Does the beef actually pay?
Every mixed farm has the conversation. Somebody at the kitchen table says the suckler herd does not pay, and somebody else says it does, because it uses grass and straw that would have no other use and it keeps the rotation going. The accounts cannot settle it, because they show one farm, not three enterprises.
The same tractor bales straw in August, carts muck in March and feeds cattle every morning in winter. The same person lambs the ewes and drills the spring barley. The straw from the arable ends up under the cattle. The cattle's muck ends up on the arable. None of it is priced between them.
Why enterprise costs are so hard on a mixed farm
The difficulty is that the costs that matter most are the shared ones.
- Labour: the same people work across all enterprises through the year, in no fixed pattern.
- Machinery and fuel: tractors and telehandlers do jobs for every enterprise, sometimes on the same day.
- Straw, grass and forage: grown by one part of the farm and used by another, usually with no value attached.
- Muck and slurry: produced by livestock and used on arable land, again with no value attached.
- Overheads such as insurance, electricity and the office.
Accounts can split costs by enterprise using tracking categories, but only if someone decides at the time of posting what share each enterprise takes, and for shared costs nobody knows. So everything shared goes to a general heading, and the enterprise figures show only the obvious direct costs.
What the blurred picture costs
Big decisions on a mixed farm, whether to expand a herd, cut back sheep or change the arable rotation, lean on the question of which enterprise earns its keep. Those decisions belong to you and your accountant or adviser. Without an honest split of shared costs, they rest on opinion and averages, and family discussions stay stuck.
Benchmarking suffers too. If you compare your costs with published figures, your numbers are only comparable when shared costs are allocated in a similar way.
An allocation built on your own records
What we build is an allocation model that uses records you already keep, with rules that are written down and adjustable.
- Enterprises are set up the way you think about them: suckler herd, finishing cattle, breeding ewes, arable, and anything else such as contracting or a farm shop.
- Each shared cost gets an allocation rule you choose. Labour by the hours people record against each enterprise, or by an agreed split if they do not. Fuel by machine drawings and what each machine was doing. Machinery by hours worked per enterprise. Overheads by a fixed split.
- Where records exist, we use them: a time log, a fuel log, machinery hours, a job diary. Where they do not, a simple weekly note of who did what is enough to start.
- Transfers between enterprises, such as straw to the cattle, grazing on stubbles, or muck to arable fields, are recorded with values you choose, so each enterprise carries a fair charge or credit.
- Each enterprise shows its direct costs, its share of shared costs with the rule used, and its income, month by month.
- Rules can be changed and the figures recalculated, so you can see how much the answer depends on the rule.
| Shared cost | Possible rule | Record it uses |
|---|---|---|
| Labour | Hours per enterprise | Time log or weekly note |
| Fuel | Litres per machine, split by the job | Fuel log and job diary |
| Machinery | Hours worked per enterprise | Service record hours |
| Straw | Tonnes or bales moved to livestock | Bale records |
| Overheads | Fixed split you agree | None needed |
The kitchen table conversation, with figures
At the end of the year, the family sits down with the enterprise view. The suckler herd carries its share of labour from the time log, its fuel from the feeding tractor's drawings, a charge for straw from the arable and a credit for muck. The arable carries its share of the combine and drilling tractor. Everyone can see the rules, and if someone thinks straw is valued too high, the figure can be changed on the spot and the effect seen.
Nobody is told what to decide. The argument is about the right things, with numbers in front of everyone.
Is your mixed farm one big pot?
- Your accounts show whole-farm figures but not enterprise costs.
- Labour, fuel and machinery are never split between livestock and arable.
- Straw, grass and muck move between enterprises at no value.
- Family discussions about which enterprise pays go round in circles.
- You would like to benchmark, but your figures are not comparable.