Farm Business Survey 2008/2009 Poultry Production in England Richard Crane, Ross Davenport and Rod Vaughan Rural Business Research R B R independent research, data and analysis Farm Business Survey 2008/09 Poultry Production in England Richard Crane, Ross Davenport and Rod Vaughan RBR at Reading Agriculture and Food Investigation Team (AFIT) Department of Agricultural & Food Economics School of Agriculture, Policy and Development University of Reading 4 Earley Gate Whiteknights PO Box 237 Reading RG6 6AR Telephone : 0118 378 7426 Fax : 0118 378 5034 E-mail : r.l.vaughan@reading.ac.uk March 2010 2 3 Foreword to the First Series This report is one of a series being produced based on the results of the Farm Business Survey (FBS) for England. The annual Farm Business Survey is the most comprehensive and independent survey of farm incomes and provides a definitive data source on the economic and physical performance of farm businesses in England. It is conducted by a Consortium comprising the Universities of Cambridge, Newcastle upon Tyne, Nottingham and Reading, and Askham Bryan, Duchy and Imperial Colleges. The Consortium is lead by the University of Nottingham and its members work in partnership, using uniform and standard practices in reporting on their findings to ensure consistent data quality, accuracy and validity. The Survey is financed by Defra and the Consortium values greatly the input of their staff. These detailed reports for various farm types and enterprises are in addition to the comprehensive Farm Business Survey Reports for Government Office Regions published at www.farmbusinesssurvey.co.uk. The Consortium is seeking by these additional reports to ensure that timely and relevant information is available to farmers, consultants, advisers and other organisations and individuals interested in farming and land management. The analysis and publication of these reports uses data from farm businesses across England, with an individual member of the Consortium undertaking the research analysis. In line with the ethos of the Consortium, these reports present results in such a way as to ensure a significant element of continuity and consistency from one report to the other, whilst also ensuring that each report captures the contemporary issues of relevance to the sector of agriculture in England to which it relates. We believe these new reports will make a valuable and useful contribution to the farming industry and we commend them to you. Prof. Martin Seabrook (Chief Executive Officer of the Consortium) Spring 2007 4 Foreword to the Fourth Series As agriculture enters the second decade of the 21st Century, the financial prospects for many sectors are arguably brighter than five years ago. The importance of agriculture as a provider of food, environmental and ecosystem services and biofuels, is becoming increasingly recognised. Issues of food security in a world with changing climatic conditions and a growing population have led to agriculture and food production being viewed in a more positive light than has appeared to be the case throughout much of the previous 20 to 30 years. However, countering this growing interest in agriculture, food, the environment and fuel is the prospect of a reduced single payment beyond 2012 and continuing and widening volatility in both input and output prices. In the early months of 2010, the prospects for agriculture and horticulture thus appear somewhat mixed with the outputs being arguably more valued by society, yet with businesses needing to adapt to a potentially more volatile market environment. Now in its fourth series, these enterprise and farm type reports from Rural Business Research (RBR) once again provide independent data and results from expert analysis of the Defra-funded Farm Business Survey (FBS) for England drawing upon 2008/09 data. Users of FBS data increasingly also rely on RBR‟s other independent outputs that are freely available on-line at www.farmbusinesssurvey.co.uk where Government Office Regional reports and farm business benchmarking services sit along-side the more specialised FBS data builder tool. As with all businesses, farmers and growers are increasingly reliant upon obtaining information from the internet. In order to enhance farmers, growers, advisors and other stakeholders use of our on-line services, RBR plans to host a series of regional workshops in the Spring of 2011 and 2012, and we will be announcing details of these in late 2010 so please visit both www.farmbusinesssurvey.co.uk and www.ruralbusinessresearch.co.uk to keep up to date with new results, publications and our plans for our regional workshops. We hope that you will find this fourth series of reports to be informative and interesting to your work and businesses. As with all our outputs, Rural Business Research provides analysis on agricultural and horticultural business performance to provide users with independent results. We always welcome comment on our outputs, so please let us know your thoughts by emailing paul.wilson@nottingham.ac.uk to let us know your views on our publications. Dr Paul Wilson Chief Executive Officer, Rural Business Research Spring 2010 Acknowledgements Rural Business Research thanks sincerely all those farmers who have voluntarily provided records and information on which the annual Farm Business Survey, and this report, is based. The basic information on which this report is based was collected on behalf of, and largely financed by, the Department for Environment, Food and Rural Affairs and is Crown Copyright. The views expressed in this publication are those of the authors and are not necessarily shared by other members of the University or by the University as a whole. 5 TABLE OF CONTENTS Page Foreword to the First Series 3 Foreword to the Fourth Series 4 Acknowledgements 4 Table of Contents 5 List of Tables 6 List of Figures 6 Summary 7 Section 1 Commentary on the UK Poultry Industry 9 1.1 General introduction 9 1.2 The structure of the industry 10 1.3 Contribution of the poultry sector to the economy 12 1.4 Trade 13 1.5 Producer prices 13 1.6 Animal welfare and regulations 14 1.7 Avian flu 15 1.8 Events and developments in the poultry industry in 2009 15 Section 2 Financial Results for Poultry Production in England 17 2.1 Introduction to the data 17 2.2 Definition of poultry type groups 17 2.3 The sample 18 2.4 Financial results for 2007/08 and 2008/09 19 2.5 Balance sheet information 22 2.6 Gross Margins 23 References 42 Glossary 43 Appendix 1 Regulations of and code of conduct for poultry production 45 Appendix 2 Reports in this series 46 6 LIST OF TABLES Page Table 1.1 Distribution of broiler holdings and production volumes, by size group (2007) 10 Table 1.2 Distribution of laying fowl holdings and production volumes, by size group (2007) 10 Table 1.3 Producer value of UK-produced poultry meat and eggs 2004-2008 (£M) 12 Table 1.4 Summary of retail sales for the 12 months to December 2006 12 Table 1.5 UK imports and exports of poultry and eggs and egg products 2003-2007 13 Table 1.6 Events and developments in the poultry industry in 2009 15 Table 2.1 Comparison of financial performance measures for mixed production systems and free range systems compared with All Laying holdings 20 Table 2.2 Financial results for all specialist poultry farms 24 Table 2.3 Financial results for all laying flocks 26 Table 2.4 Financial results for all non-laying flocks 28 Table 2.5 Financial results for laying flocks with mixed production systems including battery, deep litter and barn hens 30 Table 2.6 Financial results for laying flocks with free range hens 32 Table 2.7 Financial results for non-contract broilers, table chickens and turkeys 34 Table 2.8 Balance sheet data for 2008/09 – specialist poultry farms 36 Table 2.9 Comparison of net worth and percentage equity by farm type for 2008/09 36 Table 2.10 Distribution of tenant‟s type capital (%) 37 Table 2.11 Gross margin for all laying flocks 38 Table 2.12 Gross margin for laying flocks with mixed production systems including battery, deep litter and barn hens 38 Table 2.13 Gross margin for laying flocks with free range hens 39 Table 2.14 Gross margin per dozen eggs for all laying flocks (annual basis) 39 Table 2.15 Gross margin for non-contract broilers and table chicken 40 Table 2.16 Gross margin for turkey production 41 LIST OF FIGURES Page Figure 1.1 UK poultry numbers at June 1990-2009 9 Figure 1.2 Number of laying birds by type from 2002-2009 11 Figure 1.3 Index of producer prices for poultry and eggs and cost of production 14 Figure 2.1 Farm business income trend for specialist poultry farms in the FBS 19 Figure 2.2 Average monthly wholesale to retailer egg price 20 Figure 2.3 Average monthly wholesale to retailer broiler price 21 7 Summary  Since 1990 the UK poultry industry has grown significantly reaching a peak in 2004 [+42%] with 181.8 million birds in production. However, since then bird numbers have decreased by 12%, to 159.3 million birds in 2009. Whilst the boom in bird numbers was largely due to the increase in the number kept for poultry meat, the recent decline has been across all categories of poultry production.  The UK poultry industry is dominated by very large scale units and has seen continued consolidation. Broiler production was distributed over 3,000 units in 2007, 400 of which accounted for 72% of the number of birds in production [ 69% in 2005]. The domination of large units was even more marked for laying fowl units with 300 units accounting for 79% of production.  The value of UK poultry production amounted to £2.01 billion in 2008, up 24% on the previous year, with self sufficiency at 92%.  The impending ban on conventional battery cages in 2012 has seen some of the large supermarket retailers only stock eggs from barn, free range and organic systems.  EU broiler housing legislation to be introduced in June 2010 will bring the introduction of a maximum stocking density of 39 kg per square metre.  The price of eggs in 2008 and 2009 showed a steady increase while the price of poultry meat levelled off after the upward trend of recent years.  Feed costs were slightly lower in 2009 compared with 2008 but remain relatively high.  The profitability per bird for non-Laying Flocks was greater than Laying Flocks in 2008.  The fixed costs of electricity and fuel rose sharply again in 2008, up 27.2% and 29.7% for all Specialist Poultry Farms.  