With issues around suckler calf to beef and suckler calf to weanling system profitability, many farmers are asking if there is profit in dairy beef. It’s a tough question and, at current beef prices, margins are extremely tight.
When you calculate what was paid for calves in 2017, many of these cattle are now being slaughtered at a loss.
While the industry may get away with this for a year or two, it’s not sustainable to ask beef farmers to take the hit on these calves and continue to lose money.
While many will argue that beef price needs to be higher, some say that calves are too dear and, in some cases, beef farmers need to be paid money along with calves in order to make a €200/LU profit margin.
There is farmer interest and there needs to be honest talking when it comes to dairy beef profitability.
Pearse Kelly told a Teagasc meeting in Kilkenny last week: “The national dairy herd is heading for 1.6 million dairy cows and is continuing to grow.
“The by-product dairy beef calves that are produced from this system will end up on beef farms, whether beef farmers like it or not. Some will be exported.
“There won’t be a slaughter scheme, so as an industry we have to deal with them. We will have close to 300,000 dairy-cross beef calves this spring, many of which will end up on Irish beef farms,” Kelly added.
“Don’t get me wrong, people that consistently hit their targets with high output and high levels of liveweight gain will make money from dairy beef systems and we have proven this with some of the dairy beef farms we have been working with.
“If they are technically efficient, they can be every bit as profitable as sucklers done well.”
System choice
People ask the question every year what the most profitable system is to finish dairy beef calves. Kelly told the Kilkenny meeting to stay away from under-16-month-old dairy bulls.
“I’m going to say this straight out, under-16-month Friesian bull calves are completely unprofitable. The variable costs are too high and they will end up consuming 1.5t to 2t of concentrates over their lifetime. You then end up with a 270kg to 280kg carcase that just won’t cover the cost of production.”
It’s very important that if you choose dairy beef that you stick with it for the long haul
Twenty-month bulls are risky. Bulls are grazed at grass and come in for finishing at 20 months. There is a risk that the factory won’t be in the market for these bulls, depending on supply and demand at the time of sale.
Twenty-month heifers finished off grass can be profitable. It’s critical that maximum liveweight gain is achieved from grass and a carcase weight of 260kg to 280kg is achieved to dilute costs.
Twenty-four-month steers come in as the most profitable system, with 28-month steers also being quite attractive if grass forms a large part of the diet.
“It’s very important that if you choose dairy beef that you stick with it for the long haul. Dairy calf-to-store systems really aren’t profitable and we have seen some farmers taking less for reared calves in autumn 2018 than it cost to rear them to that point,” Kelly said.
Teagasc research
With this in mind, Teagasc has undertaken some research based on dairy calf to beef farm data.
Pearse Kelly, along with the beef specialist team, undertook the work and looked at four systems: an Aberdeen Angus-cross- Friesian heifer slaughtered at 20 months; a Jersey-Friesian steer slaughtered at 24 months; an Aberdeen Angus-cross-Friesian steer slaughtered at 24 months; and a Friesian-cross-Friesian steer slaughtered at 24 months.
Table 1 outlines the different costs of each system and what can be paid for different calves depending on the production system according to the Teagasc work carried out.
In a calf-to-beef system, it is relatively straight forward to work out your cost of production. You need a high carcase value, low cost of production and low calf value.
Fixed costs need to be diluted with high numbers in dairy calf-to-beef systems to lower the fixed costs per head.
The Teagasc analysis is based on 2.5 LU /ha. The problem with dairy-beef systems, as with any beef system, is that there are a lot of unknowns in the system, production costs and beef price being the two biggest ones.
Farmers are asked to invest over €1,000 per head and take a punt on what beef price will be in two or two and a half years.
At the moment, it’s difficult to take a punt on what beef price will be in two weeks, never mind two years.
Variable costs include meal, fertiliser, vet, straw and other variables. Fixed costs include insurance, repairs, electricity, phone, depreciation and interest on loans.
If we take the Friesian-cross-Friesian in Table 1 as an example, the total cost of production is €977. We then add in a €200/head margin and this comes to €1,177.
If this Friesian steer kills out at 316kg carcase weight and grades at O-3- at a beef price of €1,138, this means in order to leave a €200/head profit, the dairy farmer must pay the beef farmer €39 along with the calf at the point of sale to make the economics stack up.
A Jersey-cross bull calf going to steer beef at 24 months needs €135 along with him to achieve the same margin.
Making calf to beef systems profitable
Excellent management required from start to finish.High output required.Excellent calf-rearing skills.Good health and vaccination plan.Excellent-quality silage required.Maximise gain from grazed grass.Meet weight for age and market specs.Pay an appropriate price for calves.
