€4.23c/kg: The break-even base price for winter finishers

Teagasc
Teagasc

TEAGASC has warned that if current prices persist at €3.45/kg into next spring, a much larger support payment, in the region of €200/hd will be needed to cushion severe losses.

In an advisory notice to beef farmers drystock specialist Alan Dillion warned that with beef prices at their lowest level in over a decade, there are more questions being raised than ever before among winter finishers about the economics of investing in feeding stock to slaughter next spring.

"Last winter's €3.75/kg base price was loss-making no matter what way it is looked upon, but this will be cushioned somewhat with the €100/head Beef Exceptional Aid Measure (BEAM) payment, which will be issued at year-end," said Mr Dillon.

"Whether or not a second BEAM type payment will be sanctioned remains to be seen."

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He detailed a number of options for steer finishers this autumn including to sell forward stores off grass prior to housing noting that store cattle have thrived off grass and mart prices are still reasonably strong.

Another option he said was to push forward stores for an early 20-21 month finish off grass and advised that farmers weigh all forward stores at this stage.

However, he said the lowest risk option, based on Teagasc figures, was to over winter animals and kill next summer/autumn off grass, as this requires the lowest beef price to achieve a margin.

Key messages from Teagasc for beef farmers this autumn:

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  • Improving efficiency still pays;
  • Current beef prices make all suckler systems loss making;
  • Storing cattle with a view to finishing next autumn allows the market time to correct itself;
  • Bull finishing is high risk and an agreement with processors should be made before finishing bulls;
  • Costs must be cut wherever possible for the foreseeable future;
  • Implement a very basic fertiliser programme - reduce phosphorus (P) and potassium (K) and continue with lime application;
  • No investment in machinery or buildings and keep maintenance to essentials only;
  • For dairy-calf-to-beef systems, calf prices will have to fall to leave a margin - at last year's calf prices, taking them through to finish will be loss making in the current market;
  • If beef prices remain low, dairy farmers must be conditioned for a difficult calf trade in 2020.

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