In its third phase at present, the BETTER farm beef programme involves the placement of an intensive support and advisory team around a selection of Irish beef farmers for four-year stints. During these, attempts are made to optimise and push every facet of participant farms in order to create a viable, profitable enterprise by the end of the programme. However, the ultimate goal is to create farm businesses in which profits are sustainable in the long term.

Phase 2 of the BETTER farm beef programme came to conclusion at the end of 2015. In 2016, the participant farmers had to go it alone, so to speak – operating without the support network they once had. How did they fare? Here, we examine these farmers’ 2016 e-profit monitors and compare them with 2015.

That year that was

The fact that beef producers are largely price takers means that external forces can have big effects on farm financial performance. Table 1 outlines how key input and output prices differed across the two years.

Paid less but paying less – the sting of the weaker beef price in 2016 versus the previous year was softened somewhat by slightly lower market prices for feed and fertiliser, the two main inputs on beef farms. Live cattle were also cheaper on average in 2016 versus 2015, bad news for live sellers but a boost to the two trading systems that partook in BETTER farm phase 2.

The farms

Average BETTER farm size in 2016 was 55.8ha, 2ha bigger than the previous year. This was driven by a handful of farmers taking on significant portions of extra ground. Liveweight output per hectare was back slightly. While some of this drop can be attributed to a dilution effect of increasing farm size, other factors such as the poor spring in 2016 affecting animal performance would’ve played a role. Also the fact that live prices were high relative to beef price at many points in the year meant many producers purchased less cattle in 2016, while others offloaded stock at lighter weights to cash in.

Liveweight output value per hectare was back slightly on average on BETTER farms, due to both the reduced levels of physical output and lower beef prices. Interestingly, live sellers managed to increase their output value per hectare. While this goes against the grain in that 2016 live prices were consistently back on 2015, our farmers’ success may have been on the back of consistent uniformity and top quality in their lots and a number of smaller, part-time operations only getting their houses in order by 2016 – hopefully they will maintain this and even kick on from here. Feed inputs remained largely unchanged on average, with lower raw material prices in 2016 not reflected in feed sales. Interestingly, trading farmers spent significantly less on feed – likely a reflection of a reluctance to buy cattle given the high live to beef price ratio. Indeed, stocking rates were back slightly on these farms when the two years are compared. These farmers also spent significantly less per hectare on fertiliser – a result of both lower grass demand and lower fertiliser prices. So too did the trading farms, though there is a small sample size here (two farms) and one of these switched from CAN to urea and made a significant saving.

As a whole, the group spent slightly less on fertiliser in 2016, again, likely a reflection of reduced prices. However, our group of live sellers actually spent more money on fertiliser in 2016 than in the previous year. This is a clue that more grass was grown in 2016 versus 2015, a sign that perhaps peak efficiency had not been reached by 2015, as suggested earlier. Would this translate into an increased live seller gross margin for 2016 versus the year before? And, the burning question, how did the group do as a whole in 2016?

In 2016, gross margins were back from €1,059/ha to €979/ha – impressive given the significant reduction in beef price and the fact that farms actually increased in size slightly. Both finishing groups saw their margins eroded slightly. As suggested above, the live sellers actually increased their farm profitability slightly. Growing more grass leads to growth in profits – it is no coincidence that the spend on fertiliser paid off here. The margin increase on trading farms was largely driven by the switch in fertiliser.