Back in September, analysis carried out by the Irish Farmers Journal livestock team showed winter finishers required a breakeven base price in excess of €4.50/kg to leave a €100 margin after standard input costs, store cattle price and fixed costs.
Although beef price has increased by 15c/kg in recent weeks, at €3.75/kg it still falls well short of the level required to cover inputs and generate a profit.
The latest rise in beef price has been partly offset by rising meal costs. Rations are up by €10/t for December, with further increases expected given global demand for soya and maize.
Changing direction
While many farmers have committed to intensively finishing cattle, higher feed prices, low beef prices and the threat of Brexit has led many farmers to abandon finishing cattle out of the shed next spring.
With an abundance of silage on farms, many farmers are contemplating storing cattle to offload through the live ring in spring, or putting animals back to grass and killing them next summer.
Considerations
There are merits and negatives to each option. Farmers specialising in buying short-keep animals for finishing are in a system and it is hard to break this cycle.
These farmers usually fare better on price deals, but still struggle to make a positive margin from winter finishing.
Storing cattle and selling live next spring will reduce input costs.
But cattle performance on a predominantly silage-based diet can be poor, with animals often struggling to better 0.3kg/day to 0.4kg/day.
Putting cattle back to grass before killing them next summer also reduces finishing costs. But these animals will compete for grass with other stock, while the delay in sales affects cashflow.
Budget
Whichever route farmers choose to follow, completing a simple budget to compare the cost savings and merits of each option is advised.
An example of budgeting is outlined, based on a suckler farmer with 30 steers to potentially market next year.
For the purpose of the example, the stores were housed on 1 November at an average 530kg liveweight. Steers are all continental types, capable of achieving U and R grade conformation.
In option one, the example assumes the cattle are stored for 120 days from 1 November to 28 February. From 1 March until 31 May, the steers are then intensively finished.
During the store phase, cattle eat an average 30kg/day of silage (€20/t) and 3kg/day of concentrate (€270/t).
During the 120-day store period, feed costs amount to €169/head based on 3.6t of silage and 360kg of meal consumed.
For the 92-day intensive feeding period, the example assumes silage intake falls to 25kg/day and concentrate intake averages 8kg/day.
Finishing ration is also priced at €270/t to reflect high maize levels. Feed cost amounts to €245, based on 2.3t of silage and 736kg of ration consumed.
Feed costs
Total feed costs come to €414/head. Assuming steers were worth €1,166 (€2.20/kg) on 1 November, the farmer needs a finished price of €1,580.
Assuming steers average 0.5kg/day during the store period and 1.2kg/day in the finishing phase, the animal has a final liveweight of 700kg.
At a kill-out of 56%, carcase weight is 392kg, giving a breakeven price of €4.03/kg to cover feed inputs.
No margin, labour or fixed costs are factored in the example, just basic feed inputs. Fluke, worms and lice treatments are also omitted as these would be standard across all three options.
In Option two, the steers are stored until 1 April and sold live. Extending the store diet to cover the additional month brings feed costs to €212, based on 4.5t of silage and 453kg of concentrate.
Keeping weight gains at 0.5kg/day brings sale weight to 605kg, which at €2.20/kg gives a sale value of €1,331.
After deducting the basic feed costs from sale price, the steers have a net value of €1,119.
Again, no labour, fixed costs or margin are included.
From this example, the steers would have been better off sold live on 1 November.
3 Graze and finish in
summer
In option three, the farm decides to put the steers back to grass on 1 April rather than sell live. Cattle are then grazed and killed on 31 July.
Assuming cattle stay on the store diet until turnout and are then fed 4kg/day of meal for 40 days prior to slaughter, total feed costs from 1 November until slaughter are €255, a saving of €159 on option one.
But the big factors to consider in this option are:
Is there enough grazing land to put cattle back to grass?Delaying the sale will hit cashflow.In terms of land required to graze 30 steers, assuming 650kg based on a turnout weight of 605kg and kill weight of 700kg, the group has a grazing demand of 390kg DM/day.
Growth rate
At an average growth rate of 40kg DM/ha/day, the group will need around 25 acres for grazing. If this land has to be rented, conacre at €180/acre works out at €150/head.
Fertiliser based on one bag of urea/acre (€320/t) and two bags of CAN (€240/t) works at €33/head.
Total costs under this option come to €288, excluding additional land rent, giving a breakeven of €1,454 before labour, fixed costs and margin. This increases to €1,604 with conacre included.
Assuming a 55% kill-out for grass-finished steers, carase weight is 385kg meaning a beef price of €3.78/kg without a conacre charge and €4.16/kg with land rent included.
The example highlights the lack of profitability in winter finishing at current beef prices and input costs. Prices and feed rates vary from farm to farm, but the principle of completing a budget remains the same. Quality assurance bonus and higher prices for U grade cattle have to be factored in on top of the beef prices outlined. But remember labour, margin and fixed costs are excluded. Option three appears more profitable based on the example, provided no additional land is required for grazing. On farms with lower stocking rates, this is arguably the best option. On heavily stock farms, some farmers may sacrifice silage ground to carry stores as in option three, potentially leaving a fodder shortage next winter.
Delaying the kill date to late summer for a business used to sales income every May will create cashflow pressure. Keep this in mind when buying fertiliser and paying silage contractors next summer.
Ultimately, the example farm has until March before deciding which option to choose. By then, there should be a better indication on beef price, live trade, ration price and prospects for grazing.