The net worth of Specialist Poultry farms improved by 21.8% in 2008 with percentage equity of 66.2% recorded compared with 63.9% in 2007.  Enterprise Gross Margins for egg production on a per dozen basis showed little change between 2007/08 and 2008/09 with returns from battery eggs down by 0.6% and those from free range up by 1.2%.  Enterprise Gross Margin for non contract broilers and table chicken was up by 6.1% per bird. 8 9 SECTION 1: COMMENTARY ON THE UK POULTRY INDUSTRY 1.1 General introduction In 2009 there were 159.3 million birds in production in the UK at any one time (see Figure1.1)1. Although the total number of birds in the UK flock has varied significantly from year to year, the general trend over the last two decades has been one of increasing bird numbers across all types, up 24% since 1990, peaking in 2004 at 181,759 million [+42%]. However since 2004 there has been a decrease of 12.4% in total poultry numbers, with table flock numbers down by 14% and layer numbers falling by 10%. Though numbers of the latter did increase a little in 2009 [+3%]. In 2009 the UK poultry flock comprised 65% Table Chickens (produced for meat), 17% Laying Hens, 11% Pullets and Breeding Fowls with the remaining 7% being Other Poultry (ducks, geese, turkeys & other poultry). Figure 1.1 UK poultry numbers at June 1990- 2009 Notes: (1) Improvements were made to the June Survey methodology in 1997 to account for poultry production on unregistered units. Figures from that date are thus not directly comparable with earlier years. (2) Data prior to 1996 does not include figures for turkeys. Sources: Defra (2009a)&(2004)&(2000)&(1998) 1 The figure of 159.3 million birds and the data contained in Figure 1.1, represent the number of birds in production at the time of the Agricultural Survey in June 2009 and not the total number of birds produced each year. In 2008, 827.78 million broiler chicks were placed from registered UK hatcheries, plus 16.92 million turkey pullet placements and 31.08 million commercial layer chick placements Defra (2009b). 10 1.2 The Structure of the industry 1.2.1 Poultry for meat According to the June Survey of Agriculture in 2008 there were a reported 3,000 broiler holdings in the UK in 20072. Table 1.1 shows how these units were distributed over size groups, where size is defined by the number of birds produced. Table 1.1 – Distribution of broiler holdings and production volumes, by size group (2007) Flock size Number of holdings Total number of birds (%) („000) (%) 1 -9,999 broilers 1,900 63.3 539.1 0.5 10,000 – 99,999 700 23.3 29,950.8 27.5 100,000 and over 400 13.4 78,533.2 72.0 All 3,000 109,023.1 Source: (Defra 2009c) In terms of production volumes, the broiler industry is dominated by a relatively small number of producers, with 72% of all production concentrated on the largest 400 holdings (13.4% of holdings). It is not possible to give detailed evidence on longer-term trends in the number and size of broiler flocks in the UK because of changes to the representation of broiler holdings in the June Survey from 1997. However, the data are sufficient to infer that average flock sizes have been increasing in the last decade. For example, in 1995 there were 200 holdings with broiler flocks in excess of 100,000 birds, but by 2007 this number had doubled. A study by the University of Exeter in 2004 (Exeter, 2004) found that upwards of 70% of UK broiler production was processed by just 4 companies, who themselves produced half of the broilers they processed on their own holdings. According to the Exeter study, in 2001, around 88% of broiler holdings employed a „conventional‟ production system, with just 6% free range and 3% organic. 1.2.2 Poultry for eggs The number of laying fowl holdings in 20072 had reduced to 32,500 from 37,400 in 2005 showing continued consolidation. Table 1.2 shows how these units were distributed over size groups, where size is defined by the number of birds in the flock. The laying fowl sector is even more heavily dominated by the largest producers than is the case for broilers with, in 2007, 79.3% of production arising from the largest 300 units, this representing less than 1% of all laying hen holdings. Table 1.2 – Distribution of laying fowl holdings and production volumes, by size group (2007) Source: (Defra 2009c)(2) 2 At time of writing, 2007 was the latest date for which official data were available. (No new Data available) Flock size Number of holdings Total number of birds (%) („000) (%) 1 -999 layers 31,200 96.0 985.2 2.8 1,000 – 4,999 600 1.8 1,429.1 4.1 5,000-19,999 400 1.2 4,829.8 13.8 20,000 and over 300 1.0 27,668.1 79.3 All 32,500 34,912.2 11 The structure of the laying fowl industry is undergoing considerable change. The impending ban on non-enriched caged hen egg production in 2012 (see appendix 1) and the high cost of capital investment has seen a decline in the population of hens kept in battery cages. However, demand for eggs and egg products has increased on the back of high profile welfare campaigns led by celebrity chefs resulting in stronger demand that has been satisfied by the growth in the numbers of free range hens (see Fig 1.2). Figure 1.2 Number of laying birds by type from 2002-2009 Source: Defra 2009a Eggs are produced in three basic types of production system:  Laying cages – this system consists of cages with sloping mesh floors allowing the eggs to roll forward out of reach of birds for collection. Droppings pass though the mesh floor to await removal. Cages may be stacked three high and are housed in environmentally controlled buildings many thousands at a time. This is the most common method of commercial egg production, accounting for 55% of eggs produced in the first three quarters of 2009 (see Defra 2009d). The impending ban on the use of battery cages in 2012 has led to a decline in this type of egg production [58% in 2007].  Barn system – this system employs open-space hen houses with a series of perches at different levels. Birds are allowed to roam the litter covered floor space, at a maximum density (since 2002) of 9 birds3 per square metre. This system accounts for around 5% of eggs sold in the UK in 2009 (Defra 2009d). There is a Deep Litter variant of this system, where hen houses have solid floors covered with straw, sand, shavings or turf and a lower stocking density of 7 birds per square metre. Both systems provide communal nest boxes and raised feeding troughs to prevent the scattering of feeds.  Free Range System – this system requires birds to have continuous daytime access to outdoor „runs‟, largely covered with vegetation, to a maximum stocking density of 2,500 birds per hectare. The Welfare of Laying Hens Directive imposes the same hen house conditions as for the Barn System. Around 40% of eggs produced in the UK came from this system in 2009. Free range production can also be organic, where, additionally, feeds are organic and the hens are ranged on organically managed land, this accounted for 4% of egg sales in the first three quarters of 2009. 3 This maximum stocking density is stipulated by the UK Welfare of Laying Hens Directive 2007, this being more stringent than the current European Egg Marketing Regulations, which permit a maximum stocking density of 25 birds per m2. 12 1.3 Contribution of the poultry sector to the economy 1.3.1 The farm sector The number of poultry slaughtered declined in 2008 to 853 million birds, though their value of production rose by 23% to £1.48 billion. The value of eggs sold rose from £0.4 billion to £0.5 billion. Total poultry output (meat and eggs) was valued at £2.06 billion in 2008, with 26% of this, by value, accounted for by eggs (see Table 1.3). Although the poultry sector has seen a large increase in output [+17.4%] in the period 2004 to 2008, its proportion of total agricultural output in this period has fallen by 13.6%. The poultry industry receives no direct producer support payments under the Common Agricultural Policy. Table 1.3 – Producer value of UK-produced poultry meat and eggs 2004-2008 (£M) (£ million) 2004 2005 2006 2007 2008 Poultry meat 1,331 1,321 1,218 1,207 1,482 Eggs 378 349 362 410 524 Total poultry 1,709 1,670 1,580 1,617 2,006 Total agricultural output 14,474 14,255 14,460 15,732 19,751 Poultry output as proportion [%] of total agricultural output 11.8% 11.7% 10.9% 10.3% 10.2% Source: Defra (2009c) 1.3.2 The retail sector 1.3.2.1 Poultry meat The culinary versatility of poultry meat, particularly chicken, together with its perception as a „healthy‟ meat option has, in recent times, driven an increase in the importance of poultry in the western diet. Recent statistics show that in the UK around 23kg of chicken are consumed per head per year, representing one third of total meat consumption (BPC 2009). Retail sales of poultry meat in the UK are worth around £3.4 billion annually. Around 4% of sales are either free-range or organic (Great British Chicken). Table 1.4 shows the distribution of poultry meat sales by poultry types and product type for the most recently available twelve month period to December 2006. Table 1.4 - Summary of retail sales for the 12 months to December 2006 Value (£‟000) Volume („000kg) Chicken Duck Turkey Chicken Duck Turkey Primary 1,263,729 31,189 154,365 397,012 8,353 50,380 Raw convenience 232,439 2,148 115,626 48,208 337 23,434 Further processed 488,504 n.a. 79,649 113,012 n.a. 18,411 Ready meals 651,409 n.a. 8,609 148,124 n.a. 1,717 Cooked 315,983 n.a. 6,647 67,739 n.a. 712 Total 2,952,080 33,337 364,896 774,090 8,690 94,654 Source: British Poultry Council (BPC), 2007. 13 1.3.2.2 Eggs In 2008, 11,376 million eggs were consumed in the UK (compared to 10,908 million in 2007) with a retail value for production of approximately £524 million (Defra 2009c). Higher demand was met from growth in UK production amounting to 9,060 million eggs and net imports of 2,316 million eggs. Around 75% of all eggs produced are sold retail as shell eggs with the remainder split between processing and manufacturing and wholesale and catering. 