While beef finishers are seeing a higher margin over concentrate cost this year, it is not being reflected in their net margins, according to Willie Boland, sales manager at Liffey Mills.
Speaking on the latest episode of Farmland, Boland outlined that the margin over concentrate cost is 20c/kg higher this year than it was in the same time period in 2021.
With the assumption that “it takes roughly 8kg of concentrates to put on 1kg of beef”, Boland explained his calculation.
According to Boland, the price of concentrates totalled about €300/t last year when the price of beef was approximately €4/kg, which left a margin over concentrate cost of €1.60/kg.
However, he said that with the price of concentrates currently coming in at €400/t this year and a beef price of €5/kg, farmers are currently seeing a margin over concentrate cost of €1.80/kg.
If this rate is the sole factor being considered, technically, beef finishers would be facing a better return than they were a year ago. However, Boland admits this is not the case, as fuel, fertiliser and other input costs have also soared in recent months.
You can watch the interview with Willie Boland in the following video:
Meal markets
According to Boland, meal markets have become “extremely volatile” in recent months and are reeling from events such as the Covid-19 pandemic and the conflict in Ukraine.
Due to difficulties in the supply chain of grain, meal prices have increased significantly in recent months according to Boland. However, he discussed the fact that grain is still being planted and harvested in Ukraine with around 20 million tonnes currently in storage.
Boland speculated that if it became possible to transport this stock out of the country, there could be a dip in meal prices if supply increased suddenly.
Advice to beef finishers
In the Farmland episode, Boland offered advice on taking advantage of the current beef price, by concentrate-feeding cattle that are near finishing to get them through the system more efficiently.
He also referred to the strong beef markets, outlining the high weekly throughput numbers that factories are currently experiencing.
“The markets are huge; they’re killing big numbers every week but they’re still looking for them the next week. So I do think that we need to realise that and avail of the current beef price while it’s there,” Boland said.
You can watch the latest episode and podcast of Farmland here. All episodes can be streamed via the award-winning digital platform, agriland.ie, and links will also be available across Agriland social media platforms.