With issues around suckler calf to beef and suckler calf to weanling system profitability, many farmers are asking if there is profit in dairy beef. It’s a tough question and, at current beef prices, margins are extremely tight.
When you calculate what was paid for calves in 2017, many of these cattle are now being slaughtered at a loss.
While the industry may get away with this for a year or two, it’s not sustainable to ask beef farmers to take the hit on these calves and continue to lose money.
While many will argue that beef price needs to be higher, some say that calves are too dear and, in some cases, beef farmers need to be paid money along with calves in order to make a €200/LU profit margin.
There is farmer interest and there needs to be honest talking when it comes to dairy beef profitability.
Pearse Kelly told a Teagasc meeting in Kilkenny last week: “The national dairy herd is heading for 1.6 million dairy cows and is continuing to grow.
“The by-product dairy beef calves that are produced from this system will end up on beef farms, whether beef farmers like it or not. Some will be exported.
“There won’t be a slaughter scheme, so as an industry we have to deal with them. We will have close to 300,000 dairy-cross beef calves this spring, many of which will end up on Irish beef farms,” Kelly added.
“Don’t get me wrong, people that consistently hit their targets with high output and high levels of liveweight gain will make money from dairy beef systems and we have proven this with some of the dairy beef farms we have been working with.
“If they are technically efficient, they can be every bit as profitable as sucklers done well.”
System choice
People ask the question every year what the most profitable system is to finish dairy beef calves. Kelly told the Kilkenny meeting to stay away from under-16-month-old dairy bulls.
“I’m going to say this straight out, under-16-month Friesian bull calves are completely unprofitable. The variable costs are too high and they will end up consuming 1.5t to 2t of concentrates over their lifetime. You then end up with a 270kg to 280kg carcase that just won’t cover the cost of production.”
It’s very important that if you choose dairy beef that you stick with it for the long haul
Twenty-month bulls are risky. Bulls are grazed at grass and come in for finishing at 20 months. There is a risk that the factory won’t be in the market for these bulls, depending on supply and demand at the time of sale.
Twenty-month heifers finished off grass can be profitable. It’s critical that maximum liveweight gain is achieved from grass and a carcase weight of 260kg to 280kg is achieved to dilute costs.
Twenty-four-month steers come in as the most profitable system, with 28-month steers also being quite attractive if grass forms a large part of the diet.
“It’s very important that if you choose dairy beef that you stick with it for the long haul. Dairy calf-to-store systems really aren’t profitable and we have seen some farmers taking less for reared calves in autumn 2018 than it cost to rear them to that point,” Kelly said.
Teagasc research
With this in mind, Teagasc has undertaken some research based on dairy calf to beef farm data.
Pearse Kelly, along with the beef specialist team, undertook the work and looked at four systems: an Aberdeen Angus-cross- Friesian heifer slaughtered at 20 months; a Jersey-Friesian steer slaughtered at 24 months; an Aberdeen Angus-cross-Friesian steer slaughtered at 24 months; and a Friesian-cross-Friesian steer slaughtered at 24 months.
Table 1 outlines the different costs of each system and what can be paid for different calves depending on the production system according to the Teagasc work carried out.
In a calf-to-beef system, it is relatively straight forward to work out your cost of production. You need a high carcase value, low cost of production and low calf value.
Fixed costs need to be diluted with high numbers in dairy calf-to-beef systems to lower the fixed costs per head.
The Teagasc analysis is based on 2.5 LU /ha. The problem with dairy-beef systems, as with any beef system, is that there are a lot of unknowns in the system, production costs and beef price being the two biggest ones.
Farmers are asked to invest over €1,000 per head and take a punt on what beef price will be in two or two and a half years.
At the moment, it’s difficult to take a punt on what beef price will be in two weeks, never mind two years.
Variable costs include meal, fertiliser, vet, straw and other variables. Fixed costs include insurance, repairs, electricity, phone, depreciation and interest on loans.
If we take the Friesian-cross-Friesian in Table 1 as an example, the total cost of production is €977. We then add in a €200/head margin and this comes to €1,177.
If this Friesian steer kills out at 316kg carcase weight and grades at O-3- at a beef price of €1,138, this means in order to leave a €200/head profit, the dairy farmer must pay the beef farmer €39 along with the calf at the point of sale to make the economics stack up.
A Jersey-cross bull calf going to steer beef at 24 months needs €135 along with him to achieve the same margin.
Making calf to beef systems profitable
Excellent management required from start to finish.High output required.Excellent calf-rearing skills.Good health and vaccination plan.Excellent-quality silage required.Maximise gain from grazed grass.Meet weight for age and market specs.Pay an appropriate price for calves. 
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