Increased Costs Threatening Winter Beef Finishing
5 October 2007
Beef finishers face a very difficult challenge this winter following an unprofitable experience last year. Increases in the cost of concentrate feeds are threatening all finishing systems where there is a heavy dependence on concentrates in the diet. Good quality forage, in the form of grass and maize silage, will help to minimise the impact of the rise in feed costs.
Teagasc Drystock Programme Manager, Bernard Smyth said: "Winter beef finishing is a high cost, high risk business and farmers need to closely examine their systems of production to minimise costs and reduce risk, if they are to generate profit."
He advised that home-grown cereals and fodder beet will help to reduce farmers' exposure to the concentrate cost increase, but a greater contribution from quality forage will also be needed. With home-grown fodder beet, feed costs could be 10 per cent lower.
Teagasc has produced guideline budgets for a range of cattle finishing systems that show the beef selling price required for efficient operators to generate a modest margin having covered a low level of overhead costs.
The Teagasc Programme Manager said: "A price rise, from purchase to sale, ranging from 15 to 30 per cent is essential, depending on the system, even for efficient finishers to achieve a modest margin. Discussion with meat processors is necessary to achieve some minimum guarantees on selling price to reduce the risk."
He warned that if winter finishing remains unprofitable then producers will revert back to producing beef on a more seasonal basis, making it more difficult to service the UK and European consumer markets.
Teagasc budgets show that steer beef systems require a beef price of at least € 3.30 per kilogram carcase weight to leave a modest margin of € 50 per head. That assumes continental stores can be purchased at € 1.60 per kilogram liveweight and uses a cost of € 240 per tonne for concentrate.
Bull beef systems based on concentrates plus straw appear to be unattractive. With this system a price of € 3.50 per kilogram carcase weight or higher in April to June 2008 would be needed.
Bernard Smyth advises all farmers, intending to finish beef this winter, to examine their individual system and performance and act to minimise feeding costs and reduce risk by entering discussion with meats processors.
Ends
Note to Editors
Teagasc strategies to reduce costs and risk for winter beef finishers include:
- Top quality forage is an essential foundation to control the concentrate input required - 72 DMD grass silage requires 3 kilogram less meals per day compared with 65 DMD grass silage for the same level of weight gain. Total feed costs are at least 30 per cent lower where top quality silage is used.
- Animal health, housing and feed space, adequate ventilation, availability of clean water and animal welfare must all be optimal so that performance will not be restricted by non feed factors.
- Animal must have the capacity to achieve high levels of daily gain in a relatively short intensive finishing period that does not exceed 100 days. As animals approach mature finish weight feed efficiency drops rapidly - optimum slaughter stage is when animals are at fat score 3 to 4L.
- A price rise, from purchase to sale, ranging from 15 to 30 per cent is essential, depending on the system, even for efficient finishers to achieve a modest margin. Purchased stores need to have good potential for weight gain and possible grade improvement (O to R or R to U).
- Sale value per kilogram carcase will now determine price rise - discussion with meat processors is essential to achieve some minimum guarantees on selling price to reduce risk. Store bullocks costing € 1.60 per kilogram liveweight need to obtain € 3.29 to € 3.40 per kilogram carcase at KO per cent of 56 per cent and 54 per cent, respectively, for a 15 per cent price rise.
