Every year, Quality Meat Scotland (QMS) commissions Scottish Agricultural College (SAC) to run an enterprise costings survey across beef and sheep businesses.

This week, we are looking at comparing the margin in finishing cattle on a cereal or a forage diet looking at averaged figures across 54 businesses.

The survey, published this month, is taken from the 2020 business accounts in the participating businesses.

Cereal-based cattle finishing

Looking at the 17 farms which finished their cattle on a predominantly cereal diet, they bought 52 cattle weighing on average 345kg and costing £2.18/kg or £752/head.

The farms then sold the cattle at a weight of 624kg or £3.67/kg deadweight for an average of £1,330/head. This left a net output of £578/head.

The cattle were fed for 212 days, which gave a daily liveweight gain of 1.3kg per day, eating 1,572kg of concentrate in total.

On average, the diet was 1,347kg of purchased concentrates, costing £200/t or £270/head. The diet also included 225kg of homegrown cereals, which was priced at £140/t or £31/head.

Other feeds for the animal cost £14.80/head and £4/head for forage, bringing a total feed cost of £319.80. Vet bills per animal averaged £19.50, bedding was £42.50 and other costs was £39.50, which brought the total variable cost to £421.30, which left a gross margin of £156.70/head.

The fixed costs on the farms averaged out at £29/head for labour, £10/head for contractors, £19/head for power and machinery, £17/head for property maintenance and rent.

Depreciation was £18/head, finance £4/head and administration was £10/head. This brought a total fixed cost of £107/head. This left a net margin on each animal of £49.70.

Forage and cereal diet

The survey reported on 19 businesses, which finished an average of 116 cattle each under the age of 22 months using cereals and forage.

The cattle were bought at an average weight of 364kg for £2.19/kg or £797/head. They were then sold at a weight of 616kg for an average price of £3.63/kg deadweight or £1,337/head. This left a net output of £540/head, which was £38/head less than the cereal diet.

The cattle were fed for 289 days, which was 11 weeks longer than the cereal diet. Over the time on farm, they gained 0.9kg of liveweight per day. They ate 1,257kg of concentrates, which was half bought and half homegrown.

The bought concentrates had an average cost of £207/t and the homegrown was £144/t, which gave a concentrates cost of £220/head.

The fixed costs were higher on average on these farms than the cereal finishers

Other feeds were averaged out at £12, plus £28 for forage, leaving a total feed and forage cost of £260/head, which was almost £60 cheaper than the cereal diet.

The vet cost was slightly cheaper at £15/head and bedding was similar at £44/head and other costs were £34/head. This left a total variable cost of £353/head and a gross margin of £187/head.

The fixed costs were higher on average on these farms than the cereal finishers.

Labour was £48/head, which may be due to more cattle handling, as they could be kept on grass for a period.

Contractors were £14, power and machinery was £42, property maintenance and rent £29, depreciation £38, finance £13 and administration was £13, which brought a total fixed cost of £197, which left a negative net margin per animal of a £10 loss.

Forage-based finishing over 22 months

In the group of 18 businesses, the average herd size was 232 cattle, which was the biggest of the samples.

The cattle were purchased at a weight of 344kg for £2.25/kg, which was £774/head. They were then sold at an average weight of 652kg at £3.53/kg deadweight for an average of £1,333/head.

This left a net output of £559/head, which was less than the cereal system, but more than the cereal and forage mix.

They were kept for 352 days, which was 20 weeks longer than the cereal diet. The daily liveweight gain was 0.9kg, which was 400g less than the cereal diet.

Each animal consumed an average of 394kg of bought concentrates at £229/t and 528kg of homegrown cereals at £107/t.

The other feed cost was £21/head and forage was £48.50/head. This gave a total feed and forage cost per animal of £216.50.

The vet bill was similar to the other systems at £19/head, but bedding was a bit cheaper at £37/head and other costs were £40/head. This left a total variable cost of £312.50. The gross margin was £249.

The fixed costs were £31/head for labour, £21/head for contractors, £56.50/head for power and machinery and £30/head for property maintenance and rent.

Depreciation cost £48 per animal, with finance costing £30.50 and administration £23. This brought a total fixed cost of £240/head, which left a net margin of £9/head.

Conclusions

From looking at the three systems, you can see that the cereal diet was the most profitable.

This is compounded when you consider you can turn over one and three-quarter batches of cattle in a year compared with only one batch in the forage diet.

The average sale price between the systems was almost identical, while the purchase price had a range of £44/head.

The hybrid diet looks to have spent a lot on concentrates, but not enough to push the cattle to finish quickly enough.

The faster finishing diets could divide the farm overheads between one and three-quarter batches of cattle compared with only one, which eats into margin, as demonstrated by the losses in the forage diets.