Demonstrating profitable calf-to-beef pathways
Phase 2 of the Teagasc Green Acres Programme was launched to demonstrate best practice in calf to beef systems in order to maximise profitability. Now in year 3 with 12 commercially-operated farms enrolled, the changes implemented at farm level bear fruit. Sean Cummins, Green Acres Advisor outlines
Now in its third year with 12 commercially-operated farms enrolled, the changes being implemented at farm level are beginning to bear fruit in terms of the net margins being achieved.
Through the support of industry stakeholders – Volac, MSD, Munster Bovine, Drummonds, Liffey Mills, Corteva Agriscience and AgriLand - a number of key areas are being examined and improved at farm level and an increased focus has been placed on calf rearing, animal health, soil fertility, grassland management, farm planning and financial management.
Excluding subsidies, an average net margin of €455/ha was recorded across participating farms in 2020. However, this ranged from €18/ha up to a maximum of €1,140/ha on account of the farms being at various stages of development.
With growing stock numbers on some farms, it must be noted that this net margin figure is inclusive of a positive net inventory change figure €392/ha. In layman’s terms, inventory change is the estimated value of the additional livestock on programme farms and it is hoped that this will filter down into sales in the future.
Taking the inventory as it stands, the farms achieved a gross output of €2,383/ha or €1,036/LU in 2020.
Costs
A key focus of the Teagasc Green Acres Programme is monitoring costs and the below section details the variable costs experienced at farm level in 2020, which totalled €1,284/ha or 53% of gross output.
Feed and milk replacer stood at €678/ha, fertiliser spending averaged €184/ha, an average of €125/ha was outlaid on veterinary, while contractor spending averaged €157/ha and other variable costs totalled €143/ha.
With variable costs amounting to €1,284/ha, a gross margin of €1,098/ha was achieved. Meanwhile, fixed costs of €644/ha were recorded across the Teagasc Green Acres farms, with the three largest being machinery running costs (€101/ha), depreciation (€135/ha) and land lease (€107/ha). When fixed costs were accounted for, this left an overall net margin of €455/ha (excluding subsidies).
Average Teagasc eProfit Monitor results of the Green Acres farms for 2020
Calf price and slaughter value
Although profitability levels have improved, a focus must continue to be placed on calf value. Along with assessing the profitability levels, the relationship between calf cost and carcass value for animals slaughtered in 2020 and purchased during the 2018 calendar year was also assessed.
An analysis of the slaughter performance of animals produced on the Teagasc Green Acres farms was compiled earlier this year, which examined the physical (carcass weight, grade and fat scores) and financial performance (€/kg) of animals slaughtered over the course of 2020.
To delve further into this data and to understand the relationship between calf purchase price and carcass value, 2018 calf purchase values have been compiled and presented as a percentage of the total carcass value below.
Slaughter performance and calf cost of 2020-slaughtered animals
Annually, early-maturing (Angus and Hereford) males achieve a premium on the market when compared to Holstein Friesian males. The three-year price difference witnessed on the Teagasc Green Acres farms over the springs of 2018 through to 2020 is €81/head.
On account of this higher purchase price, a larger proportion of the animal’s final value has been consumed on day one of the production cycle.
This is displayed when the average performance of animals slaughtered over 2020 is compared to the average price paid for these calves in 2018. Calf price accounted for 17%, 20% and 11% respectively of Angus, Hereford and Holstein Friesian steers final value.
In €/kg terms, this equates to €0.66/kg of the animal’s value being taken by purchase price for Angus steers, €0.72/kg for Hereford steers and €0.37/kg for Holstein Friesian steers on day one – the day of purchase.
In terms of 2020-slaughtered heifers, Angus heifer calf value accounted for 20% (€0.75/kg) and Hereford heifer calf price accounted for 22% (€0.82/kg) of the animal’s final value.
Grassland performance and silage quality
Since enrolling in the programme, the participating farmers have been required to measure grass growth rates at farm level through the PastureBase system. Grass forms the backbone of many of the systems being exhibited in the programme and maximising livestock performance from this feed is one of the key targets of the programme.
In 2020, the farmers grew 10.2t DM/ha and an average of 33 measurements were taken across the individual farms.
Calf to beef systems require high-quality silage of 72-74 DMD (dry matter digestibility), which is a key factor in achieving the desired levels of animal performance and reducing feed costs over the winter months.
When silage quality falls to a sub-optimal level, increased levels of concentrate supplementation are required in order to achieve the targeted average daily gains for weanlings, steers, heifers and finishing cattle.
The expense of this increased meal feeding is a significant cost to the system and it has the potential to erode a significant proportion of the margin achievable per animal. In 2020, the dry matter digestibility (DMD) of first cut silage was 74%, while second cut was recorded at 71.9%.