1.4 Trade The UK is around 92% self-sufficient in poultry meat (Defra 2009c), although this percentage is lower than the high of 97% in the late 1980s it is currently on an upward trend, from 90% in one year. As UK consumers tend to favour the premium cuts, a significant proportion of the less favoured cuts are exported (£0.4 billion; BPC 2009). In 2007 poultry meat imports were valued at £776 million and exports were £200 million (Defra 2009c). Greater demand for eggs by the UK consumer has led to increased home production in 2008 which was up 5% on the previous year, though imports were up 6% to meet demand. As a consequence a 45% increase in imports since 2004 has seen the share of home production fall from 85% in 2004 to 80% in 2008. UK imports and exports of poultry meat (Table 1.5) grew in the period 2003 to 2007 by 2.8% whilst for eggs and egg products in the same period the growth in imports was 11.1% and for exports trading fell by 24.1%. Table 1.5 UK imports and exports of poultry, eggs and egg products 2003-2007 Source Defra (2009c) Table 8.2 1.5 Producer prices 1.5.1 Poultry meat prices Large increases in the poultry meat price between 2006 and 2008 have coincided with an even greater rise of the cost of compound feed. In 2009 the poultry prices held firm while feed costs have reduced slightly, though of greater significance is the marked reduction in the All agricultural production cost index in 2009 falling 6.3 points. (£M) 2003 2004 2005 2006 2007 Poultry Meat Imports 754.8 818 818.8 735.6 775.9 Exports 194.9 214.7 224.3 167.4 200.3 Eggs and egg products Imports 95.8 94.7 83 95.2 106.4 Exports 33.2 36.3 29.6 25.4 25.2 14 Figure 1.3 Index of producer prices for poultry and eggs and cost of production (a) 2009 data up to and inclusive of November 2009 Source Defra (2009) 1.5.2 Egg prices As with poultry meat, the price of eggs increased in the 2006-2008 period along with compound feed costs. More recently egg output rose in 2009 by 3.7 points while costs were down. 1.6 Animal welfare and regulation The Poultry industry is heavily regulated in terms of public hygiene and animal welfare and successive welfare codes have been introduced which govern the way in which birds are housed, fed and transported. As a result, birds are raised across the industry in standardised and closely regulated environments (see Appendix 1 for a summary of existing and forthcoming legislation)4. The industry is subject to routine testing and in 2006 a State Veterinary Inspections programme revealed that around 95% of all battery hen holdings were in full compliance with current animal welfare legislation. The picture is even better for broiler holdings, where close to 100% were fully compliant. The industry has its own Assured Chicken Production code and individual producers and many of the multiples operate even higher standards. At the present time the egg producing sector is still adjusting to new regulations introduced in the UK in 2002 (see Appendix 1), which will continue to add compliance costs to the industry until 2012, when the phasing-in period ends. The broiler industry under a new EU welfare directive will only be able to keep broilers at a density of 39kg/sqm with producers who wish to stock above 33kg/sqm needing to register by June 2010. It is hoped this legislation will allow the UK poultry industry to be more competitive on welfare grounds as some poultry producing countries have previously had stocking densities up to 48kg/sqm (see Appendix 1). 4 For a list of all the major legislation in the poultry sector, see http://www.defra.gov.uk/foodrin/poultry/trade/legislation/index.htm 15 1.7 Avian Flu There were no reported cases of Avian Flu (H5N1) within the UK in 2009 following the declaration in November 2008 the UK was free of this strain of the disease, although two small flocks owned by Bernard Mathews tested positive in February 2009 for a low pathogenic strain of avian flu. However the highly virulent H5N1 virus is still infecting birds and humans across the globe, thus demanding high levels of bio-security measures and vigilant surveillance throughout the UK poultry industry. 1.8 Events and developments in the poultry industry in 2009 Table 1.6 – Events and developments in the poultry industry in 2009 January 2009 – Leading Supermarket to stop selling battery farmed eggs Sainsbury was the first major retailer to announce it would stop selling eggs produced by hens from battery cages, in anticipation of the complete ban on this production system in 2012. February 2009 – Two turkey breeding units test positive for low pathogenic avian flu Two small breeding units owned by Bernard Matthews tested positive for a strain of low pathogenic avian flu virus the farms were put under movement restrictions. April 2009 – More Supermarkets stop selling battery farmed eggs The Co-op, Waitrose and Marks and Spencers joined Sainsbury in ceasing to sell battery farmed eggs meaning the retail sector was now halfway to stopping the sales of eggs originating from battery cages. June 2009 – EU environmental rules not extended to pig and poultry units Ministers rejected a proposal to extend the Integrated Pollution Prevention and Control Directive to include pig and poultry producers that could have meant smaller producers having to face onerous environmental rules. July 2009 – Investment in broiler sheds insufficient says report A report commissioned by Defra and UK broiler growers concluded that, due to regular losses between 2004-2008 a sharp reduction in capital investment in broiler sheds had been observed, with possible serious economic consequences for the sector due to a loss of critical mass. September 2009 – Organic numbers down Up to the end of 2008 organic poultry numbers were down 2%, with egg packing stations throughput dropping by 38% in a little over a year, from a peak of 371,000 cases. December 2009 – ASDA imports cheap turkeys from Brazil ASDA was given media coverage for allegedly misleading consumers by selling cheap imported frozen turkeys with country of origin only visible in the small print on the back of the packet. December 2009- Defra limits maximum stocking density to 39kg/sqm from next year While this is below the absolute maximum that may have been allowed of 42kg/sqm, dependent on stringent rules, over 90% of UK birds are already stocked at less than 39kg/sqm. December 2009- 2010 Outlook promising but investment will be high Lower feed costs and higher demand for relatively low cost meat and eggs means the outlook is positive for 2010, says Mike Houghton of Andersons. However investment in old broiler sheds, on average 24-27 years old, and the cost of conversion of barren battery farmed shed to enriched cages before the 1st January 2012 deadline, will lead many in the sector to review their future economic prospects. Source: Farmers Weekly (2009) 16 17 SECTION 2: FINANCIAL RESULTS FOR POULTRY PRODUCTION IN ENGLAND 2.1 Introduction to the data The following series of tables [Tables 2.2 to 2.10] are drawn from a sample of farmers who participate in the Farm Business Survey in England and whose farms are classified as Specialist Poultry farms. Tables 2.11 to 2.16 are drawn from a sample of farms that participate in the Farm Business Survey who have a poultry enterprise. This sample of farms includes all farm type groups, including Specialist Poultry farms. 2.2 Definition of poultry type groups Specialist Poultry farms are farms on which poultry account for more than two thirds of their total standard gross margin. Specialist Poultry  Table 2.2 –All Specialist Poultry farms  Sample includes all types of laying and non-laying enterprises, as defined as Specialist Poultry  Table 2.3-All laying flocks (sub-group of Specialist Poultry farms)  Sample includes all types of laying enterprises (battery, free range and deep litter)  Table 2.4 –All non-laying flocks  Sample includes all types of non-laying enterprises (contract and non-contract broilers, turkeys, ducks and poultry rearing units)  Table 2.5 –Laying flocks with mixed production systems including battery, deep litter and barn hens  Sample includes all battery laying and mixed laying enterprises ( a sub-set of Table 2.3)  Table 2.6 –Laying flocks with free range hens  Sample includes solely free range laying enterprises ( a sub-set of Table 2.3)  Table 2.7 –Non-laying flocks –non-contract broiler and table chickens  Sample includes non-contract broiler and table chicken enterprises (a sub-set of Table 2.4) Gross margin analysis for all poultry enterprises This sample of farms includes all farm type groups, including Specialist Poultry farms.  Table 2.11 –All laying flocks  Sample includes all types of laying enterprises (battery, free range and deep litter)  Table 2.12 –Laying flocks with mixed production systems including battery, deep litter and barn hens  Sample includes all battery laying and mixed laying enterprises ( a sub-set of Table 2.11)  Table 2.13 –Laying flocks with free range hens  Sample includes solely free range laying enterprises ( a sub-set of Table 2.11)  Table 2.14 –Laying flocks (battery and free range systems)  Gross margin per dozen eggs  Table 2.15 –Non-contract broilers and table chickens  Sample includes non-contract broiler and table chicken enterprises  Table 2.16 –Turkey production  Sample includes mainly Christmas turkey producers 18 2.3 The sample The Farm Business Survey (FBS) covers businesses with a Standard Labour Requirement (SLR) of 0.5 and above. The SLR represents the average labour requirement in Full Time Equivalents for all enterprises on the farm under typical conditions for enterprises of average size and performance. It is calculated from standard coefficients applied to each enterprise on the farm and represents the input of labour required per hectare of crops or per head of livestock. According to the 2008 June survey there are 910 Specialist Poultry farms in England. This excludes farms that are regarded as too small for inclusion in the FBS, as they fall below the minimum threshold of 0.5 SLR. The FBS sample for the 2008/09 financial year includes 66 Specialist Poultry farms, which represents 7.3% of the population. The sample is drawn from a stratified population in seven Government Office Regions. Within each stratum a single weight is calculated as the ratio of numbers of farms in the population in the sample. This weight when applied to each farm represents the number of times that farm‟s data must be replicated in order to „represent‟ farms not selected for the sample, so as to reflect the entire population. This weight is applied to all variables. The data in this report have been compiled from the 2007/08 and 2008/09 Farm Business Survey. Results for this survey can be