Dairy beef: How much can you afford to pay for calves?

There has been a dramatic increase in dairy cow numbers over the past five years. This is mainly due to the removal of milk quotas.beef

However, suckler cow numbers have somewhat declined over this period. This is particularly the case in heavily-populated dairy areas.

The Irish dairy-beef industry is ever growing and is a very important cog in the beef production chain. Due to the growth in the national dairy cow population – since the unshackling of the milk quotas – there has been a proportional increase in the number of dairy calves available for beef production.

By 2021, it’s predicted that the number of dairy-beef calves will increase to 630,000 head – up from 490,000 in 2015.

According to Teagasc, male dairy calves represent 41% of the calves available for beef production, while 43% are early-maturing crossbred calves (26% Angus and 17% Hereford). Limousin, Belgian Blue and other continental-sired calves make up the remainder.

The value of beef output from the dairy herd is expected to equal 60% of the total Irish beef output in years to come. Therefore, it will be a dominant sector of the Irish beef industry.

The costs

In a calf-to-beef enterprise, the carcass produced from the finished animal must cover a number of costs. These include: the cost of buying the calf; all production costs to slaughter; and a net margin per head.

The initial costs – Teagasc says – of investing in these systems are relatively low. However, the cost of keeping these animals can quickly amass over the production cycle.

Note: Farms with moderate levels of efficiency should base calculations on 5% lower carcass weights and 10% higher costs.

These guideline costs can also be used to give farmers an indication of how much they can pay for calves.

Carcass weight x Estimated beef selling price (€/kg) – Total costs (€/head) = Breakeven calf price.

For example, when based on the current average market prices for O+3= early-maturing steers and heifers and O=3- or P=3- Friesian steers, the breakeven calf purchase prices (excluding labour) are as follows:

  • Friesian steer (O=3-): 280kg x €3.93/kg – €950 = €150.40/head;
  • Friesian steer (P=3-): 280kg x €3.64/kg – €950 = €69.20/head;
  • Early-maturing steer when finished indoors (O+3=): 310kg x €3.99/kg – €850 = €386.90/head;
  • Early-maturing steer when finished off grass(O+3=): 320kg x €3.99/kg – €900 = €376.80/head;
  • Early-maturing heifer when finished off grass (O+3=): 250kg x €4.12/kg – €650 = €380/head.

It must be noted that these are guideline prices only and are not recommended purchase prices. The margin you wish to generate and the efficiency of your farm also needs to be factored into the equation when it comes to making purchasing decisions.