According to the Natural Resources Institute Finland (Luke), during the 2018/2019 herding season, the entrepreneurial income from reindeer husbandry decreased to EUR 7,000, down by a quarter from the previous herding season. The profitability ratio decreased from 0.4 to 0.31, meaning that entrepreneurial income covers 31% of the targeted compensation for the work performed by entrepreneur families and the capital invested in enterprises.
Sales revenues decreased by one per cent to EUR 20,400. Direct sales of reindeer meat cover more than half of the total revenues. Compensation for work paid by reindeer herding cooperatives decreased by 12% to EUR 5,200. Correspondingly, compensation paid for traffic accidents and predator incidents involving reindeer decreased from EUR 7,600 to EUR 6,500. The share of subsidies increased by 13% to EUR 6,300. Subsidies account for roughly 15% of total returns on reindeer husbandry. Compared with the previous herding season, total returns decreased by more than two per cent to EUR 40,100.
Moderate increase in costs
During the 2018/2019 herding season, production costs increased slightly from the previous year and were EUR 54,200. Machinery repair and operating costs increased the most, but the costs of purchased feed decreased by three per cent.
“Weather conditions in the winter were favourable and the reindeer had good access to food. This likely decreased the need to provide supplementary feed for the reindeer”, considers Marja Vilja, research scientist at Luke.
The working hours allocated to reindeer herding remained at the level of the previous year, totalling an average of 1,270 hours per year. Earnings from reindeer husbandry is calculated by deducting the EUR 2,500 interest on equity from the entrepreneurial income of EUR 7,000. Dividing the earnings of EUR 4,500 by the annual working hours shows that those engaged in the reindeer husbandry business earned an hourly wage of EUR 3.60.
The average equity of reindeer husbandry enterprises was EUR 84,000, while the average amount of debt totalled roughly EUR 11,400. The equity ratio, i.e. the ratio between equity and total assets, decreased to 88%. The number of living reindeer increased from the previous herding season by two to 199 reindeer.
Profitability in the north decreased
The notable regional differences within the reindeer husbandry area started to level out. Profitability was the highest in the Sámi area in the northern part of Lapland, but even there the profitability ratio decreased from 0.61 to 0.37. In the ‘other special reindeer husbandry area’, the profitability ratio increased from nil to 0.28, while the profitability ratio decreased from 0.44 to 0.27 in the ‘other reindeer husbandry area’ in the southern parts of the reindeer husbandry area.
Returns do not cover costs
During the 2018/2019 herding season, each reindeer husbandry enterprise produced an average of 2,100 kilograms of reindeer meat. The production costs per one kilogram of reindeer meat totalled around EUR 26, which is nearly one euro higher than in the previous herding season. The returns increased slightly and were EUR 19.10 per kilogram of meat.
Results from the reindeer herding industry available online
The results of reindeer husbandry profitability accounting are available in the ‘Reindeer economy’ section of Luke’s Economydoctor service. The results are based on Luke’s profitability accounting data for reindeer husbandry, which consists of annual data on a total of 75 reindeer husbandry enterprises that own 80 or more living reindeer.