Study of farm finances reveals bigger isn’t always better

The report provides farmers with sector-level detail of how and why performance varies across farming businesses in Wales
The report provides farmers with sector-level detail of how and why performance varies across farming businesses in Wales

New analysis of over 1,500 Welsh farms has suggested that there is a future for the family farm if the business is managed effectively and costs kept under control.

Data received from farmers across Wales as part of the Red Meat Benchmarking project has been independently interpreted.

The £2.15m project has highlighted the diversity within the Welsh sheep and suckler cow sectors.

It also points towards the significant range in financial performance within red meat businesses in Wales.

Hybu Cig Cymru's (HCC) report said the top performing enterprises generate a 'financially viable, and in some cases, very profitable business'.

These businesses, however, weren’t necessarily the largest in terms of scale or size, it added.

HCC’s John Richards said: “What the data analysis has evidenced is the importance of building a business based on solid foundations before attempting to grow and expand.

“The data shows that top performers keep their overhead costs considerably lower per breeding animal than the farms in the bottom tier.

“Figures from the sheep enterprises show that top third performers have almost half the amount of overhead costs when compared to the bottom third.

“Producers are encouraged to review each overhead cost, and all business costs in general, however large or small, to keep them low.”

The project has, however, highlighted the current challenge of making money from sheep and from suckler cow enterprises.

It blames the 'prolonged period of political turmoil' in Westminster and Brexit uncertainty which continues to be a 'huge hindrance' for agriculture.

However, the analysis did not identify one major problem within the sector, but a number of smaller issues that can be tackled for positive effects on farming businesses.

Mr Richards said: “Farmers should aim to effectively utilise all the resources available to them, they need to be stocking their farm to an optimal level to maximise the output from the land.

“There is also a need to focus on detail. The value of benchmarking and the savings that can be made by keeping a close eye on farm finances is evident from this work.

“Measuring an enterprise’s performance by taking time out to calculate the returns is fundamental for a well-managed, profitable and sustainable business.”

A summary of the findings, which includes a number of practical key considerations for farmers to contemplate, can be viewed online.