The average gross margin across the 10 farmers is €2,101/ha, with a huge range from €1,381 to €2,866/ha.
The figure of €2,866/ha clearly shows what is achievable at farm level. Output has been steadily increasing from the beginning of the programme.
These are the main costs associated with producing an animal for sale. The average variable costs across all the farms is €1,234/ha, with a range of €454 to €1,719.
Calf to beef systems are high cost systems and high output is required to carry these costs. The four highest variable costs on the Teagasc Green Acres farms are feed, fertiliser, vets' fees and contractor charges.
Feed typically makes up half of the variable costs.
As can be seen from the table, variable costs increase as output increases but at a lower level. What is interesting is that the variable costs as a percentage of output have decreased from 65pc to 59pc over the course of the programme.
This shows that it now costs 6pc less to produce the same amount as before.
Gross output minus the variable costs gives you the gross margin. This is the amount of money that is left to pay the fixed costs, tax, new farm development and living expenses.
The average fixed costs on the Green Acres farms is €559/ha, which is very typical of non-breeding dry stock farms which generally range from €450/ha to €650/ha.
The gross margin has increased steadily over the last two years, mainly due to the increase in beef output on the farms.
Fixed costs rose slightly in 2015 to reflect some on farm developments, particularly in the areas of paddock development on farms. In 2016 this figure has stabilised again at €559/ha.
The aim over the three years of the Teagasc Green Acres Calf to Beef programme is to have a positive net margin of at least €500/ha excluding all farm subsidies and schemes. Having started with an average net margin of -€40/ha in 2014 has now moved to +€308/ha in 2016. This shows that the target is on track to be achieved.
Key drivers of profit
The key to achieving a strong net margin on any farm is to have a good output. There are three main drivers of profit on a farm:
- Performance per livestock unit
- Stocking rate
- Beef/Sale Price
The first two are factors that can be controlled inside the farm gate by the farmer.
They are management issues and if the farmer can get these right he/she can achieve a good margin.
Unfortunately, the farmer has little or no influence over the final sale price of animals, unless they have a pre-arranged contract price agreed with their processor.
However, as can be seen from the adjoining table 3 and 4, performance (output) per livestock and stocking rate have been increasing nicely since the start of the programme.
Gordon Peppard is programme advisor for the Teagasc Calf to Beef Programme
Eight lessons from the top performers
High beef output
This refers to the kilos of beef produced per hectare. It is a combination of a high stocking rate and excellent performance of each animal on the farm.
As a target, more than 1,000kgs/ha should be produced, this can be achieved from a stocking rate of two livestock units per hectare and a performance of 500kgs per livestock unit.
In a calf to beef system these targets are very achievable and higher levels can be reached.
Source a good quality calf. Buying an earlier born calf (before March 17) will help increase output as these calves are generally from the cows with better fertility and performance.
Also these early born calves will be weaned and at grass for a longer period in the first grazing season
Feed high levels of milk replacer, feeding up to 750gs per day increases growth rates to weaning.
Ensure good hygiene at feeding and in the calf pen.
Consistency is key in relation to feeding of the calf. Feed at the same time, rate and temperature each day to avoid stressing the young animal.
Having a health plan in place in conjunction with your vet is essential. With calves coming from numerous sources, having a vaccination programme in place is critical.
The top performers vaccinate for pneumonia and IBR, using the two shot Bovipast RSP programme for pneumonia and the Bovilis IBR marker Live intranasally for IBR.
Booster pneumonia and IBR are then given at the correct stages throughout the lifetime of the animal.
A strategic dosing regime needs to be planned to control, worms, fluke, lice etc. throughout the grazing season and during housing.
In order to produce high output a lot of gain from grazed grass is required in the system. To ensure enough high quality grass is available, soil fertility needs to be at its optimum.
Ensure to correct the lime status of the soil firstly and then correct P and K levels to index 3.
Slurry and farmyard manure should be targeted at low index fields and the remainder corrected with compound fertilisers.
Having a paddock system in place to supply quality leafy grass at all times is essential. This approach maximises weight gain from grass. Target to have 230 days grazing in year two. To achieve this target animals need to be out early in the spring, this will require excellent management in the autumn where paddocks are closed up early to ensure a supply of grass in February and March.
Good management of the grazing programme in the spring to ensure you set the farm up for maximum productivity over the summer is critical to success.
High quality silage
In a calf to beef system all animals are priority.
Therefore producing high quality silage to ensure all animals meet the target average daily gains over the winter period is critical.
All silage on these farms should be greater than 70pc DMD to help reduce the concentrate level required to meet daily gains.
To ensure that performance is not compromised at any stage from purchase to slaughter it is essential that regular weighing of animals takes place throughout the year.
At a minimum animals should be weighed at turn out, mid-season and at housing.
Poor performing animals can be detected and a remedial action put in place.
Animals for finishing can be grouped together, thereby increasing efficiencies as only the stock close to target weights are fed.
When you buy your calves, you need to know when they are going to be slaughtered, and you need a plan to realise these schedules.
If not you will fall between two stools, with implications on housing facilities, slurry
storage, not enough silage, mixed age groups creating issues for dosing, feeding concentrates for finishing and cash flow.
Talk to your processor, ensure that all animals meet the required market specification to achieve bonuses, quality assurance payments etc.
Farmers should plan how many animals they can finish at different times of the year to command the best price possible from the factories.