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APPENDIX 4: METHODOLOGY
Sample Selection:
The population consisted of a range of organic farmers across Scotland. A database was received from SEERAD, which detailed the dairy enterprises in non- LFA areas and dairy units in the LFA areas. Participants were randomly selected from each population. However, the participants in the non- LFA areas were included in preference to those in the LFA areas at SEERAD's request.
Weighted Gross Margin:
The weighted gross margin for all enterprises was calculated by summing together the actual totals of income and costs for each participant, allowing a total gross margin to be calculated for each enterprise. This figure was then divided by the total of the average cow, litres or value numbers for each enterprise, resulting in a gross margin in £ per animal or £ per litre.
The weighted average gross margin therefore determines the gross margin per head per year, or per litre per year, based on the total average cow, or the total litres produced respectively. It means that the results of a larger participant have more influence than a smaller participant and that the effect of 'rogue' results is minimised.
Imputed Rent:
The value placed on this is £50/acre (£123.55/hectare)
Replacement Costs:
The cost of replacement breeding stock was calculated for males and females as:
[(Numbers sold
Plus
Number of deaths
Plus
Numbers transferred out)
6.3 MULTIPLIED BY
(Value of purchases and transfers in
6.4 DIVIDED BY
Number of purchases and transfers in)]
6.5 MINUS
(Gross value of sales and transfers out)
Enterprise Outputs:
The output of all the enterprises was calculated as per the SSMM guidelines.
For the livestock enterprises, the replacement costs were calculated as per the SSMM guidelines for male and female animals. However, these formulae did not take account of any changes in the valuation of the trading stock in the herd (i.e. unweaned calves) over the period. This change in calf valuation was therefore incorporated.
Contracting:
The contracting charges for silage making, dung/slurry spreading, etc were included in the net margins rather than the gross margins. This was in order to avoid introducing bias between the gross margins where such work was completed in hand and where units used contractors.
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