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Since early December, beef prices have risen by 20p to 30p/kg as supplies fall short of processing demand.
While higher prices are welcome, winter finishers are not making huge profits.
Concentrate rations are up £120 to £130/t on last winter. Store cattle have also increased in value as have fuel, energy and machinery running costs.
Last August, analysis presented by Kieran Mailey showed that cattle purchased in October, stored for 100 days and then intensively finished over a 90-day period by spring 2023 would need to achieve a beef price in the region of 465p/kg to breakeven.
To make a very modest £50 per head margin, a finished price of 480p/kg is required.
The exercise serves to highlight that even with record beef prices, efficient finishing systems are barely able to cover production costs.
The typical response to this from some within the trade is that finishers are over-paying for stores.
However, it is up to the market to deliver sustainable returns for farmers. Cheaper stores are not the solution and the person producing a weanling needs every penny they get.
As highlighted in last weeks’ edition, on a well-run spring calving suckler unit, costs will now be over £1,000 per cow.
Looking ahead, there is the prospect of a new headage payment coming for suckler cows and also finished cattle from 2024 onwards.
The rates of payment being talked about are in the region of £100 to £160 per suckler cow and £40 per head for finished beef cattle that meet various criteria around calving interval and age at slaughter respectively.
None of this should distract beef farmers from making the right decisions for their business and continuing to look at other ways to diversify their incomes.
The £50m pot for these beef schemes is coming from a 17% cut in the overall payment budget, so even if the rates end up higher (DAERA has not confirmed a figure per head), the net benefit will be relatively small.
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