Farmers will need €4.05/kg to make dairy calf-to-beef scheme profitable
Farmers involved in dairy calf-to-beef production will have to be paid a minimum of €4.05/kg into the hand to make a margin of €200/hd on calves bought this spring.
Analysis from Teagasc confirms that calves bought at an average of €75/hd over the past three months will have to be paid €1,275 for a 315kg carcass to provide a return of €200/hd for the farmer.
This price equates to €4.05/kg.
However, since most finished dairy stock grade 0- or P+, a return of €4.05/kg will necessitate a base beef price of €4.25/kg - even allowing for the QA bonus - given the level of QPS deductions.
Current base prices range from €3.70/kg to €3.80/kg.
The Teagasc analysis comes as Kepak and Glanbia launched a joint calf-to-beef programme.
Under the joint programme, Kepak is offering a contract price to rear dairy-bred calves to beef provided farmers purchase inputs from Glanbia.
Pearse Kelly of Teagasc pointed out that it cost €1,000 on average to finish Friesian bull calves to a carcass weight of 315kg at two years.
He said this level of performance was only possible on "well-run and efficient farms" which were working at a "reasonably high stocking rate".
Where there was a 5pc reduction in the growth rates over the lifetime of the calf, then the carcass weight falls to 300kg, Mr Kelly explained.
In these circumstances a base of €4.45/kg would be needed to give the farmer a €200/hd return, he said.
ICSA has claimed that the real cost of beef production is in excess of €5/kg when the farmer's labour is taken into account.
Meanwhile, there is a widening disparity between the cattle trade in the marts and factory beef prices.
While the factories have succeeded in pulling base prices for bullocks and heifers to €3.70-3.80/kg - and to €3.40/kg for R-grade bulls - demand in the marts for store cattle remains very strong.
Although beef prices are 50c/kg or €200/hd back on this time last year, a lively trade is reported in the marts for cattle that are ready to go to grass.
Angus and Hereford forward stores made €1.90-2.25/kg last week, with Friesians generally selling for €1.40-1.80/kg, and up €2/kg in exceptional cases.
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