Economics of Production

Newsletter No. 64 - Item 2

The Farm Management Pocket Book is a book published in the UK for farmers to use as a guide for production targets, costs of production and potential revenue to establish gross margins in the main agriculture sectors. In view of the significant increases in feed ingredient prices over the past 12 months, it has rendered it impossible to provide meaningful figures and highlights just how costs have changed in 12 months. Gross margins for the arable farmers have increased significantly while gross margins for livestock producers have been eroded. Input costs for both sectors have risen significantly.

Ostrich production in the UK, as in many other countries that started producing ostrich 10 to 20 years ago, is now confined to a few farmers that have their own breeding stock, incubate and raise their own chicks. These farmers are responsible for all their own marketing and nearly all working as individuals. There is no production carried out under contracts to supply wholesalers or larger retailers. Most of these small producers are not able to optimise production as a direct result of the small scale they operate. Several UK producers buy in meat, when available, to supplement their meat sales.

Table 1 illustrates the current range of breeder production here in the UK and throughout our industry at this time. The extremes in range are a direct reflection on the range of productive value of current rations, management systems and variable genetics.

Comparative Breeder Production

Table 1 - Comparative Breeder Production

The ability to achieve optimum production is dependent on the production design of rations fed and management standards.  When developing budget production costs and revenue, it is essential to know the production potential of the rations used as these have a very significant impact on farm output and overall profitability.  To put it simplistically rations can be split into 3 sections as defined below.

-    High Production Potential – High Nutrient Density with quality ingredients and high levels of vitamins, minerals and other additives from natural sources.   These rations support the full genetic production potential.

-    Medium Production Potential – Medium Nutrient Density with quality ingredients and medium to low levels of vitamins and minerals.

-    Low Production Potential – Low Nutrient Density with low-grade ingredients and low levels of vitamins and minerals.  A nutritional program that includes Grazing, Feeding Silage, Green Feed or vegetables of any type will fall into this category

Table 2 illustrates the current range in slaughter bird performance. The target of 45 kilos boneless meat in 180 days at a feed conversion rate of 2:1 is very achievable in time. To achieve that target requires feed of high production design, excellent management and good genetics. Poultry, pigs and other major livestock production has improved their performance using this same formula combined with aggressive improvements in genetics.

Comarative Slaughter Bird Production

Table 2 - Comparative Slaughter Bird Production

The former USDA Secretary, Mike Johanns emphasised the importance of optimising feed efficiency in April, at the 24th Alltech International Animal Health and Nutrition symposium.

62-quotefcr

Finishing ostrich in less than 200 days carries many benefits and not simply improving farmer profitability.

If any reader is unsure of the definitions of the different measurements of performance, they are all defined in the Benchmark Targets that can be found at here.

[1] Feed Management May/June 2008, page 13

One comment

  1. […] The following tables illustrate the differences based on average feed ingredient costs at current world prices. They illustrate the impact of improvements in “productive performance” and how “productive performance” has a greater influence on profitability than costs per tonne of feed and other production costs. The Low, Medium and High relate to production levels as discussed in last month’s newsletter, which can be viewed at here. […]

Leave a Reply