Financial Wisdom Found in 'Pasture for Life' Agriculture Approach
In a recent study published on July 21, 2021, researchers from the UK Centre for Ecology and Hydrology (UKCEH), Lancaster University, Natural England, and SRUC, led by Dr Lisa Norton of UKCEH, compared the financial performance of Pasture for Life (PfL) farms with those of Farm Business Survey (FBS) farms. The research, detailed in the July 2021 issue of Direct Driller magazine, reveals that PfL farms have higher gross margins, particularly in breeding sheep flocks and suckler beef farms.
The study compared the gross margins of PfL farms with those of the Farm Business Survey (FBS) across various systems. Interestingly, despite PfL farms keeping their cattle six months longer or more, the variable costs across all systems were remarkably similar for PfL farms, lowland FBS, and upland FBS. However, there is wide variation in the variable costs between the two approaches, with PfL costs at £54/head compared to £309/head for the FBS sample.
In the case of breeding sheep flocks, PfL farms' average Gross Margin is £63/head, higher than the Farm Business Survey (FBS) average for lowland farms at £59/head. The main reason for the higher Gross Margins on PfL farms is lower variable costs, at £21/head average compared to £53/head for the lowland FBS average and top farms.
PfL's reliance on pasture may also contribute to the higher gross margins in suckler beef farms. The output from the PfL suckler beef farms is almost double that of the benchmarked FBS farms at £1,158/head for the average.
PfL beef finishers also show lower total variable costs/head at £54 compared to £309 for the FBS sample. The average Gross Margin/head for PfL beef finishers is £404, while it is £238 for FBS farms. Notably, PfL beef finishers have a much better Gross Margin at £41/head compared to the average upland farm in the FBS survey at £21/head.
The probable reason for the higher output on PfL farms is that they sell their calves finished, while FBS farms sell six-month-old stores for other farmers to finish. The top PfL farms have a Gross Margin of £106/head for breeding sheep, higher than the top FBS farmers' £93/head.
The project was funded by the Biotechnology and Biological Sciences Research Council (BBSRC), the Economic and Social Research Council, the Natural Environment Council, and the Scottish Government. For accurate, detailed financial comparisons, reports or studies explicitly analyzing PfL farms versus FBS farms using Farm Business Survey data or PfL financial monitoring would be required.
This study underscores the potential benefits of grass-based, extensive livestock systems prioritizing pasture quality and animal welfare, as practiced by Pasture for Life farms. These systems might show relatively higher gross margins per hectare for certain enterprises due to lower input costs and premium product markets but potentially lower throughput compared to more intensive systems.
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