Read more
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Back in September, analysis carried out by the Irish Farmers Journal livestock team showed winter finishers required a breakeven base price in excess of €4.50/kg to leave a €100 margin after standard input costs, store cattle price and fixed costs.
Although beef price has increased by 15c/kg in recent weeks, at €3.75/kg it still falls well short of the level required to cover inputs and generate a profit.
The latest rise in beef price has been partly offset by rising meal costs. Rations are up by €10/t for December, with further increases expected given global demand for soya and maize.
Changing direction
While many farmers have committed to intensively finishing cattle, higher feed prices, low beef prices and the threat of Brexit has led many farmers to abandon finishing cattle out of the shed next spring.
With an abundance of silage on farms, many farmers are contemplating storing cattle to offload through the live ring in spring, or putting animals back to grass and killing them next summer.
Considerations
There are merits and negatives to each option. Farmers specialising in buying short-keep animals for finishing are in a system and it is hard to break this cycle.
These farmers usually fare better on price deals, but still struggle to make a positive margin from winter finishing.
Storing cattle and selling live next spring will reduce input costs.
But cattle performance on a predominantly silage-based diet can be poor, with animals often struggling to better 0.3kg/day to 0.4kg/day.
Putting cattle back to grass before killing them next summer also reduces finishing costs. But these animals will compete for grass with other stock, while the delay in sales affects cashflow.
Budget
Whichever route farmers choose to follow, completing a simple budget to compare the cost savings and merits of each option is advised.
An example of budgeting is outlined, based on a suckler farmer with 30 steers to potentially market next year.
For the purpose of the example, the stores were housed on 1 November at an average 530kg liveweight. Steers are all continental types, capable of achieving U and R grade conformation.
In option one, the example assumes the cattle are stored for 120 days from 1 November to 28 February. From 1 March until 31 May, the steers are then intensively finished.
During the store phase, cattle eat an average 30kg/day of silage (€20/t) and 3kg/day of concentrate (€270/t).
During the 120-day store period, feed costs amount to €169/head based on 3.6t of silage and 360kg of meal consumed.
For the 92-day intensive feeding period, the example assumes silage intake falls to 25kg/day and concentrate intake averages 8kg/day.
Finishing ration is also priced at €270/t to reflect high maize levels. Feed cost amounts to €245, based on 2.3t of silage and 736kg of ration consumed.
Feed costs
Total feed costs come to €414/head. Assuming steers were worth €1,166 (€2.20/kg) on 1 November, the farmer needs a finished price of €1,580.
Assuming steers average 0.5kg/day during the store period and 1.2kg/day in the finishing phase, the animal has a final liveweight of 700kg.
At a kill-out of 56%, carcase weight is 392kg, giving a breakeven price of €4.03/kg to cover feed inputs.
No margin, labour or fixed costs are factored in the example, just basic feed inputs. Fluke, worms and lice treatments are also omitted as these would be standard across all three options.
In Option two, the steers are stored until 1 April and sold live. Extending the store diet to cover the additional month brings feed costs to €212, based on 4.5t of silage and 453kg of concentrate.
Keeping weight gains at 0.5kg/day brings sale weight to 605kg, which at €2.20/kg gives a sale value of €1,331.
After deducting the basic feed costs from sale price, the steers have a net value of €1,119.
Again, no labour, fixed costs or margin are included.
From this example, the steers would have been better off sold live on 1 November.
3 Graze and finish in
summer
In option three, the farm decides to put the steers back to grass on 1 April rather than sell live. Cattle are then grazed and killed on 31 July.
Assuming cattle stay on the store diet until turnout and are then fed 4kg/day of meal for 40 days prior to slaughter, total feed costs from 1 November until slaughter are €255, a saving of €159 on option one.
But the big factors to consider in this option are:
Is there enough grazing land to put cattle back to grass?Delaying the sale will hit cashflow.In terms of land required to graze 30 steers, assuming 650kg based on a turnout weight of 605kg and kill weight of 700kg, the group has a grazing demand of 390kg DM/day.
Growth rate
At an average growth rate of 40kg DM/ha/day, the group will need around 25 acres for grazing. If this land has to be rented, conacre at €180/acre works out at €150/head.
Fertiliser based on one bag of urea/acre (€320/t) and two bags of CAN (€240/t) works at €33/head.
Total costs under this option come to €288, excluding additional land rent, giving a breakeven of €1,454 before labour, fixed costs and margin. This increases to €1,604 with conacre included.
Assuming a 55% kill-out for grass-finished steers, carase weight is 385kg meaning a beef price of €3.78/kg without a conacre charge and €4.16/kg with land rent included.
The example highlights the lack of profitability in winter finishing at current beef prices and input costs. Prices and feed rates vary from farm to farm, but the principle of completing a budget remains the same. Quality assurance bonus and higher prices for U grade cattle have to be factored in on top of the beef prices outlined. But remember labour, margin and fixed costs are excluded. Option three appears more profitable based on the example, provided no additional land is required for grazing. On farms with lower stocking rates, this is arguably the best option. On heavily stock farms, some farmers may sacrifice silage ground to carry stores as in option three, potentially leaving a fodder shortage next winter.
Delaying the kill date to late summer for a business used to sales income every May will create cashflow pressure. Keep this in mind when buying fertiliser and paying silage contractors next summer.
Ultimately, the example farm has until March before deciding which option to choose. By then, there should be a better indication on beef price, live trade, ration price and prospects for grazing.
Read more
Thrive: time for lice treatment in the weanling shed
Beef Management: drafting, clipping cattle and clean water yards
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