Price rise needed to make over-wintering pay

The cost of overwintering cattle in Scotland this year means that the liveweight price of cattle needs to rise in spring to make a margin.

If you have the sheds and can produce straw or silage then there is an opportunity to leave a margin.

Using a combination of the Farm Profit Programme figures, SRUC and Ringlink, we took a look at taking a weaned calf through to grass over winter.

Calves are typically bought at October sales at 290kg for steers and 260kg for heifers with prices this year being £2.30-£2.50/kg liveweight. This results in a typical purchase cost of £690 for a steer and £624 for a heifer.

Over winter, you would want the animal to grow at 0.7kg/day until selling in April at a weight of 420kg for steers and 386kg for heifers.

Silage diet

The two main diets on Scottish farms would either be a silage diet or a straw-based diet.

Silage diets offer the opportunity to sell stores the following spring or retain the animals for further grazing while straw diets would mainly be used for wintering animals which would be put out to grass.

For this exercise, we have given both animals a purchase and sale price to allow comparison of the different diets in the shed.

Costing your own silage is not an easy task

Weaned calves fed on a silage diet would need around 3.5t/steer or 3t/heifer.

Costing your own silage is not an easy task but taking a typical silage yield of 31t fresh weight per hectare at a cost of £523/ha gives a price of £17/t.

This means a steer will eat £59.50 of silage and a heifer £51. This is based on a silage with 300gDM/kg, 10.6ME and an application of 1,250kg/ha of high-nitrogen fertiliser.

A mixed blend costs around £230/t

On top of this, the animal will need some barley, protein and minerals which over winter will come to around 300kg for a steer and 250kg for a heifer.

A mixed blend costs around £230/t meaning the steer ration is £69 and the heifer £58.

Straw diet

A straw diet would require about 0.8t of straw for both heifers and steers. The straw would have an energy value of 6.5MJ/kgDM and would cost around £65/t if home grown. This results in cost of £52/head.

The diet would need to be further supplemented with a barley, protein and mineral mix with each animal getting 750kg which gives a cost of £173/head.

The silage diet cattle are bedded with 500kg of straw and the straw diet would only need 300kg of straw. If the straw is home grown then this puts a cost of £33/head for the silage fed cattle and £20/head for the straw fed cattle.

Vet and medicines would typically cost £30/head for vaccines, wormers and flukicides. Commission levies and haulage would also add £49/head on to the steers and £47/head on to the heifers.

Variable costs

This gives a total variable cost for a silage-fed steer at £239/head and £220/head for a heifer.

Straw diets come out with steers at £324/head and heifers at £322/head. If sold again in the spring at £2.40/kg, the steer would make £1,008 at a weight of 420kg and the heifer would make £926.40 at a weight of 386kg.

This gives a gross margin per head of £79/head for silage fed steers and £83/head for heifers.

Both straw-fed cattle made a loss with steers losing £6/head and £19.60/head lost per heifer.

Fluctuation in prices

A rise in sale weight price of 10p/kg in spring would see £42/head added to steers and £38/head added to heifers. This would leave the straw diet with a positive gross margin. However, a £10/t rise in straw price would put on £5/head to the silage-fed cattle and £11/head on to the straw-fed cattle.

The fertiliser cost was based on the prices this summer but with prices rising, a £300/t increase in fertiliser cost would add £375 on to the cost of silage per hectare, and £42/head on to the steer diet and £36/head on to the heifer diet.

If feed prices rise by £50/t to £280/t, this would cost the silage-fed beast £15/head and the straw diet animal £37.50.

Straw-fed cattle will leave the shed with an enlarged stomach which would put buyers off in the ring

These costings go to show that unless you are able to produce your own silage or straw, overwintering weaned calves is an expensive business.

Straw-fed cattle will leave the shed with an enlarged stomach which would put buyers off in the ring so this diet is mainly for those wishing to keep them over winter for putting to grass.

One thing for certain is that input prices are rising so this winter is not going to be cheap.

Silage costs

If you were to get contractors to complete all your silage without any work from the farm it would be an expensive cost.

According to the RingLink, a machinery ring co-op mowing costs £12.75/acre, tedding £6.20/acre and self-propelled forage harvester £28/acre.

An additional tractor and cart costs £39/hr and a tractor and buckrake is £42/hour. Baling and wrapping a 4x4 bales costs on average £6.25/bale based on four layers of wrap.

£567/t for OSR

The oil seed rape price in the UK continues to climb with November 21 contracts as high as £591/t (€700/t), equalling the highest price on record.

However, despite the record rape prices, global soyabeans prices have slowly been drifting downwards. Optimism on the Brazilian soyabean crop is cooling prices as many feel supply will rise.

Falling soyabean prices usually pull rapeseed prices down with them but this has not been happening in recent weeks.

Soyabeans on the Chicago market have dropped 11% since the start of August while rapeseed prices on the Paris market have risen 30%. This demonstrates the tight supply of rapeseed with little letup estimated until next summer.

Even with record prices, demand seems stable or inelastic. Much of this is being put down to the oilseeds’ characteristics, whether to fulfil biofuel mandates or in its use as an edible oil in food products.

GB cattle and sheep kill slowing

Figures from Defra show 160,600 prime cattle were slaughtered in September, which is a 5% fall compared to last year. From this kill, 73,600t of beef was produced, 6% less than last year.

Similarly, the sheep kill was just over one million head which is a massive 16% decline year-on-year. The ewe klll was 15% down at 108,000. In the year to the end of September, production totalled 190,000t, down 25,000t or 11% on the same period in 2020.

Butcher boom starts to slip

The COVID-19 pandemic saw shoppers flock to butchers to stock up on meat while stuck in their homes. But this trend has started to turn with figures from Kantar, a market research company, showing consumers returning to pre-pandemic patterns of purchases. Over 2020, meat and poultry purchases from butchers rose by 22%.

However, figures from 12 weeks leading to 5 September show a 21% fall. During the same period, all food retailers suffered a reduction in sales by 4.1% as the UK opened up after the lockdown.

Worryingly, butchers’ meat and poultry volumes have slipped to below pre-COVID levels by 4.4%. The number of people using butchers has dropped by 400,000 compared to during 2020 and down 200,000 compared to 2019. Many of those customers gained during the pandemic haven’t continued to shop with these local stores and in the latest 12 weeks of figures just 7% of households bought meat and poultry from a butcher.

Quality counts

Nearly three-quarters of shoppers choose to go to a butcher for better quality meat, according to pollster YouGov. The second most common reason was to support a local business (65% of the respondents).