make a positive margin.

    In volatile times a detailed understanding of costs of production and the variables are important. This knowledge allowed some livestock producers to hedge their feed costs with confidence in the summer. For some producers now cutting production may be the only answer.

    Click here for current commodity prices (correct on 28.1.11)

     
     

    Key contacts

    Keith Preston

    Keith Preston

    Director
    Food & Farming

    Savills Oxford

    +44 (0) 1865 269 170

    +44 (0) 1865 269 170

     

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