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Licentiate thesis, 2013

Searcing for economically sustainable Swedish suckle cow based beef production systems after decoupling of EU-income support

Salevid, Pernilla

Abstract

After decoupling of European Union income support, the current Swedish systems for suckle cow-based beef production will be unable to pay the costs of new investments and the market wage for labour. In a Delphi study, production systems able to achieve full cost coverage were identified as being "Organic with high environmental grants and a premium price for beef" and "Conventional with outdoor wintering of cows". Both systems require large areas of semi-natural pasture per cow and larger herds than currently common in Sweden.

To test the results from the Delphi study, different models of suckle beef production were calculated for different regions of Sweden. The ambition was to identify production models with sufficient profitability to pay at least stipulated farm workers wage and a return on investment of 5% under Swedish conditions. In the calculations, the income from weaned calves, culled cows and European Union support was reduced by operating costs excluding labour. The result was divided by hours spent on labour requirement for animal husbandry and pasture management, which resulted in a return to labour per hour. Calculations for varying future scenarios with a changing Common Agricultural Policy showed that organic production models generated a higher return to labour than conventional production models. The main reason for this was the environmental areal payment for organic farming in combination with the higher acreage requirements in organic production. This resulting in higher environmental payments and other European Union supports per suckle cow. The most profitable production models were spring calving, heavy beef cow breeds and winter feed based on grass-clover silage. Some organic production models gave a return to labour above stipulated farm workers wage. However, if the Single Farm Payment scheme is phased out and not replaced by increased environmental payments, the return to labour will be at best half the stipulated farm workers wage.

A complementary telephone survey of 20 farmers with above-average herd size showed that the theoretical calculated profitability did not accurately reflect some of the real costs. One example was the opportunity cost of land, which was more expensive than calculated, because the areal payments are slowly moving from animal farmers towards passive retired farmers and landowners. The interviews indicated that the results of the Delphi study and profitability calculations are reliable and valid for costefficient future suckle beef operations, but overestimate the average profitability of current Swedish suckle herds.

Keywords

suckle cow production, semi-natural pasture, profitability, future scenarios, grazing, forest-dominated regions

Published in

Avhandling (Sveriges lantbruksuniversitet, Institutionen för husdjurens miljö och hälsa)
2013, number: 6
ISBN: 978-91-576-9135-4
Publisher: Institutionen för husdjurens miljö och hälsa, Sveriges lantbruksuniversitet

Authors' information

Salevid, Pernilla
Swedish University of Agricultural Sciences, Department of Animal Environment and Health

UKÄ Subject classification

Agricultural Science

URI (permanent link to this page)

https://res.slu.se/id/publ/61024