accessed at: http://farmbusinesssurvey.co.uk and at: http://statistics.defra.gov.uk/esg/publications/fab/default.asp 19 2.4 Financial results for 2007/08 and 2008/09 2.4.1 Specialist Poultry Farms In 2008/09 a total of 66 farms participating in the Farm Business Survey in England classified as Specialist Poultry farms. However, it should be noted that one farm only available in 2007/08 has been excluded from the sample as it is regarded as an extreme outlier that would have had a significant effect on Farm Business Income (FBI). The data in Figure 2.1 have been recalculated to exclude this one business from the results of the previous year (2007/08). The consequence of which is the results for the „Specialist Poultry‟ group presented in the Government Office Regions Report‟ (http://farmbusinesssurvey.co.uk) are different from the results shown in this report. Compared with 2007/08 the Specialist Poultry farm businesses were less profitable [-7.0%] in the 2008/09 financial year. Despite increases in both egg and poultry meat prices between the two years with average Gross Output showing a growth of 13.2%, to £687,348 per farm, costs rose at a greater rate. Higher commodity prices led to a big rise in feed costs with expenditure on feed, the single largest cost on these poultry units increasing by 25.0%, to £361,952 per farm. Fixed Cost went up by 8.3% to £237,040 per farm with the cost of fuel and electricity increasing by 27.2% and 29.7% respectively between 2007/08 and 2008/09. The year-on-year change to output and costs saw FBI decrease by 7.0%, to £47,701 per farm. In common with past income trends there was a wide range in the level of FBI per farm business, with 30% of farms producing an average annual FBI of over £50,000 in 2008/09 and 21% of farms incurring a negative FBI, compared with 29% and 12% respectively in the previous year. Figure 2.1 shows a time series of FBI for Specialist Poultry farms in England for the last five years. Figure 2.1 Farm Business Income trend for Specialist Poultry Farms in the FBS Source: www.farmbusinesssurvey.co.uk 2.4.2 All Laying Flocks Average Gross Output for Laying Flocks in England in 2008 was £533,426, an increase of 2.9% on 2007 and, up 56.4% on 2006. Whilst the percentage improvement in the average egg price between 2007 and 2008 was actually greater than the increase in Gross Output, a reduction to average flock size, and a slight fall in eggs produced per bird, largely offset better egg returns Total Variable Costs went up by 11.2% to £324,109 per farm amongst which feed comprising 91.7% of all these costs increased by 12.7% to £297,087 per farm. As a consequence, average Gross Margin fell by 7.8% to £209,317 per farm. Total Fixed Costs remained virtually unchanged between the two years at £197,397 per farm, though expenditure on fuel and electricity rose sharply, up 19.9% and 9.7% respectively, but a decline in 20 labour costs [casual labour -37.4%] and occupier‟s repairs [-39.2%] helped restrain overall spending. The result of which was a marked decrease of £12,897 in FBI, to £27,605 per farm for the 2008/09 financial year. A decrease in average bird numbers led to lower business profit and the margin per bird also showed a reduction on the previous year, despite the increase of 12.8% to 73.8 pence per dozen in the average egg price, which was offset by the decline of 2.1% in egg yields from 278 to 272 eggs per bird per year. The net effect saw Gross Output per bird increase by £1.78 to £14.82 per bird and in the same period feed costs increased by £1.62 to £8.25 per bird. Thus FBI fell by 25p to 77p per bird. Figure 2.2 shows the average wholesale egg price has increased over the 2007/08 and 2008/09 financial years. Figure 2.2 Average Monthly Wholesale to Retailer Egg price Source: Defra (2009) Weekly average wholesale to retailer prices for home produced poultry and eggs 2.4.3 Mixed production systems and Free Range flocks Table 2.1 Comparison of financial performance measures for mixed production systems and free range systems compared with All Laying holdings All Laying Flocks (£ per holding) Mixed production systems including battery, deep litter & barn hens (£ per holding) (% difference from All Laying Flocks) Free Range hens (£ per holding) (% difference from All Laying Flocks) Total Gross Output 533,426 865,291 (+62.2) 193,297 (-63.8) Total Variable Costs 324,109 535,703 (+65.3) 107,246 (-66.9) Total Fixed Costs 197,397 319,129 (+61.7) 72,634 (-63.2) Farm Business Income 27,605 29,142 (+5.6) 26,030 (-5.7) The more intensive mixed production systems benefited from a 13.0% increase in the price of eggs to an average of 70.3 p per dozen, while the returns from free range eggs increased further [16.8%] to 94.5 p per dozen. Whereas the number of eggs produced per bird remained static for the free range units at 262 eggs per bird per year, the battery/mixed units saw a decline in production from 282 to 274 eggs per bird per year. On a per bird basis, poultry output increased more for free range units [+£2.34/bird] than for battery/mixed units [+£1.60/bird]. However, the average size of flock for free range systems fell by 23.4% to 10,969 laying hens, but for battery/mixed units it only fell by 5.1% to 60,425 laying hens. As a result total poultry output per business fell by 11.3% for free range units and increased by 7.7% on battery/mixed units. 21 Total Variable Costs increased by £1.69 per bird on both systems, with most of this increase attributable to the cost of feed. Fixed Costs per bird also increased a little on battery/mixed units and they fell slightly on free range units. On a per bird basis, battery units saw FBI fall by 33p to 48p while free range units recorded an increase to FBI of 39p to, £2.37 per bird. When the results are shown on a “£ per dozen eggs” basis a similar pattern emerges with FBI per dozen eggs for free range systems five times greater than for battery systems. However, as battery units were five and a half times larger than free range units in 2008/09, the profitability per business was broadly similar for both systems with Battery/mixed Units at £29,142, compared with £26,030 for Free Range units. 2.4.4 Non-laying flocks The 2008/09 financial year saw Gross Output go up by 20.5% to £731,694 per farm for Non-Laying flocks. At the same time total Variable Costs (which is mostly feed) increased by 27.0% and total Fixed Costs went up by 7.7%, while the total bird numbers grew by 25.3%. Overall, FBI increased by only 2.5% to £58,329 per unit for 2008/09. This group includes a mixture of contract and non-contract poultry meat producers. Although broiler production is the predominant system, a small number of producers of table chickens, turkeys, ducks and geese were also present. Small sample sizes meant it was not possible to show the results for individual enterprises, although the combined results for non-contract broilers, table chickens and turkey production can be found in Table 2.7. 2.4.5 Broilers, Table Chickens & Turkeys In 2007/08 the 15 farms in the group comprised 12 non-contract broiler producers, and three table chicken and turkey producers, whilst in 2008/09 the 15 farms in the group were all non-contract broiler producers. Total poultry output in this group increased by 5.9% to £1,076,477. However, some of the costs increased much more significantly (feed +27.3%, fuel & electric +46.6%). As a result FBI fell by 12.8% to £57,830 per farm. The average throughput was down by 2.6% to 799,809 birds per farm, with an average of 6.2 crops per year. The results on a per bird basis (based on throughput) show that although poultry output increased by 11p per bird, feed costs increased by 24p per bird. Consequently, Gross Margin per bird fell by 5p to 31p per bird, with FBI at 7p per bird. The broilers had an average sale price of £1.70 per bird (+25.9%). Figure 2.3 shows the change in the average broiler price over the 2007/08 and 2008/09 financial years. Although the sample of solely non-contract broilers was not large enough in 2007/08 to publish comparable results with 2008/09 there is evidence based on a limited number of observations that Gross Output increased by about 30p per bird, while feed costs increased by 25p per bird, producing a Gross Margin of 31p per bird (+5p per bird on 2007/08). Figure 2.3 Average Monthly Wholesale to Retailer broiler price Source: Defra (2009) Weekly average wholesale to retailer prices for home produced poultry and eggs 22 2.5 Balance Sheet Information Table 2.8 shows the Assets, Liabilities and Net Worth for the same group of farms included in the preceding commentary on financial results. For Specialist Poultry farms as a whole, the percentage equity in the business increased slightly [+2.3%] during the year to 66.2%. The value of Fixed Assets increased by 27.2% to £569,901, while total External Liabilities increased by less [+10.2%] to £262,646. The Laying Flocks with Battery production systems saw a decrease [-6.2%] in their percentage equity during the most recent financial year, which at 63.1% is less than for Free Range Production units with 69% equity in their business at the end of the year. Conversely, Poultry Meat producers recorded a rise [+6.7%] in their percentage equity, brought about by a 17.3% decrease in liabilities (in particular bank overdraft), with their equity amounting to 74.5%. Table 2.9 compares the Net Worth and percentage equity for the other Robust Farm Type classification used in England at an average of £1,000,000 per farm representing 88.2% equity in the business. Those farms that are predominantly land based have the highest Net Worth, while those businesses with intensive livestock systems and less land have lower Net Worth and a smaller stake in the equity of their businesses. A fact illustrated by lowland cattle & sheep farms and cereal farms having the highest percentage equity at 91.2% and 93.0%, while pig and poultry farms have the lowest percentage equity at 53.2% and 65.1% respectively. 23 2.6 Gross Margins 2.6.1 Gross Margins for all Poultry Enterprises Tables 2.11 to 2.16 show the Gross Margin results from all farms in the survey with poultry enterprises, some of which will be in addition to the Specialist Poultry farms commented upon earlier in the report. Hence the sample of farms on which Gross Margins have been calculated is larger, although the average flock size is lower, as the poultry enterprises on these additional farms tend to be supplementary to the main farm enterprises. 