Record prices for store cattle and grain mean that beef finishers face unprecedented costs this winter.
Cattle rations are currently priced at £260-£270/t, up £50-£60/t on last autumn, while mart analysis published by the Livestock and Meat Commission shows good-quality store bullocks over 500kg are averaging 233p/kg, compared to 220p/kg last year.
With higher feed and store cattle prices, farmers that traditionally purchase animals in October for finishing out of the shed next spring should carefully consider the impact of these costs on cash flow.
In our example, we assume a farmer purchases 30 store bullocks averaging 550kg on 1 November each year.
The animals are continental types, so at an average purchase price of 230p/kg, it is a cost of £1,265 per head.
Cattle are stored for 100 days, eating 30kg/day of silage and 3kg/day of a growing ration.
Silage costs £20/t, with the growing ration at £265/t. Over the 100 day period, feed costs amount to £140.
Assuming a daily gain of 0.5kg/day during the 100 day store period, bullocks will weigh 600kg by early March.
Cattle are then moved on to an intensive finishing diet for 90 days, during which they eat an average 20kg/day of silage and 7kg/day of concentrate.
Assuming no change in silage or ration price, feed costs over the 90 day period amount to £203. Weight gain during the finishing period is 1.2kg/day, bringing the final liveweight to 708kg.
Total finishing costs are £343. When combined with purchased price, break-even is £1,608. At 57% kill-out, the bullocks should yield a carcase weight of 403kg, which equates to a break-even price of 399p/kg.
Note, no veterinary, miscellaneous or fixed costs are included in this example of winter finishing, nor is there a profit margin for return on investment.
Feed cost rise
The £50/t increase in concentrate year-on-year, means that meal costs are up £47 per head.
At the outlined carcase weight, the higher feed cost requires an increase of 12p/kg in beef price just to maintain the same margins as the previous winter.
However, aside from whether a profit is actually made, the total expenditure is significant.
The 30 bullocks will cost £37,950 when purchased. During the store period, they will consume 9t of concentrate at a cost £2,385, and during the 90 day finishing period, they will consume 18.9t of concentrate costing £5,009.
Over the winter period, finishing the 30 bullocks will cost the example business £45,344, and that is before any other expenses related to silage, dosing, etc are factored in.
The farmer should make sure the business has adequate working capital or overdraft facilities in place through to next spring.