Farm Ireland

Wednesday 22 November 2017

Profit prospects in balance for beef producers

John Shirley

At the moment, the most frequently asked question from cattle people is whether this strong beef trade can last.

Take a 320kg bull costing €800 and finish him on silage plus an average of 4.5kg of meal/hd/day.

Assuming average gain of 1.26kg/day over a 230-day finishing period. This brings the bull to about 610kg liveweight and, hopefully, about 350kg carcase weight.

Assuming that the feeder is paying the full whack for his inputs, borrowing about 50pc of working capital and allowing about €100/hd for fixed costs, this gives a break-even price of about 386c/kg carcase weight.

In practice, the specialist feeders who are surviving, or even expanding, are saving on inputs and selling for higher prices than the average punter.

This puts them in a strong position when buying weanlings and stores. Input savings can be made by feeding sugar/fodder beet, maize silage, potatoes and by-products etc. Special deals with slaughter plants, in return for a guaranteed supply of stock, can deliver a significant price premium over the quoted price.

Between price premium and the price grid, some heifers have returned €4/kg (and higher) over recent months.

Is it any wonder that the live shippers are being taken out by Irish buyers at the ringsides?

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There is also a significant swing towards leaving weanlings bulls uncastrated. In the first seven months of 2010, young bulls were 22pc of the prime male cattle kill. Over the same period of 2011, this figure has jumped to 30pc.

In the past young bull beef was linked to a high meal diet, which was attractive when cereals were cheap. More recently, however, Irish farmers are putting more grazed grass into the diet of young bulls. This demands good management skills and it also pushes out the slaughter age of young bulls, which is an issue for the meat plants. However it helps the Irish finisher to compete against the shippers for weanlings.

All we need now is for the Irish meat plants to work at keeping beef prices at current levels. And with such a want for beef across the world, this is achievable.

Indo Farming