2.6.2 Gross margin for laying flocks The average flock size for this group of farms at 18,000 hens in 2008/09 is half that of the Specialist Poultry group, however the trend of financial results is very similar. Average egg price was 76.4p per dozen, compared with 66.9p per dozen the year before. This rise in the price of eggs saw output increase to £14.30 [+£1.86] per bird. Feed costs, amounting to 59% of output, increased to £8.45 [+£1.74] per bird, resulting in a Gross Margin of £5.16 [+5p] per bird for 2008/09. The Gross Margin per dozen eggs was 24.1p for all layers, an increase of just 0.06 p per dozen. As with the Specialist Poultry farms, both the Free Range and Mixed production systems experienced similar increases in output, which were both offset by similar increases in feed costs. The Gross Margin for Free Range layers was £6.04 [-4p] per bird compared with £4.73 [-7p] for Mixed Battery Layers for the 2008/09 financial year. The average egg price was 23% higher for Free Range layers [87.6 per dozen], although egg production was 5.5% less for free range systems [258 eggs per year]. Feed costs were also 13% higher [£9.14 per bird] for free range producers. The Gross Margin per dozen eggs was 29.6p for free range layers and 21.6p for battery layers. However, battery systems had the advantage of size, being two and a half times greater than their free range counterparts in 2008/09. 2.6.3 Gross Margin for Broilers & table chicken production (non-contract) The average price received for broilers in 2008/09 was £1.73 [+32p] per bird, while the average purchase price for chicks was 29p [+3p] per bird. Feed costs also increased to £1.04 [+27p] per bird, producing a Gross Margin of 35p per bird compared with 33p per bird in the previous year. With 6.1 crops per year an average Gross Margin of £2.09 per bird was produced on a twelve month basis. 2.6.4 Turkey production The majority of farms in this group are small scale Christmas turkey producers. The average price received for turkeys in 2008/09 was £28.59 [+91p] per bird, while the average purchase price was £3.14 [-11p] per bird. Overall, poultry output was £24.57 per bird [+51p], while feed cost was £4.47 per bird [-£1.89]. This produced a Gross Margin of £11.86 [-£2.03] per bird for 2008/09. 24 Table 2.2 Financial results for all specialist poultry farms2007/08 2008/09 % change 2007/08 2008/09 £ changeNumber of farms 68 66 68 66Average number of birds/year 57,875 69,099 57,875 69,099Gross outputEggs 292,939 300,445 2.6 5.06 4.35 -0.71Hen depreciation -18,848 -15,451 -18.0 -0.33 -0.22 0.10Broilers 210,647 283,762 34.7 3.64 4.11 0.47Other poultry output 96,991 84,542 -12.8 1.68 1.22 -0.45Total poultry output 581,729 653,298 12.3 10.05 9.45 -0.60Crops 2,837 5,368 89.2 0.05 0.08 0.03Other livestock 3,270 2,312 -29.3 0.06 0.03 -0.02Other output 19,168 26,370 37.6 0.33 0.38 0.05Total gross output 607,004 687,348 13.2 10.49 9.95 -0.54Variable costsFeed 289,567 361,952 25.0 5.00 5.24 0.23Seed, fertiliser, crop costs 1,379 1,384 0.4 0.02 0.02 0.00Vet. & medicines 8,048 9,036 12.3 0.14 0.13 -0.01Other livestock costs 49,267 43,971 -10.7 0.85 0.64 -0.21Total variable costs 348,260 416,343 19.5 6.02 6.03 0.01Total gross margin 258,744 271,004 4.7 4.47 3.92 -0.55Fixed costsLabour: Regular paid 71,201 76,995 8.1 1.23 1.11 -0.12 Regular unpaid 17,844 19,930 11.7 0.31 0.29 -0.02 Casual labour 3,482 2,992 -14.1 0.06 0.04 -0.02Power & machinery costs: Contract & hire 5,939 6,438 8.4 0.10 0.09 -0.01 Fuel 7,440 9,461 27.2 0.13 0.14 0.01 Electricity 11,778 15,282 29.7 0.20 0.22 0.02 Heat 6,005 7,313 21.8 0.10 0.11 0.00 Repairs 10,665 10,476 -1.8 0.18 0.15 -0.03 Depreciation 12,368 14,415 16.6 0.21 0.21 -0.01Rent (incl. imputed) 28,342 30,810 8.7 0.49 0.45 -0.04Other costs: Occupiers repairs 11,971 9,147 -23.6 0.21 0.13 -0.07 Sundries (incl. bad debts) 31,813 33,781 6.2 0.55 0.49 -0.06Total fixed costs 218,848 237,040 8.3 3.78 3.43 -0.35Management &investment income 39,896 33,964 -14.9 0.69 0.49 -0.20Minus: management salaries 583 221 -62.2 0.01 0.00 -0.01Plus: farmer & spouse labour 15,018 16,018 6.7 0.26 0.23 -0.03Net farm income 54,331 49,762 -8.4 0.94 0.72 -0.22Farm business income 51,266 47,701 -7.0 0.89 0.69 -0.20Average £ per birdPer farm Per bird (annual basis)Average £ per farm 25 Per £100 of gross output2007/08 2008/09 £ change Farm Business Income (FBI) per farmNumber of farms 68 66 (% distribution by number of farms)Average number (birds/year) 57,875 69,099 % %2007/08 2008/09Gross output (%) Over £100,000 16 15Eggs (%) 48.26 43.71 £50,000 to <£100,000 13 15Hen depreciation (%) -3.11 -2.25 £25,000 to <£50,000 26 18Broilers (%) 34.70 41.28 £12,500 to <£25,000 22 21Other poultry output (%) 15.98 12.30 0 to <£12,000 10 11-£25,000 to 0 6 14Total poultry output (%) 95.84 95.05 Below -£25,000 6 7Crops (%) 0.47 0.78 Total 100 100Other livestock (%) 0.54 0.34Other output (%) 3.16 3.84Total gross output (%) 100.00 100.00Variable costsFeed 47.70 52.66 4.96Seed, fertiliser, crop costs 0.23 0.20 -0.03Vet. & medicines 1.33 1.31 -0.01Other livestock costs 8.12 6.40 -1.72Total variable costs 57.37 60.57 3.20Total gross margin 42.63 39.43 -3.20Fixed costs Other efficiency factorsLabour: Regular paid 11.73 11.20 -0.53 Average Average Regular unpaid 2.94 2.90 -0.04 2007/08 2008/09 Casual labour 0.57 0.44 -0.14Power & machinery costs: Eggs per bird 252 238 Contract & hire 0.98 0.94 -0.04 Fuel 1.23 1.38 0.15 Eggs (p/doz.) 63.44 76.06 Electricity 1.94 2.22 0.28 Heat 0.99 1.06 0.07 Repairs 1.76 1.52 -0.23 Depreciation 2.04 2.10 0.06Rent (incl. imputed) 4.67 4.48 -0.19Other costs: Occupiers repairs 1.97 1.33 -0.64 Sundries (incl. bad debts) 5.24 4.91 -0.33Total fixed costs 36.05 34.49 -1.57Management &investment income 6.57 4.94 -1.63Minus: management salaries 0.10 0.03 -0.06Plus: farmer & spouse labour 2.47 2.33 -0.14Net farm income 8.95 7.24 -1.71Farm business income 8.45 6.94 -1.51 Average £ per £100 of gross output 26 Table 2.3 Financial results for all laying flocks2007/08 2008/09 % change 2007/08 2008/09 £ changeNumber of farms 35 31 35 31Average number of birds/year 39,762 36,001 39,762 36,001Gross outputEggs 573,956 579,378 0.9 14.43 16.09 1.66Hen depreciation -81,438 -74,486 -8.5 -2.05 -2.07 -0.02Broilers 0 0 0.0 0.00 0.00 0.00Other poultry output 24 172 605.8 0.00 0.00 0.00Total poultry output 492,543 505,064 2.5 12.39 14.03 1.64Crops 1,445 742 -48.7 0.04 0.02 -0.02Other livestock 3,486 572 -83.6 0.09 0.02 -0.07Other output 21,033 27,047 28.6 0.53 0.75 0.22Total gross output 518,507 533,426 2.9 13.04 14.82 1.78Variable costsFeed 263,524 297,087 12.7 6.63 8.25 1.62Seed, fertiliser, crop costs 554 161 -71.0 0.01 0.00 -0.01Vet. & medicines 3,221 3,758 16.6 0.08 0.10 0.02Other livestock costs 24,277 23,104 -4.8 0.61 0.64 0.03Total variable costs 291,577 324,109 11.2 7.33 9.00 1.67Total gross margin 226,930 209,317 -7.8 5.71 5.81 0.11Fixed costsLabour: Regular paid 69,795 65,155 -6.6 1.76 1.81 0.05 Regular unpaid 20,344 20,418 0.4 0.51 0.57 0.06 Casual labour 4,544 2,846 -37.4 0.11 0.08 -0.04Power & machinery costs: Contract & hire 4,021 3,613 -10.2 0.10 0.10 0.00 Fuel 5,800 6,955 19.9 0.15 0.19 0.05 Electricity 11,208 12,296 9.7 0.28 0.34 0.06 Heat 255 361 41.4 0.01 0.01 0.00 Repairs 10,363 11,983 15.6 0.26 0.33 0.07 Depreciation 12,506 11,424 -8.6 0.31 0.32 0.00Rent (incl. imputed) 22,055 27,198 23.3 0.55 0.76 0.20Other costs: Occupiers repairs 8,232 5,008 -39.2 0.21 0.14 -0.07 Sundries (incl. bad debts) 29,481 30,140 2.2 0.74 0.84 0.10Total fixed costs 198,604 197,397 -0.6 4.99 5.48 0.49Management &investment income 28,327 11,920 -57.9 0.71 0.33 -0.38Minus: management salaries 543 478 -12.0 0.01 0.01 0.00Plus: farmer & spouse labour 17,713 18,314 3.4 0.45 0.51 0.06Net farm income 45,497 29,756 -34.6 1.14 0.83 -0.32Farm business income 40,502 27,605 -31.8 1.02 0.77 -0.25Average £ per birdPer farm Per bird (annual basis)Average £ per farm 27 Per £100 of gross output Pence per dozen eggs2007/08 2008/09 £ change 2007/08 2008/09Number of farms 35 31 Gross outputAverage number (birds/year) 39,762 36,001 Eggs 65.40 73.79Other poultry output -9.28 -9.46Other output 2.96 3.61Gross output (%) Total gross output 59.08 67.94Eggs (%) 110.69 108.61Hen depreciation (%) -15.71 -13.96 Variable costsBroilers (%) 0.00 0.00 Feed 30.03 37.84Other poultry output (%) 0.00 0.03 Other variable costs 3.20 3.44Total poultry output (%) 94.99 94.68 Total variable costs 33.22 41.28Crops (%) 0.28 0.14 Total gross margin 25.86 26.66Other livestock (%) 0.67 0.11Other output (%) 4.06 5.07 Total fixed costs 22.63 25.14Total gross output (%) 100.00 100.00 Management &investment income 3.23 1.52Variable costsFeed 50.82 55.69 4.87 Net farm income 5.18 3.79Seed, fertiliser, crop costs 0.11 0.03 -0.08Vet. & medicines 0.62 0.70 0.08 Farm businessOther livestock costs 4.68 4.33 -0.35 income 4.61 3.52Total variable costs 56.23 60.76 4.53Total gross margin 43.77 39.24 -4.53Farm Business Income (FBI) per farmFixed costs (% distribution by number of farms)Labour: % % Regular paid 13.46 12.21 -1.25 2007/08 2008/09 Regular unpaid 3.92 3.83 -0.10 Casual labour 0.88 0.53 -0.34Power & machinery costs: Over £100,000 14 6 Contract & hire 0.78 0.68 -0.10 £50,000 to <£100,000 3 13 Fuel 1.12 1.30 0.19 £25,000 to <£50,000 31 23 Electricity 2.16 2.31 0.14 £12,500 to <£25,000 26 23 Heat 0.05 0.07 0.02 0 to <£12,000 11 16 Repairs 2.00 2.25 0.25 -£25,000 to 0 6 16 Depreciation 2.41 2.14 -0.27 Below -£25,000 9 3Rent (incl. imputed) 4.25 5.10 0.85Other costs: Total 100 100 Occupiers repairs 1.59 0.94 -0.65 Sundries (incl. bad debts) 5.69 5.65 -0.04Total fixed costs 38.30 37.01 -1.30Management &investment income 5.46 2.23 -3.23 Other efficiency factorsMinus: management salaries 0.10 0.09 -0.02 Average AveragePlus: farmer & spouse labour 3.42 3.43 0.02 2007/08 2008/09Net farm income 8.77 5.58 -3.20 Eggs per bird 278 272Farm business income 7.81 5.18 -2.64 Eggs (p/doz.) 65.40 73.79 Average £ per £100 of gross output 28 Table 2.4 Financial results for all non-laying flocks2007/08 2008/09 % change 2007/08 2008/09 £ changeNumber of farms 30 31 30 31Average number of birds/year 74,920 93,897 74,920 93,897Gross outputEggs 0 0 0.0 0.00 0.00 0.00Hen depreciation 0 0 0.0 0.00 0.00 0.00Broilers 453,824 578,387 27.4 6.06 6.16 0.10Other poultry output 126,916 123,253 -2.9 1.69 1.31 -0.38Total poultry output 