During the reindeer herding year 2015/2016, total production of reindeer meat increased while profitability was weaker compared to the previous year. Entrepreneurial income decreased by more than a quarter, down to 12, 600 euros per enterprise. The profitability ratio was 0.54, indicating that an entrepreneur engaged in reindeer farming earned average hourly wages of 8.4 euros and interest of 2.7 per cents on equity.
The producer price of reindeer meat was 10.2 euros on average. Reindeer meat production was around one per cent higher in the previous year (2.0 million kilos). Sales revenues of reindeer meat per enterprise amounted to 24,100 euros. In addition, other revenue such as compensation for work performed for herding cooperatives, and various forms of support and compensation for damages came to almost the same amount. Support as a share of total revenue, excluding investment support, amounted to 13.6 per cent, while that granted to agricultural entrepreneurs in Lapland was 41 per cent.
Meat production accounts for only part of the livelihood
In addition to meat production, reindeer farmers make a living by engaging in tourism, processing reindeer meat and engaging in handicrafts, as well as from agriculture, forestry and paid work. Profitability accounting covers only financial developments within reindeer meat production.
“The number of reindeer butchered and sales prices are the two factors with the greatest effect on the profitability of reindeer meat production. “However, through direct sales, producers have managed to raise the average price,” says Jukka Tauriainen, the Natural Resources Institute Finland.
During the accounting year 2015–2016, the average cost of production per enterprise amounted to 50,400 euros, an increase of more than five per cent compared to the previous year. While almost all costs increased, those caused by feed increased most proportionally. The cost of feed varies between years, depending on the grazing conditions in the winter.
Profitability deteriorated across the entire reindeer herding area
In 2014–2015, profitability was at its highest in all the parts of the reindeer herding area. In the following year, in relative terms profitability deteriorated more in the special reindeer herding area than elsewhere in the reindeer herding area. In the special reindeer herding area, entrepreneurs obtained 62% of the targeted compensation for their own work and equity, while the figure was 34% for elsewhere in the reindeer herding area.
There is wide variation between enterprises. The most successful enterprises accumulated around 26,700 euros in entrepreneurial income, while the income of the least successful amounted to 700 euros per enterprise. The number of reindeer in the best enterprises was larger, the yield per slaughtered reindeer was better, the proportion of income from direct sales was larger, and production costs were smaller than those of less successful enterprises. In the north, a larger number of enterprises belong to the group with the best profitability compared to those in the southern reindeer herding area.
The results are available free of charge online
The results of the profitability monitoring of reindeer husbandry are available at the EconomyDoctor website-of the Natural Resources Institute Finland. Using this service, visitors can browse ready-made calculations in table format, or select an area or enterprises of a specific size for viewing.
The results and forecasts are based on profitability bookkeeping by the Natural Resources Institute Finland (Luke), which is based on information on 75 to 80 enterprises engaged in reindeer husbandry.