When looking at the financials of any business it is important to analyse where the business is going, where improvements are needed and what changes within your control are needed to make the business more profitable, or in the case of dairy beef systems, profitable.

Some of the key profit drivers of a dairy calf to beef system are purchasing calves from high beef merit genetics, purchasing healthy calves, maximising the growth of animals by feeding the animals the maximum amount of grazed grass over their lifetime while introducing concentrates at the appropriate times and hitting an in-spec carcase.

All are important ingredients for success. If we look at Teagsc blueprints for slaughtering 19-month-old early maturing heifers, we have hit most of the milestones, except the profit margin.

Heifer performance

The heifers were all purchased from dairy farms and moved to John Hally’s farm in Cashel and reared on a contract arrangement as part of the Thrive project. Calves were reared in a simple calf-rearing shed in batch pens before being turned out to grass and grazed in a paddock grazing system.

Calves continued to be fed concentrates at an average rate of 1kg/day during the first grazing season. Calves were housed at the end of November and fed 2kg concentrates along with ad-lib silage for December and January. Heifers were turned back out to grass in early February with no concentrates fed until the end of August 2019 when 2.5kg/head/day was introduced. Calves received two shots of pneumonia vaccine in Year 1 along with two shots for clostridial disease.

Average lifetime performance was 0.86/kg/day. Average carcase weight was 272kg at just over 18 months of age with an average carcase grade of O+4= and a kill out % of 52%. Table 1 outlines the cost of the system. It should be noted that no BPS payments are included in the calculations.

Comment

At current beef prices, all beef finishing systems are in trouble. It doesn’t matter whether you are finishing 380kg U+ 3= continental steers at 24 months or 19-month Aberdeen Angus dairy beef crosses, the sums at the moment just don’t add up. The market isn’t able to deliver a price that covers production costs and labour for the farmer.

For some, this system was seen as a viable alternative to sucklers and if the beef price was at €4/kg, it would perform quite well in comparison. So where to from here and what has to change to make a margin. In terms of technical efficiency, the farm is performing very well.

A long grazing season and low meal bill coupled with very few health incidences has meant we were on budget with inputs. A few tweaks on liveweight gain will help. From the budget above I would estimate that we are out by about €100 on calf price.

We didn’t give over and above the market value for calves. These prices were easily attainable in marts at the time and in cases where we left calves behind us, they went on to make more in the mart.

It’s not a case of paying nothing for calves but calf price is definitely out of synch with margins. To break even we need calf price to be closer to €100. As beef farmers, we have only got ourselves to blame here. Some would regard doing the same thing again next year as fairly poor judgement putting it mildly.

On the other end is beef price, and we needed beef price to be at the €4/kg mark to get out. At a base of €3.55/kg, we are just about able to cover the variable costs and calf purchase without anything for land rent, fixed costs or labour.

Calf price and beef price are the two issues with this system at the moment.

We need calf price to be at a maximum of €100 and we need beef price to be at €4 to cover costs including land and labour.