Market analysis

The value of interacting with the person likely to buy your goods on farm is higher than ever.

Knowing exactly what to produce might be a relatively straightforward conversation or it could be highly complex. But recognising what is of greatest value to the buyer is critical to adding value to both parties and to keeping costs down. For example, why produce fat carcases if your buyer wants lean? It costs more to make fat carcases and then it costs more to trim it off; it’s simply wasteful.

Producing what your buyer requires could make the difference between a few percentage points of the sale value, which is important for the marginal benefit. Or, even worse, it could be a cancellation of sale (such as antibiotics in milk or ergot in grain), which could be disastrously expensive.

Adjusting a product to make an added-value commodity – high-protein wheat, brightly coloured beans, high-protein milk, the correct sized apples, clean carrots and so on – would progressively make a small premium on the commodity, a crucial process, and also enable your business to stand out as one to rely on, potentially then making it even more valuable.

Understanding the key consumer trends which may affect your business is also important. AHDB’s retail and consumer insight webpages provide a wealth of information in this area.

Steps for success

  • Understand the EUROP carcase classification system and dressing specifications of abattoirs. Aim for most animals to fall within the green shaded area of the EUROP grid where there is the greatest demand and highest prices. 
  • Check you have the right breeds for your customers’ requirements and your farm system. Think ahead – what if their requirements change?
  • Understand the timeframes required for finished animals
  • Understand the disease risks from bringing replacement livestock on to the farm. Consider a closed herd/flock policy.
  • Growing and utilising high yields of grass should reduce the cost of production. Rotational grazing can improve both grassland productivity and individual animal performance
  • Concentrate supplementation is required when forage quality or quantity is inadequate for the output required. Formulate appropriate rations to balance analysed forage samples when needed
  • Ensure labour inputs are planned and effective as there are wide variations between farms and labour is one of the most significant overhead costs
  • Overhead costs are typically double the level of variable costs. Can these be spread over more animals through improved stocking rates?
  • Benchmarking will help to identify your strengths and weaknesses, and this will highlight the areas to concentrate on
  • Make sure you are producing the right constituents in milk for the markets it is being used in. If you’re not being paid for higher levels of protein then don’t feed for it. Download our PDF and learn more about managing feeding your cows
  • Make sure your Bactoscan and somatic cell counts are not being penalised. Visit the milk price calculator to understand your contract
  • Consider the A&B pricing in your contract when deciding how much milk to produce, both in the short term and longer term. Find out more about A and B milk pricing
  • Understand the variety, quality and protein levels your merchant wants and refer to AHDB’s Recommended Lists for information on yield and quality performance, agronomic features and market options to help with variety selection. Read through the contract first rather than just grow and sell
  • Consider varieties with additional market options, e.g. growing uks Group 4 varieties to export specifications may mean your product is more marketable that just a Group 4 feed
  • What are your merchant’s delivery requirements? Do they need a certain amount of grain in a certain period?
  • Make sure your grain merchant understands your farm and business, e.g. storage capabilities, to lead to more opportunities
  • Increase the uniformity of finished pigs
  • Have good communication with your abattoir about scheduling, to minimise optimal pigs being rolled over into another batch
  • Understand and meet your customers’ requirements for assurance, e.g. Red Tractor