Food & Farming update

    Much has been written about the cereals and oilseed markets, and quite rightly so. With wheat hitting £200/T and OSR £420/T, exceptional returns are being created in the arable sector. Tight supply factors around the world mean that these returns are likely to be here for a while.

    So while the arable sector is enjoying good returns, one sector’s boom often spells bust for others. Livestock feed costs on the back of cereal prices have been forced up dramatically. The difficulties faced by livestock producers have been further exaggerated by other costs such as 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 on the back of tight forage supplies from a dry spring. Vastly increased feed prices and usage, after an exceptionally hard winter, will prove costly for producers.

    Wheat and protein price accounts for approximately 60% of the total cost of production for egg, poultry and pig producers. 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

    Ewan Berkeley

    Ewan Berkeley

    Director
    Rural

    Savills Brechin

    +44 (0) 1356 628 605

    +44 (0) 1356 628 605

     

    Choose an Office Location