580,739 701,639 20.8 7.75 7.47 -0.28Crops 4,463 9,972 123.4 0.06 0.11 0.05Other livestock 3,517 4,404 25.2 0.05 0.05 0.00Other output 18,325 15,679 -14.4 0.24 0.17 -0.08Total gross output 607,044 731,694 20.5 8.10 7.79 -0.31Variable costsFeed 322,834 421,230 30.5 4.31 4.49 0.18Seed, fertiliser, crop costs 2,444 2,545 4.1 0.03 0.03 -0.01Vet. & medicines 7,365 7,407 0.6 0.10 0.08 -0.02Other livestock costs 53,632 59,415 10.8 0.72 0.63 -0.08Total variable costs 386,274 490,597 27.0 5.16 5.22 0.07Total gross margin 220,769 241,097 9.2 2.95 2.57 -0.38Fixed costsLabour: Regular paid 37,950 42,863 12.9 0.51 0.46 -0.05 Regular unpaid 16,711 17,502 4.7 0.22 0.19 -0.04 Casual labour 2,436 2,953 21.2 0.03 0.03 0.00Power & machinery costs: Contract & hire 7,576 9,305 22.8 0.10 0.10 0.00 Fuel 7,712 7,202 -6.6 0.10 0.08 -0.03 Electricity 8,108 14,204 75.2 0.11 0.15 0.04 Heat 12,207 14,389 17.9 0.16 0.15 -0.01 Repairs 6,503 6,230 -4.2 0.09 0.07 -0.02 Depreciation 10,154 12,155 19.7 0.14 0.13 -0.01Rent (incl. imputed) 32,106 30,194 -6.0 0.43 0.32 -0.11Other costs: Occupiers repairs 15,399 12,878 -16.4 0.21 0.14 -0.07 Sundries (incl. bad debts) 24,793 25,835 4.2 0.33 0.28 -0.06Total fixed costs 181,656 195,709 7.7 2.42 2.08 -0.34Management &investment income 39,113 45,388 16.0 0.52 0.48 -0.04Minus: management salaries 711 26 -96.4 0.01 0.00 -0.01Plus: farmer & spouse labour 13,269 15,355 15.7 0.18 0.16 -0.01Net farm income 51,671 60,717 17.5 0.69 0.65 -0.04Farm business income 56,893 58,329 2.5 0.76 0.62 -0.14Average £ per birdPer farm Per bird (annual basis)Average £ per farm 29 Per £100 of gross output2007/08 2008/09 £ change Farm Business Income (FBI) per farmNumber of farms 30 31 (% distribution by number of farms)Average number (birds/year) 74,920 93,897 % %2007/08 2008/09Gross output (%) Over £100,000 17 21Eggs (%) 0.00 0.00 £50,000 to <£100,000 27 15Hen depreciation (%) 0.00 0.00 £25,000 to <£50,000 20 18Broilers (%) 74.76 79.05 £12,500 to <£25,000 17 24Other poultry output (%) 20.91 16.84 0 to <£12,000 13 9-£25,000 to 0 3 9Total poultry output (%) 95.67 95.89 Below -£25,000 3 6Crops (%) 0.74 1.36 Total 100 100Other livestock (%) 0.58 0.60Other output (%) 3.02 2.14Total gross output (%) 100.00 100.00Variable costsFeed 53.18 57.57 4.39Seed, fertiliser, crop costs 0.40 0.35 -0.05Vet. & medicines 1.21 1.01 -0.20Other livestock costs 8.84 8.12 -0.71Total variable costs 63.63 67.05 3.42Total gross margin 36.37 32.95 -3.42Fixed costsLabour: Regular paid 6.25 5.86 -0.39 Regular unpaid 2.75 2.39 -0.36 Casual labour 0.40 0.40 0.00Power & machinery costs: Contract & hire 1.25 1.27 0.02 Fuel 1.27 0.98 -0.29 Electricity 1.34 1.94 0.61 Heat 2.01 1.97 -0.04 Repairs 1.07 0.85 -0.22 Depreciation 1.67 1.66 -0.01Rent (incl. imputed) 5.29 4.13 -1.16Other costs: Occupiers repairs 2.54 1.76 -0.78 Sundries (incl. bad debts) 4.08 3.53 -0.55Total fixed costs 29.92 26.75 -3.18Management &investment income 6.44 6.20 -0.24Minus: management salaries 0.12 0.00 -0.11Plus: farmer & spouse labour 2.19 2.10 -0.09Net farm income 8.51 8.30 -0.21Farm business income 9.37 7.97 -1.40 Average £ per £100 of gross output 30 Table 2.5 Financial results for laying flocks with mixed production systems including battery, deep litter and barn hens2007/08 2008/09 % change 2007/08 2008/09 £ changeNumber of farms 16 15 16 15Average number of birds/year 63,663 60,425 63,663 60,425Gross output (%)Eggs 879,162 932,606 6.1 13.81 15.43 1.62Hen depreciation -123,421 -118,509 -4.0 -1.94 -1.96 -0.02Broilers 0 0 0.0 0.00 0.00 0.00Other poultry output 0 0 0.0 0.00 0.00 0.00Total poultry output 755,740 814,098 7.7 11.87 13.47 1.60Crops 957 983 2.7 0.02 0.02 0.00Other livestock 0 0 0.0 0.00 0.00 0.00Other output 26,654 50,210 88.4 0.42 0.83 0.41Total gross output 783,352 865,291 10.5 12.30 14.32 2.02Variable costsFeed 408,975 487,209 19.1 6.42 8.06 1.64Seed, fertiliser, crop costs 206 144 -30.1 0.00 0.00 0.00Vet. & medicines 4,003 6,127 53.0 0.06 0.10 0.04Other livestock costs 43,462 42,223 -2.9 0.68 0.70 0.02Total variable costs 456,646 535,703 17.3 7.17 8.87 1.69Total gross margin 326,705 329,588 0.9 5.13 5.45 0.32Fixed costsLabour: Regular paid 118,357 118,511 0.1 1.86 1.96 0.10 Regular unpaid 22,279 22,125 -0.7 0.35 0.37 0.02 Casual labour 7,929 4,558 -42.5 0.12 0.08 -0.05Power & machinery costs: Contract & hire 4,920 4,777 -2.9 0.08 0.08 0.00 Fuel 9,650 12,256 27.0 0.15 0.20 0.05 Electricity 18,222 21,987 20.7 0.29 0.36 0.08 Heat 363 538 48.3 0.01 0.01 0.00 Repairs 16,016 20,529 28.2 0.25 0.34 0.09 Depreciation 14,033 14,367 2.4 0.22 0.24 0.02Rent (incl. imputed) 24,162 38,275 58.4 0.38 0.63 0.25Other costs: Occupiers repairs 11,188 8,068 -27.9 0.18 0.13 -0.04 Sundries (incl. bad debts) 47,428 53,137 12.0 0.74 0.88 0.13Total fixed costs 294,547 319,129 8.3 4.63 5.28 0.65Management &investment income 32,158 10,459 -67.5 0.51 0.17 -0.33Minus: management salaries 765 744 -2.7 0.01 0.01 0.00Plus: farmer & spouse labour 17,222 18,025 4.7 0.27 0.30 0.03Net farm income 48,614 27,740 -42.9 0.76 0.46 -0.30Farm business income 51,892 29,142 -43.8 0.82 0.48 -0.33Average £ per birdPer farm Per bird (annual basis)Average £ per farm 31 Per £100 of gross output Pence per dozen eggs2007/08 2008/09 £ change 2007/08 2008/09Number of farms 16 15 Gross outputAverage number (birds/year) 63,663 60,425 Eggs 62.22 70.29Other poultry output -8.73 -8.93Other output 1.95 3.86Gross output (%) Total gross output 55.44 65.21Eggs (%) 112.23 107.78Hen depreciation (%) -15.76 -13.70 Variable costsBroilers (%) 0.00 0.00 Feed 28.94 36.72Other poultry output (%) 0.00 0.00 Other variable costs 3.37 3.65Total poultry output (%) 96.48 94.08 Total variable costs 32.32 40.37Crops (%) 0.12 0.11 Total gross margin 23.12 24.84Other livestock (%) 0.00 0.00Other output (%) 3.40 5.80 Total fixed costs 20.85 24.05Total gross output (%) 100.00 100.00 Management &investment income 2.28 0.79Variable costsFeed 52.21 56.31 4.10 Net farm income 3.44 2.09Seed, fertiliser, crop costs 0.03 0.02 -0.01Vet. & medicines 0.51 0.71 0.20 Farm businessOther livestock costs 5.55 4.88 -0.67 income 3.67 2.20Total variable costs 58.29 61.91 3.62Total gross margin 41.71 38.09 -3.62Farm Business Income (FBI) per farmFixed costs (% distribution by number of farms)Labour: % % Regular paid 15.11 13.70 -1.41 2007/08 2008/09 Regular unpaid 2.84 2.56 -0.29 Casual labour 1.01 0.53 -0.49Power & machinery costs: Over £100,000 19 13 Contract & hire 0.63 0.55 -0.08 £50,000 to <£100,000 6 7 Fuel 1.23 1.42 0.18 £25,000 to <£50,000 31 20 Electricity 2.33 2.54 0.21 £12,500 to <£25,000 19 20 Heat 0.05 0.06 0.02 0 to <£12,000 6 20 Repairs 2.04 2.37 0.33 -£25,000 to 0 6 13 Depreciation 1.79 1.66 -0.13 Below -£25,000 13 7Rent (incl. imputed) 3.08 4.42 1.34Other costs: Total 100 100 Occupiers repairs 1.43 0.93 -0.50 Sundries (incl. bad debts) 6.05 6.14 0.09Total fixed costs 37.60 36.88 -0.72Management &investment income 4.11 1.21 -2.90 Other efficiency factorsMinus: management salaries 0.10 0.09 -0.01 Average AveragePlus: farmer & spouse labour 2.20 2.08 -0.12 2007/08 2008/09Net farm income 6.21 3.21 -3.00 Eggs per bird 282 274Farm business income 6.62 3.37 -3.26 Eggs (p/doz.) 62.22 70.29 Average £ per £100 of gross output 32 Table 2.6 Financial results for laying flocks with free range hens2007/08 2008/09 % change 2007/08 2008/09 £ changeNumber of farms 19 16 19 16Average number of birds/year 14,315 10,969 14,315 10,969Gross output (%)Eggs 249,009 217,354 -12.7 17.40 19.81 2.42Hen depreciation -36,739 -29,368 -20.1 -2.57 -2.68 -0.11Broilers 0 0 0.0 0.00 0.00 0.00Other poultry output 50 348 592.2 0.00 0.03 0.03Total poultry output 212,321 188,335 -11.3 14.83 17.17 2.34Crops 1,964 495 -74.8 0.14 0.05 -0.09Other livestock 7,197 1,159 -83.9 0.50 0.11 -0.40Other output 15,048 3,308 -78.0 1.05 0.30 -0.75Total gross output 236,531 193,297 -18.3 16.52 17.62 1.10Variable costsFeed 108,664 102,230 -5.9 7.59 9.32 1.73Seed, fertiliser, crop costs 926 178 -80.8 0.06 0.02 -0.05Vet. & medicines 2,389 1,329 -44.4 0.17 0.12 -0.05Other livestock costs 3,851 3,508 -8.9 0.27 0.32 0.05Total variable costs 115,829 107,246 -7.4 8.09 9.78 1.69Total gross margin 120,701 86,051 -28.7 8.43 7.84 -0.59Fixed costsLabour: Regular paid 18,092 10,470 -42.1 1.26 0.95 -0.31 Regular unpaid 18,284 18,668 2.1 1.28 1.70 0.42 Casual labour 939 1,091 16.2 0.07 0.10 0.03Power & machinery costs: Contract & hire 3,064 2,420 -21.0 0.21 0.22 0.01 Fuel 1,700 1,522 -10.4 0.12 0.14 0.02 Electricity 3,740 2,363 -36.8 0.26 0.22 -0.05 Heat 141 179 27.4 0.01 0.02 0.01 Repairs 4,345 3,224 -25.8 0.30 0.29 -0.01 Depreciation 10,880 8,409 -22.7 0.76 0.77 0.01Rent (incl. imputed) 19,812 15,845 -20.0 1.38 1.44 0.06Other costs: Occupiers repairs 5,084 1,871 -63.2 0.36 0.17 -0.18 Sundries (incl. bad debts) 10,373 6,572 -36.7 0.72 0.60 -0.13Total fixed costs 96,454 72,634 -24.7 6.74 6.62 -0.12Management &investment income 24,248 13,416 n/a 1.69 1.22 -0.47Minus: management salaries 306 204 -33.3 0.02 0.02 0.00Plus: farmer & spouse labour 18,237 18,610 2.0 1.27 1.70 0.42Net farm income 42,179 31,822 n/a 2.95 2.90 -0.05Farm business income 28,375 26,030 n/a 1.98 2.37 0.39Average £ per birdPer farm Per bird (annual basis)Average £ per farm 33 Per £100 of gross output Pence per dozen eggs2007/08 2008/09 £ change 2007/08 2008/09Number of farms 19 16 Gross outputAverage number (birds/year) 14,315 10,969 Eggs 80.92 94.53Other poultry output -11.92 -12.62Other output 7.87 2.16Gross output (%) Total gross output 76.86 84.06Eggs (%) 105.28 112.45Hen depreciation (%) -15.53 -15.19 Variable costsBroilers (%) 0.00 0.00 Feed 35.31 44.46Other poultry output (%) 0.02 0.18 Other variable costs 2.33 2.18Total poultry output (%) 89.76 97.43 Total variable costs 37.64 46.64Crops (%) 0.83 0.26 Total gross margin 39.22 37.42Other livestock (%) 3.04 0.60Other output (%) 6.36 1.71 Total fixed costs 31.34 31.59Total gross output (%) 100.00 100.00 Management &investment income 7.88 5.83Variable costsFeed 45.94 52.89 6.95 Net farm income 13.71 13.84Seed, fertiliser, crop costs 0.39 0.09 -0.30Vet. & medicines 1.01 0.69 -0.32 Farm businessOther livestock costs 1.63 1.81 0.19 income 9.22 11.32Total variable costs 48.97 55.48 6.51Total gross margin 51.03 44.52 -6.51Farm Business Income (FBI) per farmFixed costs (% distribution by number of farms)Labour: % % Regular paid 7.65 5.42 -2.23 2007/08 2008/09 Regular unpaid 7.73 9.66 1.93 Casual labour 0.40 0.56 0.17Power & machinery costs: Over £100,000 11 0 Contract & hire 1.30 1.25 -0.04 £50,000 to <£100,000 0 19 Fuel 0.72 0.79 0.07 £25,000 to <£50,000 32 25 Electricity 1.58 1.22 -0.36 £12,500 to <£25,000 32 25 Heat 0.06 0.09 0.03 0 to <£12,000 16 13 Repairs 1.84 1.67 -0.17 -£25,000 to 0 5 19 Depreciation 4.60 4.35 -0.25 Below -£25,000 5 0Rent (incl. imputed) 8.38 8.20 -0.18Other costs: Total 100 100 Occupiers repairs 2.15 0.97 -1.18 Sundries (incl. bad debts) 4.39 3.40 -0.99Total fixed costs 40.78 37.58 -3.20Management &investment income 10.25 6.94 -3.31 Other efficiency factorsMinus: management salaries 0.13 0.11 -0.02 Average AveragePlus: farmer & spouse labour 7.71 9.63 1.92 2007/08 2008/09Net farm income 17.83 16.46 -1.37 Eggs per bird 261 262Farm business income 12.00 13.47 1.47 Eggs (p/doz.) 80.92 94.53 Average £ per £100 of gross output 34 Table 2.7 Financial results for non-contract broilers, table chicken and turkeys2007/08 2008/09 % change 2007/08 2008/09 £ changeNumber of farms 15 15 15 15Average number of birds/year 113,846 129,232 113,846 129,232Throughput of birds/year 821,459 799,809 821,459 799,809Gross output (%)Eggs 0 0 0.0 0.00 0.00 0.00Hen depreciation 0 0 0.0 0.00 0.00 0.00Broilers 855,082 1,076,264 25.9 1.04 1.35 0.30Other poultry output 161,235 213 -99.9 0.20 0.00 -0.20Total poultry output 1,016,317 1,076,477 5.9 1.24 1.35 0.11Crops 6,851 10,795 57.6 0.01 0.01 0.01Other livestock 5,581 7,108 27.3 0.01 0.01 0.00Other output 12,474 6,903 -44.7 0.02 0.01 -0.01Total gross output 1,041,223 1,101,282 5.8 1.27 1.38 0.11Variable costsFeed 638,039 812,447 27.3 0.78 1.02 0.24Seed, fertiliser, crop costs 2,305 2,358 2.3 0.00 0.00 0.00Vet. & medicines 13,657 13,522 -1.0 0.02 0.02 0.00Other livestock costs 96,900 26,564 -72.6 0.12 0.03 -0.08Total variable costs 750,901 854,892 13.8 0.91 1.07 0.15Total gross margin 290,322 246,390 -15.1 0.35 0.31 -0.05Fixed costsLabour: Regular paid 56,465 30,396 -46.2 0.07 0.04 -0.03 Regular unpaid 14,859 17,235 16.0 0.02 0.02 0.00 Casual labour 3,405 2,718 -20.2 0.00 0.00 0.00Power & machinery costs: Contract & hire 12,033 14,046 16.7 0.01 0.02 0.00 Fuel 9,048 10,307 13.9 0.01 0.01 0.00 Electricity 10,331 18,106 75.3 0.01 0.02 0.01 Heat 17,995 20,859 15.9 0.02 0.03 0.00 Repairs 7,583 6,297 -17.0 0.01 0.01 0.00 Depreciation 9,249 9,325 0.8 0.01 0.01 0.00Rent (incl. imputed) 40,394 41,173 1.9 0.05 0.05 0.00Other costs: Occupiers repairs 25,500 7,114 -72.1 0.03 0.01 -0.02 Sundries (incl. bad debts) 32,139 18,712 -41.8 0.04 0.02 -0.02Total fixed costs 239,001 196,289 -17.9 0.29 0.25 -0.05Management &investment income 51,321 50,101 -2.4 0.06 0.06 0.00Minus: management salaries 1,390 0 -100.0 0.00 0.00 0.00Plus: farmer & spouse labour 11,151 15,622 40.1 0.01 0.02 0.01Net farm income 61,082 65,724 7.6 0.07 0.08 0.01Farm business income 66,353 57,830 -12.8 0.08 0.07 -0.01Average £ per birdPer farm Per bird (annual basis)Average £ per farm 35 Per £100 of gross output2007/08 2008/09 £ change Farm Business Income (FBI) per farmNumber of farms 15 15 (% distribution by number of farms)Average number (birds/year) 113,846 129,232 % %2007/08 2008/09Gross output (%) Over £100,000 19 22Eggs (%) 0.00 0.00 £50,000 to <£100,000 19 11Hen depreciation (%) 0.00 0.00 £25,000 to <£50,000 31 22Broilers (%) 82.12 97.73 £12,500 to <£25,000 13 22Other poultry output (%) 15.49 0.02 0 to <£12,000 6 11-£25,000 to 0 6 0Total poultry output (%) 97.61 97.75 Below -£25,000 6 11Crops (%) 0.66 0.98 Total 100 100Other livestock (%) 0.54 0.65Other output (%) 1.20 0.63Total gross output (%) 100.00 100.00Variable costsFeed 61.28 73.77 12.49Seed, fertiliser, crop costs 0.22 0.21 -0.01Vet. & medicines 1.31 1.23 -0.08Other livestock costs 9.31 2.41 -6.89Total variable costs 72.12 77.63 5.51Total gross margin 27.88 22.37 -5.51Fixed costs Other efficiency factorsLabour: Regular paid 5.42 2.76 -2.66 Average Average Regular unpaid 1.43 1.57 0.14 2007/08 2008/09 Casual labour 0.33 0.25 -0.08Power & machinery costs: Broiler sale price 1.35 1.70 Contract & hire 1.16 1.28 0.12 (£/bird) Fuel 0.87 0.94 0.07 Electricity 0.99 1.64 0.65 Broiler purchase price 0.25 0.29 Heat 1.73 1.89 0.17 (£/bird) Repairs 0.73 0.57 -0.16 Depreciation 0.89 0.85 -0.04 Average number of 7.2 6.2Rent (incl. imputed) 3.88 3.74 -0.14 crops/yearOther costs: Occupiers repairs 2.45 0.65 -1.80 Sundries (incl. bad debts) 3.09 1.70 -1.39Total fixed costs 22.95 17.82 -5.13Management & Sample Profile (numbers of businesses)investment income 4.93 4.55 -0.382007/08 2008/09Minus: management salaries 0.13 0.00 -0.13Plus: farmer & spouse labour 1.07 1.42 0.35 Broilers 12 15Table chickens 0 0Net farm income 5.87 5.97 0.10 Turkeys 3 0Farm business income 6.37 5.25 -1.12 15 15 Average £ per £100 of gross output 36 Table 2.8 Balance sheet data for 2008/09 - specialist poultry farmsGroupNumber of farmsFinancial yearOpening Closing Opening Closing Opening ClosingAssetsFixed assets Land, buildings & SPS 379,075 488,304 364,030 490,876 284,017 338,010 Breeding livestock 724 950 0 0 337 643 Machinery 65,674 77,736 73,648 77,325 43,159 47,466 Miscellaneous business assets 2,580 2,912 1,096 2,594 0 0Total fixed assets 448,054 569,901 438,774 570,796 327,513 386,120Current assets Crops & trading livestock 58,526 62,303 84,003 96,751 11,036 16,280 Feedstuffs & goods in store 5,326 7,033 8,581 10,553 1,663 1,886 Liquid assets 148,764 137,617 118,992 119,469 30,463 29,663Total current assets 212,617 206,953 211,575 226,772 43,163 47,830Total assets 660,671 776,855 650,350 797,568 370,676 433,950Liabilities Bank term loans 79,418 96,976 97,961 165,704 55,933 60,180 Other loans 56,611 54,421 10,735 9,485 28,757 43,892 Bank overdraft 41,258 39,852 24,751 24,777 16,388 19,145 Other short term loans 61,156 71,397 66,379 94,713 9,266 11,198Total external liabilities 238,442 262,646 199,827 294,678 110,344 134,416Net worth 422,229 514,209 450,523 502,890 260,332 299,534Percentage equity (%) 63.9% 66.2% 69.3% 63.1% 70.2% 69.0%2008/09 2008/09 2008/09Specialist poultry Mixed production Free range layers66 15 16systems Table 2.9 Comparison of net worth and percentage equity by farm type for 2008/09Average Average Average AverageAssets Liabilities Net Worth % EquityDefra main farm typeLowland cattle & sheep 658,488 45,994 612,494 93.0%Cereals 1,521,024 133,820 1,387,204 91.2%Mixed 1,046,547 119,749 926,798 88.6%General cropping 1,482,083 169,318 1,312,765 88.6%Dairy 1,034,278 181,993 852,285 82.4%Horticulture 618,971 138,589 480,382 77.6%Pigs 612,633 286,647 325,987 53.2%Poultry 718,763 250,544 468,219 65.1%All businesses 1,040,593 122,652 917,942 88.2% 37 GroupNumber of farmsFinancial yearOpening ClosingAssetsFixed assets Land, buildings & SPS 299,688 322,730 Breeding livestock 494 717 Machinery 47,237 54,414 Miscellaneous business assets 604 604Total fixed assets 348,023 378,466Current assets Crops & trading livestock 65,359 61,372 Feedstuffs & goods in store 8,556 13,684 Liquid assets 88,280 79,357Total current assets 162,195 154,414Total assets 510,218 532,880Liabilities Bank term loans 36,061 30,258 Other loans 37,203 37,801 Bank overdraft 44,834 25,108 Other short term loans 46,196 42,651Total external liabilities 164,295 135,818Net worth 345,923 397,062Percentage equity (%) 67.8% 74.5%2008/0915Broilers, table chickens & turkeys Table 2.10 Distribution of tenant's type capital (%)Specialist Mixed production Free range Broilers &poultry layers layers table chickensCrops & tillages 0.5 0.0 0.3 0.9Stores 2.2 3.2 1.9 5.3Machinery 25.2 25.5 49.7 24.3Livestock 21.1 30.5 15.3 29.7Other 51.1 40.8 32.8 39.9Total 100.0 100.0 100.0 100.0Tenant's type capital (£) 284,559 296,472 91,105 209,346 38 Table 2.11 Gross margin for all laying flocksPer £100 of gross output2007/08 2008/09 £ change 2007/08 2008/09 £ changeNumber of farms 48 53Average number of birds/year 19,093 18,021Gross outputEggs 14.54 16.35 1.81Hen depreciation -2.11 -2.06 0.05Other poultry output 0.00 0.01 0.01Total output 12.43 14.30 1.86 100.00 100.00Variable costsFeed 6.71 8.45 1.74 53.93 59.06 5.13Vet. & medicines 0.07 0.13 0.06 0.58 0.91 0.33Other livestock costs 0.53 0.57 0.03 4.29 3.95 -0.34Other variable costs 0.01 0.00 -0.01 0.09 0.00 -0.08Total variable costs 7.32 9.14 1.82 58.89 63.93 5.04Total gross margin 5.11 5.16 0.05 41.11 36.07 -5.04Average £ per £100 gross outputPer bird (annual basis)Average £ per bird (annual basis) Table 2.12 Gross margin for laying flocks with mixed production systems including battery, deep litter and barn hensPer £100 of gross output2007/08 2008/09 £ change 2007/08 2008/09 £ changeNumber of farms 20 20Average number of birds/year 33,459 27,005Gross outputEggs 13.91 15.63 1.72Hen depreciation -1.95 -1.99 -0.04Other poultry output 0.00 0.00 0.00Total output 11.96 13.64 1.68 100.00 100.00Variable costsFeed 6.46 8.11 1.65 54.04 59.46 5.42Vet. & medicines 0.06 0.10 0.04 0.53 0.73 0.20Other livestock costs 0.63 0.70 0.06 5.30 5.12 -0.18Other variable costs 0.00 0.00 0.00 0.01 0.00 -0.01Total variable costs 7.16 8.91 1.75 59.87 65.30 5.44Total gross margin 4.80 4.73 -0.07 40.13 34.70 -5.44Average £ per £100 gross outputPer bird (annual basis)Average £ per bird (annual basis) 39 Table 2.13 Gross margin for laying flocks with free range hensPer £100 of gross output2007/08 2008/09 £ change 2007/08 2008/09 £ changeNumber of farms 28 33Average number of birds/year 8,184 10,671Gross outputEggs 16.50 17.85 1.35Hen depreciation -2.59 -2.20 0.39Other poultry output 0.00 0.02 0.02Total output 13.92 15.67 1.75 100.00 100.00Variable costsFeed 7.47 9.14 1.68 53.64 58.34 4.70Vet. & medicines 0.10 0.20 0.09 0.74 1.25 0.52Other livestock costs 0.22 0.29 0.07 1.61 1.86 0.25Other variable costs 0.04 0.00 -0.04 0.31 0.01 -0.30Total variable costs 7.83 9.63 1.80 56.29 61.46 5.17Total gross margin 6.08 6.04 -0.04 43.71 38.54 -5.17Per bird (annual basis)Average £ per bird (annual basis) Average £ per £100 gross output Table 2.14 Gross margin per dozen eggs for all laying flocks (annual basis)2007/08 2008/09 2007/08 2008/09 2007/08 2008/09Number of farms 48 53 20 20 28 33No of dozen eggs 415,171 385,487 738,101 590,873 169,930 217,446Average egg yield/bird 273 268 280 273 252 258Average egg price p/doz 66.88 76.44 63.06 71.42 79.47 87.61Gross outputEggs 66.88 76.44 63.06 71.42 79.47 87.61Hen depreciation -9.69 -9.62 -8.85 -9.09 -12.46 -10.79Other poultry output 0.00 0.03 0.00 0.00 0.01 0.09Total output 57.19 66.85 54.21 62.32 67.02 76.91Variable costsFeed 30.84 39.48 29.29 37.06 35.95 44.87Vet. & medicines 0.33 0.61 0.28 