This is a subscriber-only article
The 2016 profit monitors for our 27 new BETTER farmers are a mixed bag. Gross margin measures return from direct costs such as feed, fertiliser, contractor and vet costs and ranges from -€37/ha to €1,048/ha within the group and averages €570/ha. Average farm size in the BETTER farm Beef Challenge is 53.4ha (132ac), the smallest being a 16ha (39ac) holding in Leitrim and the largest a substantial 123ha (304ac) block in Tipperary.
Baby bulls
This time round, the target is for the group to achieve an average gross margin of €1,250/ha, but within this there are system-specific criteria. The initial phases of the BETTER farm programme showed that under-16-month bull systems yielded the highest gross margins consistently. Indeed, looking at the 2016 gross margins by system, under-16-month bull producers are already a long way ahead of the pack. Three of the current 27 BETTER farmers – coincidentally concentrated in the northeastern part of the country – ran with this system in 2016 and recorded an average gross margin of €995/ha between them. In this phase, producers in the system will aim for €1,650/ha.
The under-16-month system needs a heavy weaning weight and a calf that will perform at the feed face. It allows for a big jump in stocking rate without putting huge pressure on grazing ground – much of the stocking rate is in the shed and no second winter is required. For me, this system is a race to 700kg liveweight – at the very least half of which should come from the cow. Good terminal sires on milky, maternal cows is the ideal cocktail. Unsurprisingly, these producers have the biggest meal bill of all at €531/ha and the challenge is keeping a handle on this. Weighing is paramount in the under-16-month system – we must get on the QPS grid to make this system pay and overweight cattle risk missing out.
Live sellers
At the opposite end of the spectrum, while farms selling live cattle made huge strides during the first phases of BETTER farm, they consistently fell toward the lower end of the gross margin ranking tables. In 2016, our weanling producers recorded a combined average gross margin of €413/ha, 58% less than the under-16-month bull finishers. Many of our weanling producers are in counties traditionally described as having marginal soils. Such ground can curtail potential margins – largely due to volatility in soil conditions, grass growth and shorter grazing seasons. However, there are more ways to skin a cat – one of the wettest farms in phase 2 of the BETTER farm programme recorded the highest gross margin in 2015. These producers must quickly identify their strengths and play to them. Our store-producing farmers fared slightly better in 2016, averaging €530/ha and coming in just behind the steer finishers. This time round, the live sellers will target a gross margin of €850/ha.
Big bulls
After the optimum blueprint was devised at Teagasc Grange at the turn of the decade, the under-20-month bull system brought with it much promise. It involves a spring-born bull being stored for his first winter and turning out to grass for 100 days.
Here at grass the combination of compensatory growth, cheap grass and continental genetics lead to lucrative weight gain and lots of it. The animal then hits the shed for a quick finish in late summer and is out before the main herd hit the sheds. But, in more recent years, tightening specs have eroded slaughter prices for bulls over 16 months old. The reality now is that carcases from such bulls are largely seen as sources of cheaper manufacturing beef. While there is still scope to produce such animals, it is limited and requires clear and definite lines of communication between farmer and factory.
Like the under-16-month system, the older bull allows for increases in stocking rate and frees up winter accommodation. In terms of profitability, the under-20-month bull producers are in second place, at €685/ha, behind the 16-month club.
Steering group
There are seven steer producers in the group and the notable thing about these is the size of their farms, almost 81ha on average. Granted our mammoth 123ha Tipperary farm is pulling this figure slightly, but discounting this farm still leaves a 74ha average. The challenge for these farms is to stock these hectares – current stocking rate in the steer group is 1.81 and given that most are on relatively good ground, there is room to grow. Average gross margin on these farms is €564/ha and these farmers have a long way to go to hit their €1, 250/ha target.
Coincidentally, our one organic farmer from Offaly is holding his own at €518/ha. Steer systems are largely grass-based and these farmers must become masters of grassland if they want to be successful.
Not all about pushing
Here we have picked out two interesting relationships evident from the BETTER farmers’ 2016 performance:
There are two message in this. A correlation of 85% is substantial. We say that getting more beef out the gate is the key and stocking the farm higher is obviously the way for a farmer to do this. But, on an efficient farm I would like to see a greater correlation between output and gross margin. That tells us that the guys with big outputs in the group at present are leaking money somewhere. There is scope for these farmers to tighten their belts to grow their margins – less might be more.
Men behind the figures
Next week we will start getting to know the farmers themselves. Looking at system performance is all well and good, but it’s easy to forget the person behind the system and indeed to viability of the enterprise as a whole. Fixed costs, cash flow and labour demands will be on the agenda.
SHARING OPTIONS: