By Teagasc Green Acres Calf to Beef Programme advisor Seán Cummins

In calf-to-beef systems, the margins for ensuring any levels of profitability are based on maximising animal performance efficiency and minimising unnecessary financial costs.

An analysis of the slaughter performance of animals produced on the Teagasc Green Acres farms was compiled earlier this year, which examined the physical (carcass weight, grade and fat scores) and financial performance (€/kg) of animals slaughtered over the course of 2020.

Calf purchase price vs carcass value

To delve further into this data and to understand the relationship between the calf purchase price and carcass value, the 2018 calf purchase values have been compiled and presented as a percentage of the total carcass value in table 1 (below).

Annually, early-maturing (Angus and Hereford) males achieve a premium on the market when compared to Holstein Friesian males.

The three-year price difference witnessed on the Teagasc Green Acres farms over the spring of 2018 through to 2020 is €81/head.

On account of this higher purchase price, a larger proportion of the animals’ final value has been consumed on day one of the production cycle. This is displayed when the average performance of animals slaughtered over 2020 is compared to the average price paid for these calves in 2018.

Calf price accounted for 17%, 20% and 11% respectively of Angus, Hereford and Holstein Friesian steers’ final value.

In price per kilo terms, this equates to €0.66/kg of the animal’s value being taken by purchase price for Angus steers, €0.72/kg for Hereford steers and €0.37/kg for Holstein Friesian steers on day one – the day of purchase.

Looking at the data for the 2020-slaughtered heifers, Angus heifer calf value accounted for 20% (€0.75/kg) and Hereford heifer calf price accounted for 22% (€0.82/kg) of the animal’s final value.

Calf-to-beef

Purchasing and rearing costs

As displayed above, the calf cost accounts for a large proportion of the animal’s overall value upon slaughter when 2018 calf purchase price and 2020 animal values on the Teagasc Green Acres farms are compared.

When budgeted calf rearing costs (€124/head) are included alongside the 2018 calf purchase price and then compared to the final average animal value recorded over 2020 – as outlined in table 2 (below) – it’s evident that a large proportion of the animal’s final value is accounted for before the animal is turned out to grass for its first season.

Across the production systems examined, calf purchase and rearing costs account for between 22% (Holstein Friesian steers) and 34% (Hereford heifers).

Importance of budgeting

Keeping this in mind, careful consideration is therefore required in terms of the price payable for calves at the beginning of the production cycle.

Table 3 (below) provides a cost breakdown of the various steer and heifer systems from acquiring the calf at three weeks of age through to slaughter at a relatively high level of efficiency.

The fixed costs were based on previous findings from phase one of the Teagasc Green Acres Calf to Beef Programme. The slaughter performance and carcass weight data were obtained from the national database and previous Teagasc research.

For farmers entering the market for calves, it’s advisable to complete careful budgets before purchasing to have an understanding of the associated costs and the potential returns achievable.

Farmers can study the example, which is explained in table 3 (below), and assess their own profit/head achieved based on their system.

*-15c/kg = -24c/kg (O-) + 7c/kg (35% QPS payment) + 2c/kg (15% x 12c/kg on O-). **+12c/kg = -12c/kg (O+) + 16.8c/kg (84% QPS payment) + 6.6c/kg (66% breed bonus) +0.6c/kg (5% x 12 c/kg on O-). ***-1c/kg = -18c/kg (O=) + 10c/kg (50% QPS payment) + 5c/kg (50% breed bonus) + 2c/kg (15% x 12c/kg on O-).