Calculating return on investment for expanding egg production
Background
John and his mother run a traditional upland beef and sheep farm in Mid-Wales. Their farm holding spans 400 acres (150 acres owned), and includes 1,000 Welsh Mountain and Mule ewes, along with 33 Limousin and Charolais suckler cows.
As the farm relied solely on upland livestock, John explored ways to diversify so he could eventually involve his young son in the farm. The family decided to invest in free-range egg production on low-lying land near the main farm. Their poultry unit now houses 12,000 free-range layers, supplying eggs to East Anglian Egg, which are ultimately sold through Tesco supermarkets.
The farm’s location supports the egg enterprise well with local infrastructure in place for pullet supply, feed delivery, and egg collection. Encouraged by early success, John began considering a second poultry shed to expand to 16,000 free-range birds.
To guide their decision, John engaged ADAS to assess the return from this investment and to explore whether more could be done to improve their long-term sustainability.
Actions
Our objectives for this assessment included:
- Evaluating the performance of current enterprises against other Welsh producers
- Identifying profit margins across all farm enterprises and areas for improvement
- Determining the return on investment for expanding the poultry unit
Exploring grant opportunities available through the Welsh Government - Understanding the impact of the declining Basic Payment Scheme (BPS) on overall income
- Developing a business plan to support future funding applications
Results
ADAS provided John with a detailed business assessment and practical recommendations, including:
- Annual enterprise benchmarking to compare performance with other similar and successful farmers, and to demonstrate year-on-year improvement.
- Drawing up a machinery replacement policy to ensure that adequate funds are set aside for new equipment.
- To go ahead with investing in the poultry shed for a further 16,000 birds.
- Recommendations to make minor changes to its cost structure.
- Confirmation that the business is in a strong position and resilient to change.
