Over the next month, livestock marts will see a rise in the number of farmers buying light to mid-weight stores for grazing.

Depending on breed, weight and land type, some of these animals will kill off grass in the autumn, although a larger percentage will be housed and finished out of the shed at some stage next winter.

Regardless of which finishing system is in place, it is important to draw up a short budget before buying stores this spring.

Although there are some signals of fertiliser prices easing, in general, inputs are still relatively expensive.

Store cattle prices are also higher year-on-year, buoyed by record beef prices over the past two months.

While it is impossible to predict what beef price will be come winter, doing a budget now will give a good indication of the break-even price required to cover production costs.

What to include?

When doing a budget, the most important aspect is to use realistic prices and inputs for the cattle on your farm.

Do not assume all cattle will thrive to their potential from arriving on-farm until the day they are sold.

Equally, allow for some variation in kill-out percentage and conformation across animals, as there will be a range of carcase weights and beef prices.

In terms of inputs, how many bags of fertiliser will be applied to the grazing block carrying the stores purchased this spring?

Include any worm drenches, minerals, electric fencing materials and meal fed at grass. If cattle are housed, factor in silage, meal and any parasite control for fluke, worms and lice.

Allow for some miscellaneous costs like replacement tags, dehorning or haulage. Allow for fixed costs to cover fuel, machinery, electricity, water etc, and lastly, include a profit margin.

Weight gains

In a well-managed grass-based system, good-quality continental stores are capable of gaining 1kg/day at grass, reducing to around 0.7kg to 0.8kg/day for cattle with more dairy breeding.

Once housed and intensively finished, good-quality continental stores can gain 1kg to 1.2kg/day over a 60 to 90 day period. Shorter feeding periods can deliver higher daily liveweight gains.

Again, plainer beef cattle and animals with dairy breeding will more realistically achieve weight gains of 0.8kg to 0.9kg/day when finished over a 60 to 90 day period.

As animals will be weighed when purchased in the mart, use the outlined weight gains to get a target housing weight and finishing weight.

Kill-out is likely to be 53% to 57% depending on animal type and breeding. Steers will have a higher kill-out than heifers. Continental breeds have a higher kill-out than dairy beef.

Stacking it up

Using the target finishing weight and kill-out, it is possible to work out a carcase weight for the stores. This should allow farmers to calculate a break-even beef price.

Based on this break-even beef price, it is up to the farmer to consider if there is a realistic chance of making a profit from buying stores in spring for finishing next winter.

Completing a budget for grazing stores

Table 1 outlines an example budget drawn up by a farmer that buys stores every spring for grazing and finishing in December.

The example assumes there will be no change to the number of cattle purchased this year. The same grazing area will be used with no change in the level of inputs used.

Cattle purchased are always heifers. They are rotationally grazed on a paddock system, before housing in October and finished after 60 days. High levels of management are in place throughout.

Buying cattle

From mid to late March, the farmer will buy 30 good-quality beef heifers with 100% suckler breeding.

Heifers are purchased from 400kg to 440kg liveweight, with an average purchased weight of 420kg used in the budget.

An average purchase price of 285p/kg is assumed for good-quality heifers with U -grading conformation, which is up 30p/kg on last year or just over £120/head.

Based on the average weight and purchase price for the group, the heifers cost £1,197/head.

Grazing

The budget assumes the heifers are turned out to graze on arrival to the farm, with an average start date of 25 March used.

The grazing block allocated to the group is 20ac of productive grassland with relatively free draining soils.

Three bags/acre of nitrogen fertiliser are applied to this block over the season, along with slurry in early spring. The first round of fertiliser is in April, with follow up dressings in May and July.

Fertiliser applied comes to 3t over the 20ac grazing block. Assuming fertiliser averages £620/t, this comes to £1,860 or £62/head.

Heifers get two worm drenches and minerals, which are costed at £10/head. Miscellaneous costs of £20/head are also included for fencing.

Prior to housing, heifers get 2kg/day of barley (£280/t) for two weeks to maintain performance and help transition onto the finishing diet. Grazing costs come to £100/head.

Weight gain at grass is 0.9kg/day from 25 March to 1 October, giving the heifers a housing weight of 590kg.

Housing

From 1 October to 1 December, heifers are intensively finished. Heifers average 25kg/day of silage (£25/t) and 5kg/day of rolled barley (£280/t) over the 60 days.

Finishing costs come to £38 for silage and £92 for barley, with an additional £10 to cover parasite control and £20 for miscellaneous. All combined, this comes to £132/head.

Weight gain over the 60 days is 1.1kg/day, bringing the final liveweight to 656kg. At 55% kill-out, carcase weight is 360kg.

Fixed costs and margin

Heifers are on-farm for just over eight months. Assuming fixed costs of £30/month, or £1/day for machinery, fuel, insurance, electricity etc, this adds £240 into the budget. A profit margin of £50/head is also included.

Break-even

As outlined in Table 1, it costs the farmer £1,739 to purchase heifers and finish them within the outlined system.

On a 360kg beef carcase, the farmer needs a beef price in the region of 483p/kg to cover the outlined production costs and generate a modest £50/head margin.

Sensitivity analysis

For every 10p/kg change in purchase price, the break-even beef price changes by 12p/kg. Likewise, for every £100/t change in fertiliser price, beef price changes by 3p/kg. Should meal price rise by £20/t, then beef price changes by around 1p/kg.

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