A farmer's guide to Organic upland beef and sheep production

The various financial analyses in this report all show that organic upland beef and sheep production results in a superior financial performance to comparable conventional businesses. The latest figures from the Defra-funded Organic Farm Incomes study show that net farm income (NFI) for organic upland beef and sheep businesses, at £174/ha, is substantially higher than for comparable conventional businesses, at £93/ha. Output tends to be higher on organic businesses, which have lower forage costs, but variable costs can also be higher.
The optimistic picture of organic upland farming must however be tempered by the credit crunch, impacting on demand for organic meat, with lower differentials between organic and conventional prices. Therefore it is
likely that the relatively favourable picture for the last two years will look less good in 2008/9. Organic holdings appear to be more profitable, but it must be noted that a higher proportion of their income is sourced not only from the Organic Farming Scheme, but also from agri-environment payments such as Tir Cynnal and Tir Gofal. Organic farming systems combine easily with the requirements of these agri-environment schemes, and to achieve maximum returns under organic farming they should be adopted.
Analysis of the costs of production, or benchmarking, makes it clear that the sale price achieved for beef and sheep is still considerably below the total cost of production. Benchmarking continues to be an excellent resource in assessing the true costs of production, and highlights the need for further market development to ensure maximum returns from the marketplace.