Unprecedented farmgate prices for beef and lower feed costs sees Meadow Farm forecast to make its largest-ever margin from production. In fact this is only the second time in its history that the mixed livestock farm model has made a profit before support payments.
Meadow Farm is a notional 154-hectare (380 acre) beef and sheep holding in the Midlands. It consists of grassland, with wheat and barley mainly for livestock feed. There are 60 spring-calving suckler cows with all progeny finished, a dairy bull beef enterprise and a 500-ewe breeding flock. It has an SFI 2023 agreement.
The table below sets out actual results for the years 2023/24 and 2024/25. There is then an estimate for the current year and also the first forecast for 2026/27. As Meadow Farm sells its livestock in the autumn, for the 2024/25 year finishing back in March, it did not experience the significant rise in cattle prices during the first five months of this year. Some of the higher variable costs are due to the farm entering the SFI (i.e. herbal ley establishment). The extra income from the SFI offsets the decline of the BPS and the business profitability improves.
For the current year 2025/26, the current strong livestock prices and lower feed costs are forecast to continue through this autumn resulting in an increase in the gross margin. Overheads rise again partly due to inflation but also because Meadow Farm has budgeted to replace its old tractor and loader and also to upgrade its cattle handling system; partly grant funded under the Farming Equipment and Technology Fund (FETF). Finance costs reduce, due to lower borrowings and interest rate cuts; drawings rise with inflation. Overall, the margin from production is budgeted to be the largest in the farming model’s history. The BPS sees a large decline as the higher deductions under the agricultural transition ‘kick-in’. The SFI declines marginally, due to the lower management payment in years 2 and 3, but business profitability is good.
For 2026/27 we have forecast livestock prices to ease, in particular for cattle, from their current exceptionally high prices as the cost of living sees purchasers switching to cheaper proteins – poultry and pork. This sees the margin from production fall marginally back into the red. With the BPS now negligible it shows how important the SFI payment has become to this type of business.
If you found this article useful, there are numerous additional articles published each month on our Professional Update bulletin service. You can access a no obligation 90-day free trial via the link below.
Sign up to the Professional Update
