Cattle Budgets 2020 - Too many Unknowns gives Cause for Concern
Teagasc annually produces a set of beef budgets dealing with a number of finishing scenarios. No two farms are the same in terms of input costs, management, stocking rates or fixed costs. With that in mind Aidan Murray, Beef Specialist says each individual should really do their own specific budgets
Many businesses in the current climate are struggling to make sense of all that is happening and those of you involved in the beef sector will be no different. On the face of it the number of unknowns within the sector outweigh the knowns
Every year Teagasc produce a set of beef budgets that deal with a number of finishing scenarios from the shorter keep winter finishing and bull systems to the longer autumn to autumn and weanling to beef systems. No two farms are the same in terms of input costs, management, stocking rates or fixed costs. With that in mind each individual should really do their own specific budgets.
Store & Weanling Prices
Stores and weanling prices are compiled from early August through to mid-September and then subsequently used to set the purchase price for each category of animal. The most noticeable point on store and weanling purchase prices is the rise from the 2019 figures. Across all the categories prices are up 12% when compared to last year, but this ranges from 2 to 30%. This is a welcome development for weanling and store producers but will tighten potential margins on the finishing side.
If we take the purchase of a 550kg store bullock at €2.33/kg liveweight the animal will cost €1,281. If, when slaughtered it gives a 380 kg U= 3 carcase at a base of €3.60 that animal will gross €1,512 leaving only €231 to cover the costs of putting on 150kg liveweight and leaving a margin. If the same animal was to grade an R=3 then the gross value drops to €1,444 leaving only €163 to work with.
2020 Budget Figures
For the purposes of the budgets silage has been costed at €30/tonne for good quality silage, meal at €240/t, half the interest cost on feed and animals borrowed at 7%, no mortality assumed and a standard level of fixed costs.
The winter finishing budget
The winter finishing budget looks at three different animal types. The first two are: a 500kg Friesian and traditional type steers that have been purchased in at €1.76 and €2.05/kg, respectively. They are finished on a diet of good silage and 4kg concentrates and will finish at 626kg liveweight giving a 326 & 332kg carcase. When the finished carcase weight is divided across total costs, the breakeven price needed next spring is €4.04 & €4.41/kg. The third animal type, continental steers start at 530kg, costs €2.33/kg at purchase, leaves a heavier carcase weight of 375kg and will need a breakeven price of €4.48/kg.
The weanling to finishing budget
The weanling to finishing budget takes a 280kg heifer and a 300kg weanling (steer) through to finish at 20 and 24 months respectively. So heifers will be slaughtered in November/December 2021 at a carcase weight of 296kg. Steers will be grazed next spring and will go into the shed to be finished in spring 2022 leaving a carcase of 377kg. When total costs are considered heifers will need a breakeven price of €4.17 and steers €4.27/kg.
The autumn to autumn budget
The autumn to autumn appears to be the most attainable in terms of achieving a margin. This is a purely grass/silage based system with minimal to no concentrates, so good quality silage and good grazing performance will be essential to achieving the target slaughter weight of 700kg in the autumn of 2021. A 430kg steer is bought costing €2.22/kg liveweight. The final carcase weight of 375kg has to cover total costs of €1,425 meaning that the breakeven price needs to be €3.80/kg.
A bull beef system
A bull beef system offers much better average daily gains, conformation and killout % when compared to a steer system if fed to their potential. On the down side you are left with a more difficult animal to handle, they are not universally desirable to all processors, they can run up to weight and age limits quite quickly. Once ready they are not the type of animal you want to be left holding for an extra 2-3 weeks if slaughtering is delayed.
On bull finishing, the Teagasc budget looks at purchasing a 420kg bull that will eventually go onto an ad lib concentrate diet before it is finished at 675kg liveweight next spring. The final 385kg carcase must cover total costs of €1,687, so a breakeven price of €4.38 will be required. If performance can be pushed over 1.5kg per day this will increase carcase weight, or lead to a shorter finish, and for every 0.1kg/day over you could reduce the price required by 16-18c/kg, so performance is crucial.
To be frank other than the autumn to autumn system, the current beef price looks a long way off what will be needed next spring for finishers to breakeven let alone make a margin. Given the uncertainties around Covid and the implications of Brexit when it comes to possible future tarrifs, logistics of getting beef into markets and possible devaluation of sterling we are certainly in a time of great uncertainty. Never has it been more important to sit down and work out how your own farm can navigate through this.
All the Teagasc budgets can be found on www.teagasc.ie/beef