Gerry Giggins: Big beef finishers deserve respect for beefing up operations in face of dairy dominance

Even with very welcome price increases for beef and lamb so far in 2022, there is no reason to believe average income on beef and sheep farms will close the gap on that of incomes earned on dairy farms.

When comparing incomes on beef and dairy farms it must be factored in that farm sizes and land quality will vary greatly and that many beef farms are now part-time operations.

While looking at incomes earned from specific beef enterprises, suckler farming average income is €10,297, while beef finishing is €16,416. Unfortunately, these incomes rank right at the bottom below incomes from sheep, tillage and dairy farming.

A difference of just over €80,000 between the incomes on a dairy farm and a beef finishing unit explains why many beef farmers have converted to dairy farming in the past decade.

Some commentators attribute the main difference between the beef and dairy sectors here in Ireland as being the lack of a co-operative system and the presence of large corporates in the beef industry.

Previous attempts by co-ops to gain a foothold in the beef processing industry met with significant failure. When they were present in the market, they didn’t contribute any greater price return or secure any significant market share and in the majority of cases were poorly supported by farmers.

In fact, many would argue that they behaved exactly the same as the large corporates — only wearing co-op clothing!

When conducting any financial review or forward budget, the main variable costs to consider are cattle purchase price, feed input costs and finished beef price. The craziness of the past two years has made the task of budgeting and predicting all the more difficult. This time last year, market analysts were predicting reasonable demand for beef cattle with finished beef prices anticipated to hit €4.40/kg during the winter.

Store prices ranged from €1.70/kg for non-continentals to €2.20/kg for continental cattle.

For those who were purchasing all feed requirements, stability in the feed market meant that intensively fed animals were set to cost €2.60 to €3 per day. Given these forecasted circumstances, only modest incomes were to be achieved per animal. Beef finishers, particularly winter or indoor finishers have continued to grow in scale.

These farms are highly efficient and provide a huge service to the overall livestock industry.

Huge numbers of cattle are purchased by these farms every week of the year throughout the country, which helps keep buoyancy in the weanling, light store and forward store trades.

These farms also provide a consistent supply of well finished cattle to the meat plants on a weekly basis.

Without this supply, meat factories can’t offer the retailers and food services a consistent product 52 weeks of the year.

If this was the case, they could be driven to look elsewhere for their beef requirements from other markets such as South America.

With the level of professionalism that they operate to, these beef finishers are well regarded within the feed trade, using high volumes of feed, on a consistent basis.

A number of years ago, these large-scale beef farms were tarnished with the term ‘factory feedlot’.

Dairy farms have increased significantly in size over the past decade with it not uncommon to find herds with up to 1,000 animals.

For some reason, a beef unit finishing 1,000 animals annually can receive more negative sentiment than a comparable dairy farm!

 

Gerry Giggins is an animal nutritionist based in Co Louth