The chosen theme was reflective of the renewed interest in dairy beef production by many stakeholders across the beef sector.

Because of the imminent abolition of quotas, coupled with the availability of funding, dairy expansion has been gradually gaining momentum. However, for dairy output to achieve its proposed targeted (50% increase in volume of dairy output) growth, as set out in the Food Harvest 2020 report, cow numbers will have to increase by 30% to 1.4m cows from their current levels of 1.1m cow.

Inevitably, an increase in dairy cow numbers will result in more surplus male dairy calves and beef cross dairy calves available for beef production, with projections indicating an extra 240,000 calves becoming available.

While once considered a by-product, dairy beef will form an important part of the beef industry in the future. Indeed, with suckler cow numbers in decline, dairy beef can offset the potential drop in production and maintain beef output levels.

As a production system, dairy calf to beef can be quite profitable. These systems can be operated to complement existing farm enterprises and have the potential to significantly increase farm output without requiring significant capital investment. Financial analysis reported at the national conference shows that, in general, whether it is a Holstein Fresian bull, steer, or an early maturing dairy beef breed, the potential gross margin from a system operating well is between €1,100 to €1,500/hectare.

Compared with suckler beef production, dairy beef can be produced at a lower economic and environmental cost. The principal advantage is that the overhead cost of the cow is borne by the dairy industry and not the dairy beef system.

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However, in order to achieve these impressive gross margins, farmers must operate an intensive high stocking rate system, where a high level of animal performance must be achieved from grass.

Additionally, before entering into any dairy beef system, it’s advisable to conduct a detailed financial budget. The dairy beef production system is relatively easy to get into when you take into account calf purchase price.

However, a high level of working capital is required throughout and, if not managed correctly, this can put immense pressure on cashflow.

Early Maturing Dairy Beef Systems

In spring 2011, the early maturing dairy calf to beef study was established at the Johnstown Castle, under the direction of Teagasc Researcher, Rob Prendiville. The aim of the study was to establish low input profitable production systems for Angus and Hereford sired heifers and steers.

It is also focused on delivering a high valued product that is available to the market on a year-round basis.

At yesterday’s beef conference, the physical and financial performance of the first cycle of calves from the study were presented.

Calf to beef study

Physical performance of the early maturing production systems

During his presentation, Rob went through the various production systems. He looked at reducing age at slaughter and lowering concentrate supplementation for early maturing heifer and steer production systems.

February-born heifers were either slaughtered directly off grass alone at 19 months, or they will remain at grass until November and receive 2.5kg concentrate supplementation at pasture for the final 60 days pre-slaughter at 21 months.

Heifers in the 19-month production system were 454kg at slaughter, yielding a carcase of 228kg.

Liveweight and carcase weight for heifers in the 21-month production system were 471kg and 238kg respectively. Carcase conformation for heifers in both production systems were predominately ‘O=’ with carcase fat classes of 3=.

February-born steers will be slaughtered in November at 21 months of age.

These animals will be finished off grass and supplemented with 2.5kg concentrates for the final 60 days pre-slaughter, thereby removing the need to house for the second winter.

The remaining February-born animals will be finished indoors on ad-lib silage and 4kg concentrates per head and slaughtered at 23 months of age.

Liveweight and carcase weights of 533kg and 277kg respectively, were achieved for steers in the 21-month production system. Liveweight at slaughter was 581kg and a carcase weight of 293kg was achieved in the 23-month production system.

Carcase conformation for steers in both production systems were predominately ‘O=/ O+’ with carcase fat classes of 3=.

Financial Performance

Financial analysis on four of the early maturing production systems is detailed in Table 1 above.

For the heifer system, both net and gross margins followed a similar trend, with the 21-month system returning a slightly higher margin than the 19-month system.

Net margin/head followed the gross margin results, with the 21-month system returning a slightly higher margin than the 19-month system.

A gross margin per head was similar for the 21-month and the 23-month steer systems at €419/head and €424/head respectively. However, retaining the animal for the indoor winter period, increased associated fixed costs and, therefore, there was a net margin advantage of €100/head in favour of the 21-month system – slaughtered off grass.

Collectively, if operated on a high-stocking intensity (at 200 organic N) and taking bonus payment and quality assurance scheme (QAS) into account, the early maturing production systems, based on last year’s data, have the potential to yield gross margins of between €1,350-€1,650/ hectare.

This stands up well to the current performance of the suckler herd where the top 10% of producers in the 2012 profit monitor achieved a gross margin of €1,089 / hectare.

The top one-third of suckler producers had a gross margin of €809/hectare. Furthermore, the data would indicate these production systems to be almost immune to the increase in concentrate prices due to the high levels of gain being achieved from grass and grass silage.

The greatest factor impacting on the profitability of the system is beef price and, to a lesser extent, calf purchase price. Therefore, it should be recognised that the animals in the study were sold during a time period when beef price was exceptionally strong – base price was assumed at €4.50/kg carcass for R3. Producers should factor in the sensitivity analysis to account for fluctuation in beef price.

In simple terms, every 10c/kg fall in beef price, margin per head reduces by €23 to €30.

Producer group bonus payments

Rob acknowledged that the bonus payments from the producer groups make a significant contribution to the overall margin.

He added that: “For the early maturing heifers, the bonus payment is worth approximately €60/head”.

For the steer, the bonus payment can range from €68 to €95/head. This large differential in bonus payment is due to the seasonality of the bonus structure for the Angus.

Grass production and stocking rate

A key element of profitable dairy calf to beef systems is the efficient utilisation of grazed grass.

As such, the capacity of the farm to grow grass will largely dictate the stock carrying potential of the farm and this will ultimately determine whether these impressive gross margins (€1,350-€1,650/hectare) of the early maturing systems can be realised.

Taking a high stocking scenario of 200kg organic N/hectare (derogation required; heifers and steers stock at 3.0 livestock units/hectare) and assuming excellent levels of grass utilisation, the farm would need to grow 10.1 t DM/ha and 11.6 t DM/ha. At 225kg organic N/hectare this rises to 11.3 and 13.0 t DM/ha, respectively.