‘Beef price critical in making €1,000/ha margin in dairy calf to beef systems’

Dairy calf to beef systems have the potential to leave gross margins of €1,500 per hectare, according to Teagasc beef specialist Pearse Kelly.

However, he said that the profitability of these systems depends on three key factors, which are calf price, beef price and the cost of concentrates.

“Dairy calf to beef enterprises are very sensitive to beef price. It is going to be very hard to make a gross margin of €1,000/ha if the beef price is below €4/kg.

“Good grassland management is important when the beef price is below €4/kg.

“Grass is important for all finishing systems. The farms that have the highest proportion of grass in animals diets are less risky and have lower costs. This leaves a higher margin,” he said.

Speaking at a recent Teagasc Green Acres farm walk in Co. Meath, Kelly said that the prices farmers pay for calves will have an impact on the profit when it comes to slaughtering the animal.

Farmers should aim to purchase Friesian bull calves at €100-120, Angus and Hereford heifers at €200 and similar type bulls for €250.

Kelly also said that the concentrate cost has a big impact on the profitability of these systems,  but these costs have remained relatively stable over the last number of years.

He also discussed some of the options available to farmers who are considering rearing dairy calves for the beef market.

There has been a lot of work done on finishing systems in Teagasc Johnstown Castle. It shows what people need to get right and what factors affect the profitability of the system.

friesian bulls

Friesian steer finishing system

The Friesian steer beef system is an attractive enterprise on many farms, as it requires low level of expensive inputs when it is operated on a grass-based system, he said.

However, Kelly said that the major downside of this system is that there is less output on a per hectare basis, when compared to the bull finishing systems.

Teagasc market and general considerations
  • Strongest demand is for animals with carcass weights of up to 400kg
  • The system depends on high-quality grass silage (+70% DMD)
  • Good weight gains over the first winter are essential to avoid a prolonged finishing period
  • It is important to market animals as they become fit to avoid steers becoming over fat

Under 16-month bulls dairy bulls

Recent Teagasc research shows that finishing 16-month bulls on all concentrate and concentrate and silage diets produces a negative gross margin.

Kelly said it has hard to make money in this system unless you get the calf for close to nothing and are guaranteed a beef price well in excess of €4/kg.

“Farmers will need a contract price for this system and even at that, the calf and concentrate cost should be looked at closely,” he said.

Teagasc market considerations:
  • Young bulls must be less than 16 months of age at slaughter
  • They should have a minimum fat class of 2+
  • Poorly fleshed carcasses will have dark-cutting meat with a reduced eating quality
  • Strongest demand is for animals with a confirmation of O= or better, with a carcass weight of 270kg upwards

18-20 month Friesian bulls

The Teagasc beef specialist said that the 18-20 month bull system works well on farms, as it produces 300-330kg carcasses that avoid the penalties applied for carcasses over 400kg.

However, he said there are risks associated with this system, especially when the number of cattle being in the meat plants are high.

“The risk in this system is when cattle number rise, the factories can become more selective with the cattle they purchase and this can force the price of these bulls down,” he said.

Teagasc market considerations
  • Producers undertaking this enterprise should do so in consultation with a meat plant
  • Young bulls should achieve a minimum fat class of 2+
  • Strongest demand is for animals with confirmation of O= or better

Early maturing beef steers and heifers

The main advantage of this system, Kelly said, is that there is always a market for early maturing steers and heifers, but heifer carcasses tend to be light and weigh about 240-260kg.

He also said that the calf value is important for the success of this enterprise.

“There are bonuses for early maturing animals, but with all bonus systems farmers will have to pay a premium for calves.

“It is very difficult for these animals to make more than €1,000 each. You will need to carry about four heifers per hectare to make this system work,” Kelly said.

Teagasc market considerations
  • Finished heifers usually attract the highest base-price at slaughter, as they tend to meet the desired specifications
  • The ideal fat cover for these heifers id 3 or 4-
  • Strongest demand is for animals with O= or better confirmation
  • These animals will qualify under breed-specific schemes in certain factories
  • It is advised to pre-book Angus and Hereford cattle in advance to maximise payments

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