0.45 0.49 0.96Other livestock costs 2.46 2.64 2.87 3.19 1.08 1.43Other variable costs 0.05 0.00 0.00 0.00 0.21 0.01Total variable costs 33.68 42.74 32.45 40.70 37.73 47.27Total gross margin 23.51 24.11 21.75 21.62 29.29 29.64Layers Mixed production Free range LayersAverage pence per dozen (annual basis) 40 Table 2.15 Gross margin for non-contract broilers and table chickenPer £100 of gross output2007/08 2008/09 £ change 2007/08 2008/09 £ changeNumber of farms 17 19Average number of birds/year 50,468 78,045Throughput of birds/year 347,448 473,307Average number of crops/year 6.88 6.06Average sale price (broilers) - £/bird 1.41 1.73Average purchase price (broilers) - £/bird 0.26 0.29Average £ per bird (annual basis) Average £ per £100 gross outputGross outputBroilers 1.20 1.45 0.25Total output 1.20 1.45 0.25 100.00 100.00Variable costsFeed 0.77 1.04 0.27 64.48 71.84 7.36Vet. & medicines 0.02 0.02 0.00 1.69 1.25 -0.44Other livestock costs 0.08 0.04 -0.03 6.32 2.98 -3.34Other variable costs 0.00 0.00 0.00 0.14 0.05 -0.09Total variable costs 0.87 1.10 0.23 72.64 76.12 3.49Total gross margin 0.33 0.35 0.02 27.36 23.88 -3.49Per bird (annual basis) 41 Table 2.16 Gross margin for turkey productionPer £100 of gross output2007/08 2008/09 £ change 2007/08 2008/09 £ changeNumber of farms 17 20Average number of birds/year 651 1,511Throughput of birds/year 1,365 3,277Average sale price (turkeys) - £/bird 29.50 28.59Average purchase price (turkeys) - £/bird 3.25 3.14Average £ per bird (annual basis) Average £ per £100 gross outputGross outputOther poultry output 24.05 24.57 0.51Total output 24.05 24.57 0.51 100.00 100.00Variable costsFeed 6.36 4.47 -1.89 26.44 18.20 -8.24Vet. & medicines 0.22 0.08 -0.14 0.90 0.31 -0.59Other livestock costs 3.54 8.10 4.56 14.71 32.97 18.26Other variable costs 0.05 0.07 0.02 0.21 0.27 0.06Total variable costs 10.17 12.71 2.55 42.26 51.75 9.49Total gross margin 13.89 11.86 -2.03 57.74 48.25 -9.49Per bird (annual basis) 42 References Defra (2009a) June Survey of agriculture and horticulture (land use and livestock on agricultural holdings at 1st June 2009) UK- final results. (https://statistics.defra.gov.uk/esg/statnot/june_UK.pdf). Table 10. Date accessed 12.01.10 Defra (2005) Agriculture in the United Kingdom 2004 (Table 3.2) Defra (2001) Agriculture in the United Kingdom 2000 (Table 3.2) Defra (1999) Agriculture in the United Kingdom 1998 (Table 3.2) Defra (2009b) Poultry and poultry meat statistics https://statistics.defra.gov.uk/esg/statnot/ppntc.pdf Accessed 14/01/10 Defra (2009c) Agriculture in the United Kingdom 2008 https://statistics.defra.gov.uk/esg/publications/auk/2008/AUK2008.pdf Accessed 14/01/10 Defra (2009d) Egg Statistics https://statistics.defra.gov.uk/esg/statnot/eggnotce.pdf Accessed 29.01.10 British Poultry Council (2010) http://www.poultry.uk.com/index.htm Accessed 28/01/10 Defra (2009e) Agricultural Price indices, United Kingdom (2005=100) API : Index of the Purchase Prices of the Means of Agricultural Production ; Monthly Data Accessed 29/01/10 Farmers Weekly (2009) http://www.fwi.co.uk/poultry/ Accessed 29/01/10 43 Glossary Farm Business Income (FBI) Represents the return to all unpaid labour (farmers, spouses and others with an entrepreneurial interest in the farm business) and to all their capital invested in the farm business including land and farm buildings. It is defined as Total Farm Output (TFO) plus profit/loss on sale of assets minus cost (C): where TFO is defined as the sum of output from: crop enterprises, adjustment for disposal of previous crops, livestock enterprises, separable non-agricultural diversifications, single farm payment, agri-environmental payments, other grants and subsidies, miscellaneous receipts; C is defined as variable costs plus fixed costs. Fixed costs These include rent (or imputed rent), regular wages, unpaid manual labour, casual labour, power and machinery costs, glasshouse depreciation, glasshouse fuel, building and general repairs, insurance, water, office expenses and miscellaneous expenditure. Gross output Total revenue adjusted for changes in valuation of livestock and stores, less purchases of livestock, or produce for resale. Labour Covers not only the costs of hired labour, but also an appropriate allowance for the unpaid manual labour of the grower and members of the family. Management and investment income (MII) Total gross output less all costs (including the value of unpaid manual labour) other than salaried management. It represents the reward to management, both paid and unpaid and the return on tenant-type capital whether that capital is borrowed or not. Net farm income Represents the return to the farmer and spouse for their manual labour, management and interest on tenant-type capital invested in the farm, whether that capital is borrowed or not. Per £100 gross output Shows the relative importance of the main resources used in each unit product, and in total provide a useful measure of profitability. Power and machinery Include contract and hire, fuel, electricity, repairs and an allowance for depreciation. A deduction is made for the private use of vehicles. Machinery depreciation is calculated on a „replacement cost‟ basis. Rent In the case of an owner occupier, an imputed rent is charged in accordance with what a tenant in similar circumstances, including length of occupation, would be paying. Tenant-type capital Assets normally provided by tenants and includes growing crops, stores, machinery, livestock, cash and other assets needed to run the business. Permanent crops (including orchards) and glasshouses are also generally considered to be tenant-type capital. Total gross margin This is the difference between total gross output and total variable costs and measures the contribution of the business towards covering its fixed costs and providing for a profit. Variable costs These vary in direct proportion to the size of each holding enterprise and include all purchased feed, seed, fertilisers, crop protection, veterinary and livestock costs. 44 Abbreviations used in this Publication / per £ pounds (stirling) Defra Department for Environment, Food and Rural Affairs Ave Average depn. depreciation ha hectare no. number n/a not applicable p pence Rounding Totals are calculated from unrounded components and may not therefore be the total of the rounded components shown. Derivation of Farm Business Income Net Farm Income Plus: Value of unpaid labour [excluding farmer & spouse; already taken into account in deriving Net Farm Income] Imputed rent and rental value Non-agricultural output historically not accounted for in Net Farm Income Less: Net interest payments Ownership charges [buildings & works depreciation; insurance of farm buildings; landlord-type repairs and upkeep] Non-agricultural input costs historically not accounted for in Net Farm Income Director‟s remuneration Equals: Farm Business Income 45 Appendix 1: Regulation of and codes of conduct for poultry production Laying hens In 1999 the Welfare of Laying Hens Directive (1999/74/EC)(EC, 1999) was adopted and this was implemented in the UK by domestic legislation such as Welfare of Farm animals (England)(Amendment) Regulations 2002 (SI 2002 No.1646), later amended by the Welfare of Farmed Animals (England) Regulations 2007 (SI 2007 No.2078), which came into force on 1st October 2007 and by similar legislation from the Devolved Administrations. The legislation set out the following:  Minimum standards for non-cage systems (barn, free-range). These came into effect on 1 January 2007.  A ban on the barren battery cage from 2012. From 1 January 2003, it has been illegal to install new barren battery cage systems, „enriched‟ cages must be used instead.  Minimum standards for „enriched‟ cages, including an increased space allowance, a claw shortening device, perch, next boxes and litter for scratching and pecking. A Defra research exercise into the cost of compliance with these new regulations (see House of Commons, 2002) estimated one off costs for a medium sized flock of 100,000 birds at £1.39 millions and the cost for a flock of 400,000 birds of £5.57 millions. The total cost to the industry is estimated by Defra study to be around £400 millions. Broilers Defra announced on 8 May 2007 (Defra,2007i) that agreement had been reached on the contents of an EC directive (EC,2007) to regulate the conditions in which chickens reared for meat are kept from the time chicks are brought on to production sites, until they leave for slaughter. The proposed new measures include, amongst other things:  The introduction of limits on stocking density (ordinarily to a maximum of 33kg/m2)  Cross-EU training for the industry  A possible new welfare labelling regime  EU-wide data collection and scientific monitoring of impacts on welfare  Action against anyone breaking the rules A directive will come into force by 2010 and will apply to all flocks of more than 500 birds. Two sets of standards are applied using stocking density as a criterion for production intensity. Producers who stock up to a maximum of 33kg/m2 have to comply with standards relating to drinkers, feeding, litter, ventilation/heating, light, inspection, cleaning, training, record keeping and mutilations. Producers stocking above 33kg/m2 up to a maximum of 38kg/m2 are subject to an additional set of standards, plus monitoring at the slaughter house. At present there is no dedicated legislation governing the production of poultry for meat, although a code of recommendations was published by Defra in 2002, based on elements of existing legislation governing the protection of farm animals (eg, The Welfare of Farmed Animals (England) Regulations 2000 and later amendment (2007). 46 Appendix 2: Reports in this series  Crop Production in England  Dairy Farming in England  Hill Farming in England  Horticulture Production in England  Lowland Grazing Livestock in England  Pig Production in England  Poultry Production in England Details available at www.ruralbusinessresearch.cu.uk RBR at Reading Agriculture and Food Investigation Team Department of Agricultural & Food Economics School of Agriculture, Policy and Development University of Reading 4 Earley Gate Whiteknights PO Box 237 Reading RG6 6AR Phone 0118 378 7426 Fax 0118 975 6467 www.ruralbusinessresearch.co.uk

Farm business survey 2008/09: poultry production in England

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