Meadow Farm Update

Andersons has updated its Meadow Farm model.  Meadow Farm is a notional 154 hectare (380 acre) lowland mixed beef and sheep business typical of many family-run livestock operations across Great Britain.  The farm runs a 60 cow suckler herd and a 500 ewe mule sheep flock; in both cases finishing all progeny.  There is also a small dairy-cross bull-beef enterprise and 32 hectares (80 acres) of feed wheat and feed barley is grown.  The business is managed on a real time basis and provides an accurate representation of business structures and changes in annual performance.

ANDERSONS MEADOW FARM – Source: Andersons The Farm Business Consultants

The table above shows the results for the last two years and a budget for 2016/17 and forecast for 2017/18.  The 2015/16 year saw a small rise in in the livestock gross margin, but this was not enough to offset the lower crop returns.  The business makes a loss even after support payments, which are lower in the first year of the Basic Payment Scheme; the ELS contract also finished part way through the year andno CSS agreement has been entered into.  For the financial year ending March 2017, whilst there is some improvement forecast due to a slight increase in the livestock gross margin and costs falling, increases in borrowings sees finance costs rise and the level of return seen is not sustainable.

The key point is, like many similar businesses, the overhead structure of Meadow Farm is too large for the output the business achieves. Businesses need to re-assess the way they operate.