FARM business consultant Andersons has published a report stating that the beef and sheep sectors need radical change to reverse poor profitability.

Andersons’ partner and head of business research Richard King said: “Returns for beef and sheep farms are set to be lower this year on account of poor markets and declining subsidy, as a result of CAP reform, will put a continued strain on incomes for livestock producers in future. The overhead structure of many of these types of livestock farms is too high, running many enterprises inefficiently.

“The beef price will be back on the year, even if it recovers from today’s price. Lamb is at a reasonably good price but what farmers might lose on beef is more than you can gain on lamb at the moment.”

The firms’ report model farm, which attempts to replicate an average beef and sheep holding with a 60-cow suckler herd and a 500-ewe Mule sheep flock, shows a decline in business surplus from £88/hectare (£35/acre in 2013-14 to £34/ha (£14/acre) in 2014-15. And estimates for the following year show a further decline, with surplus falling to £8/ha (£3/acre).

It is a contrasting story in the dairy sector, with profits forecast to be “resilient” despite recent milk price cuts.

According to another of Andersons’ model farm businesses, surplus will decline from 6.5 pence per litre to 5.6ppl from 2013-14 to 2014-15.

Mr King said: “There will be some good years and some bad years. It is all about having more good years than bad years.”