Profitability from reindeer herding increases slightly

Natural Resources Institute Finland (Luke) has performed a profitability accounting assessment for reindeer herding, according to which the profitability of this sector rose slightly during the 2016–2017 herding season.

The profitability coefficient was 0.57, meaning that, on average, those in the reindeer herding business earned an hourly wage of EUR 9.00, and nearly 3% interest on their equity, said an official press release.

Herding companies’ income from their own labour and equity rose about 5% from the previous year, to EUR 13,200.

Meat production is still the single most important source of income from reindeer herding. Revenues from the sale of meat averaged EUR 20,500 per company.

“More than half of income from the sale of meat is already obtained through direct sales, and the percentage of income coming from direct sales is growing steadily. By contrast, the share of sales made through reindeer herders’ cooperatives is decreasing. Other revenue, such as labour remuneration from the herders’ cooperatives, damage compensation, and support funds, totalled almost as much all together as revenue from meat sales”, said Luke researcher Marja Vilja.

Damage compensation sums from traffic accidents and predator incidents in which reindeer were involved rose 60% from the previous year, to EUR 8,640. Damage compensation amounts have risen almost every year. Various types of mortality transmitters have become helpful in the reindeer herding industry. They make dead reindeer easier to locate. This then becomes reflected in damage compensation amounts.

Total revenues in the reindeer herding sector were approximately EUR 42,100, 13% of which consists of support funds. By way of comparison, 44% of the total revenue of agricultural companies in Finland’s Lapland region consists of support funds.

Production expenses in the reindeer herding sector remained unchanged from the previous year, totalling EUR 50,400.

“The biggest increase was in the amount spent on feed (23%). Winter weather conditions have a significant effect on feeding requirements, and extra feedings help to ensure that the reindeer stock will remain in good health through the winter”, Marja Vilja said.