Time to do the sums on winter finishing

The winter period is fast approaching and with that comes questions on the potential costs and returns from winter finishing systems. Prepared annually by Teagasc Beef Specialist, Aidan Murray, the Teagasc Beef Budgets 2024/2025 are a good starting point for finishers wishing to budget.

All-in-all, four budgets are created as an indicative guide for purchasers and finishers of cattle and include: a winter finishing budget for steers; a store to beef – autumn to autumn budget; a weanling to bull beef budget; and a weanling to beef budget. The focus of this article is the former or the budget focusing on the prospects for the winter finishing of steers.

Three varying systems of steer production are examined under the winter finishing budget; Friesian steer finishing, Hereford steer finishing (early maturing), and continental steer finishing, with all animals being purchased in October. Market data obtained from the Irish Farmers Journal are used within the budgets to make the potential purchasing costs of the animals reflective of what’s currently happening in the market place. All three systems are budgeted on the proviso that very good levels of efficiency are obtained at farm level, while also basing feed budgets on the availability of well preserved, 72% DMD silage.

Friesian steers

The basis of the Friesian steer finishing budget is a 500kg steer purchased in October at an assumed price of €2.34/kg or €1,170/head. An expected level of performance of 0.9kg/head/day is targeted, leaving the animal 626kg at the time of marketing, to produce a 326kg carcass.

In terms of inputs, a silage input of 5.5t costing €45/t is budgeted, along with a daily concentrate input of 4kg/head which is valued at €310/t. Other variable costs budgeted include animal health costs of €8/head, while €42/head has been assigned to transport and marketing costs, which leave total variable costs at an estimated €471/head. Along with this, fixed costs are budgeted at €95/head, stemming mainly from the costs associated with housing the animals and an allocation towards an interest charge for financing 50% of the animal purchase and feed costs.

Overall, when factoring in the purchase price of the Friesian steer (€1,170) and the variable (€471) and fixed costs (€95), the breakeven selling price required for this system is €1,736 or €5.32/kg when a 326kg carcass is produced.

To account for variability in purchase price, a 10c/kg higher and lower purchase price is also examined, with the former bringing the breakeven price to €5.49/kg and the latter requiring a price of €5.81/kg to breakeven.

Hereford steers

The winter finishing budget also sheds light on the potential returns from a Hereford cross (early maturing) steer finishing system. Again, using an assumed starting weight of 500kg in October, a purchase price of €2.71/kg is budgeted, bringing the outlay at the time of purchase to €1,355/head for the Hereford cross steer.

The expected silage and meal input, along with the average daily gain expected, remain the same as the Friesian steer system, but instead a higher carcass weight of 332kg is expected come the point of sale. Overall, total variable costs for this system are estimated at €471/head, while fixed costs are included at €97/head. As the breakeven selling price is a combination of the purchase (€1,355/head), variable (€471/head) and fixed costs (€97/head), the breakeven selling price required for this system is €5.79/kg or €1,923/head. If the purchase price was to fluctuate up or down by 10c/kg, this corresponds to a €0.14-0.16/kg change in the breakeven beef price required.

Continental steers

The third budget examines the potential returns from a continental cross steer system, this time starting in October with a steer weighing 530kg. Meal input for this system is budgeted at 4.5kg/head/day, while a total silage input of 4.5t is expected. Given the additional efficiencies stemming from continental breeding, an average daily live weight gain of 1kg/head/day is anticipated to produce an animal weighing 670kg, resulting in a 375kg carcass at the point of sale.

Again using market data, the assumed purchase price of this animal is €3.08/kg or €1,632/head, while variable costs and fixed costs are budgeted at €470/head and €101/head, respectively, resulting the required breakeven selling price being €2,203 or €5.87/kg. Where cattle are purchased at 10c/kg lower or higher, this influences the required breakeven selling price by €0.14-0.18/kg.

Table 1: Teagasc Beef Budgets 2024/2025 – Winter finishing steers

Assumptions: Very good levels of efficiency with a high average daily gain; meal cost at €310 per tonne; silage quality critical to performance - well preserved, 20% DM, 72% DMD, costed at €45/t; good animal health – dosing and other health costs at €8 per head; transport and marketing at €42 per head; half the interest cost on feed and animals borrowed at 7%; no mortality assumed; selling price required only covers variable and fixed costs and does not include a margin.

Specialist comment

Aidan Murray, the preparer of the Teagasc Beef Budgets, stressed that the above should only be used as an indicative guide for beef finishers and each should sit down and complete a budget pertinent to their own farm, using their own farm’s performance, costs and the margin they wish to obtain from their system.

“Costs and the levels of efficiency achieved on all farms can vary hugely. We’d strongly advise farmers to sit down and examine their costs carefully before the winter. Our budgets are prepared solely on the basis of breakeven price required; finishers need to examine their costs carefully to clarify what levels of margin can be achieved using their own individual farm’s costs, potential purchase price, margin desired and the efficiency of their system,” Aidan Murray explained.

Another important factor to note is the importance of silage quality. Where silage of a suitable quality (+72DMD) for finishing isn’t available or silage reserves are scare, ad-lib concentrate feeding systems may prove attractive to some finishers. Where this is the case, purchasers of large volumes of concentrates need to have a discussion with their merchant regarding its potential cost and be aware that ad-lib feeding will give a much more predictable, faster finish.

To access the full suite of Teagasc Beef Budgets 2024/2025, click here.