Finishing Friesian or Hereford bullocks? Here’s the break-even prices required
We have already looked at the slaughter prices required to ensure a profit – budgeting feed costs, medical costs, transports costs and fixed costs – for finishing young bulls, continental steers and weanling heifers and bullocks.
In this article, we will look at the break-even prices required when finishing Friesian and Hereford store bullocks over the winter period.
Prices paid in spring 2018 (February, March, April) for P and O-grade (fat score of 3=) bullocks averaged 363-412c/kg in factories across Ireland.
While some steers may grade higher, it is assumed that the majority of Friesian carcasses would fall into the P and O-grade category.
Assuming that a 500kg steer – fed silage and meal – would finish over a 140-day period and would gain 0.9kg/day, a 326kg carcass (626kg live weight) would be expected to be produced.
Teagasc estimates the silage requirement for this 140-day period at 5.5t and the meal requirement at 4kg/head/day.
Looking at different purchasing costs, if the bullock was purchased at a lower ‘autumn 2018’ price of €1.60/kg (€800/head), this animal would need to achieve 376c/kg or €1,226/head to provide the farmer with sufficient funds to cover his/her costs.
If the steer was purchased for €1.70/kg or €850/head, a price of 391c/kg or €1,276/head would be needed for the farmer to break-even.
Finally, moving to a higher purchase price of €1.80/kg or €900/head, the farmer would need to receive a price of 407c/kg or €1,326/head at slaughter.
Teagasc estimates variable costs and fixed cost for the above system – which will vary from farm to farm – at €345/head and €81/head respectively.
Therefore, the purchase price of the bullock plus the total costs of finishing the animal will give us the break-even price.
Producers finishing Hereford steers will require a break-even price of 428-459c/kg. Again, this is only a break-even price and a higher price will be needed to secure a profit.
The lower break-even price of 428c/kg or €1,420/head will be required if a 500kg steer was purchased at €1.93/kg or €965/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 on 5.5t of silage and meal at a rate of 4kg/head/day.
If the steer was bought for €2.03/kg, this animal would need to achieve 443c/kg or €1,471 to provide the farmer with sufficient funds to cover his/her costs.
Moving to a higher ‘October 2018’ price of €1.80/kg, the Hereford bullock would need a carcass price of 459c/kg or €1,523/head at slaughter.
It must be noted that most Department of Agriculture approved processing plants averaged 374-426c/kg for O and R-grade bullocks (fat score 3=) during spring 2018 (February, March, April).
Costs for the finisher
For the above systems, farmers need to be operating at a high efficiency. Meal costs – for the above analysis – were taken at 280/t and silage of top quality with a dry matter value of 20%, 72% dry matter digestibility (DMD) and at a cost of €30/t was assumed.
An excellent animal health programme is essential and Teagasc attributes €8/head to cover such associated costs. Transport and marketing of the bulls was estimated at €42/head.
Prices needed for a profit margin
The above analysis only outlines the break-even prices. If a margin of just €20/head was targeted – for both the Friesian and Hereford finishing system – an extra 6c/kg would have to be added to the break-even price mentioned above to allow for such a return.
If meals are available at cheaper prices, these could be used ad-lib and used over the last 80 days of the system.