Is there money to be made in black and white beef this winter?

Beef farmers looking to finish Hereford or Friesian steers will struggle to break-even this winter, due to high store costs and low factory prices, recent figures from Teagasc have shown.

Currently, most beef processing plants are now operating off a base price of 370-375c/kg for steers.

During the week ending October 1, some 18,242 steers were slaughtered in Department of Agriculture approved beef export plants. This is an increase of 2,113 head, or 9%, on the corresponding week in 2016.

The overall kill (37,639) is not only the highest weekly beef kill of 2017, but the highest since week ending November 8, 2014, when 37,509 cattle were slaughtered.

Friesian steers

Teagasc figures show that farmers finishing Friesian steers this winter will require a break-even price of 381-411c/kg next spring. A higher price will be needed to secure a profit.

The higher break-even price (411c/kg) would be required if a 500kg steer, for example, was purchased for €1.76/kg or €880.

These break-even prices are significantly higher than the current quotes being offered to farmers. If those quotes remain unchanged until next spring, it will see many farmers ‘out of pocket’.

Most Department of Agriculture approved processing plants were offering 353-380c/kg for P and O-grade animals during Spring 2017.

Assuming that the 500kg forward store would be finished over a 140-day period – gaining 0.9kg/day – a 326kg carcass would be expected to be produced.

At a store purchase cost of €1.76/kg, this animal would need to achieve 411c/kg or €1,339 to provide the farmer with enough money to cover his/her costs.

It is important to note that these break-even prices were generated using various budgeted costs – many of which can vary. Some of these include: silage at €25/t (dry matter); meal at €240/t; and fixed costs at €81/head.

It must also be noted that this example does not include a margin for the farmer. If a margin of €20/head was targeted, an extra 6c/kg would have to be added to the break-even price mentioned above – to allow for such a return.

Hereford steers

Producers finishing Hereford steers will require a break-even price of 419-449c/kg. Again, this is only a break-even price and a higher price will be needed to secure a profit.

The higher break-even price (449c/kg) will be required if a 500kg steer was purchased at €2.07/kg or €1,035/head.

A 332kg carcass would be produced, assuming that the 500kg forward store would be finished over a 140-day period – gaining 0.9kg/day.

dairy-beef

If the steer was bought for €1.76/kg, this animal would need to achieve 449c/kg or €1,490 to provide the farmer with sufficient funds to cover his/her costs.

Most Department of Agriculture approved processing plants were offering 375-403c/kg for O, R and U-grade animals during Spring 2017.

Yet again, it must be noted that these break-even prices were generated using various budgeted costs – many of which can vary greatly from one farm to the next. These costs include: meal at €240/t; silage at €25/t (dry matter); and fixed costs at €83/head.

Like the Friesian finisher, if a €20/head margin was targeted by the farmer, he/she would need to achieve an extra 6c/kg to allow for such a return.