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Teagasc recently produced its annual beef budgets, which include a breakdown of costs associated with different finishing systems. This annual publication is launched at the Ploughing each year as beef finishers prepare to enter another cycle and hit the marts up and down the country over the coming months.
The budgets have changed in presentation in recent years and now include a breakeven selling price required without any farmer margin included.
Teagasc beef specialist Aidan Murray, who compiles the budgets each year, said: “Doing a breakeven budget allows farmers the flexibility to put whatever margin they think is appropriate. Some farmers may accept a €50 margin, while others may think a €150 margin is more appropriate. A €100 margin will add €0.38/kg carcase weight to a 380kg carcase.”
Tables 1 to 4 highlight the projected breakeven prices for each system, including the fixed costs associated with each system.
All systems have been prepared on the assumption that very high-quality, well-preserved 20% dry matter 72DMD silage is being fed.
Concentrates have been costed into the budgets at €240/t and silage has been costed at €25/t fresh weight. It is also assumed that half the cost of the animals and feed is borrowed and this cost is at 7% interest, so each system has an interest payment to make.
Winter finishing steers
Table 3 outlines the budget for winter finishing steers.
This involves purchasing a forward store in October 2017 and finishing in spring 2018 out of the shed.
Three breeds have been costed – a Friesian steer, an early maturing steer and a continental steer.
The first is for a Friesian steer purchased at €1.76/kg at 500kg (€880/head). The target weight gain is 0.9kg liveweight per day and, with this performance, the carcase weight equates to 326kg.
With variable costs at €322 and fixed costs coming in at €81, the total cost of finishing this animal is €1,283 including purchase price, which would require a breakeven price of €3.94 (€1,283/326kg).
The second system is an early maturing steer and this animal would cost €1,035 at today’s market prices – €2.07/kg for 500kg.
The target carcase weight in this system is 332kg and with the total cost of finishing coming to €1,440 including the purchase price, that means a breakeven price of €4.34 is needed.
A 10c/kg shift in the purchase price of these animals will increase or decrease the breakeven price by 15c/kg.
The continental steer to winter finish system is based on the purchase of a steer at 530kg liveweight.
Martwatch figures tell us that this type of animal is currently making €2.37/kg, leaving the purchase price at €1,256.
The target carcase weight in this system is higher at 375kg. Total costs (variable and fixed) come to €1,668 in this system, so breakeven selling price required is €4.45/kg carcase weight.
Autumn 2017 to autumn 2018
Table 2 outlines three similar systems, with cattle being purchased in October 2017 and finished in October 2018. Steers are bought at lower weights of 350kg to 430kg and stored over the first winter on good-quality silage, turned out to grass and finished in autumn 2018.
The Friesian steer system would see a 350kg steer being purchased at €1.82/kg or €637/head at current market prices. Variable costs in this system are €244 and fixed costs come in at €174/head.
The breakeven selling price required is €1,055/head or €3.41/kg on a 309kg carcase.
The early maturing option in this table looked at purchasing a Hereford steer at 350kg at €2.27/kg or €795/head. Breakeven selling price required in this system was €1,218 or €3.87/kg on a 315kg carcase.
The final option in this table is the purchase of a continental steer at 430kg at €2.41/kg or €1,036/head. The breakeven selling price required in this system is €1,468 or €3.92/kg on a 375kg carcase.
Aidan said that no meal is fed in this system and that feeding meal in the last three to four weeks pre-slaughter could be an option for a quicker finish in more favourable market conditions.
Weanling to beef steers and heifers
Table 1 highlights the Teagasc budget for buying weanlings and bringing through to beef as steers or heifers. This budget projects a spring 2019 finish for the steers and a winter 2018 (Nov/Dec) finish for the heifers.
The weanling bull to steer system is based on the purchase of a 300kg bull weanling at €2.52/kg or €756/head. Total variable costs in this system come to €541, while fixed costs equate to €207.
The breakeven selling price required in this system is €1,504 or €3.99/kg based on a 377kg carcase.
The heifer weanling to beef system is based on the purchase of a 280kg heifer at €2.69/kg or €753/head and finishing to beef in Nov/Dec 2018 at 296kg carcase. Total variable costs in this system come to €289, while fixed costs equate to €147/head. The breakeven selling price required in this system is €1,189/head or €4.01/kg.
Weanling to bull beef systems
Table 4 looks at the popular bull beef systems. The first budget is based on purchasing a 320kg bull and slaughtering next June under 16 months of age in an intensive indoor system over 230 days.
Target liveweight gains in this system are high, with a target weight gain of 1.25kg/day over this period. The system is based on an average of 4.5kg of concentrates being fed per day along with top-quality 72DMD silage.
This system targets a carcase weight of 346kg. It involves purchasing a 320kg bull weanling at €806/head or €2.52/kg. Total variable costs come to €447, with fixed costs totalling €136/head. The breakeven selling price required is €1,389 or €4.01/kg.
The more intensive bull option involves taking a 420kg bull to beef using a 180-day finishing period between build-up and final finishing phase. This budget includes a 20-day build-up period at 4kg/day and then 160 days of intensive ad-lib finishing where target concentrate intake would be in excess of 11kg/day.
This system sees the purchase of a late autumn-born weanling at 420kg and finishing this bull out of the shed in mid-April. Variable costs in this system come in at €554/head and fixed costs come to €109/head. This means a selling price of €1,667 is needed to break even. This equates to €4.33/kg carcase.
The other option is to purchase a heavier spring-born weanling for a target June 2018 finish. This system is again based on a build-up period followed by an intensive finishing period.
The variable costs in this system come to €737/head and fixed costs come in at €145/head. The breakeven selling price required in this system is €1,886 or €4.48/kg carcase based on a 421kg carcase.
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