How much can I pay for calves this spring?
The face of the Irish beef industry is changing as more calves, sourced for the dairy herd, come on stream and suckler cow numbers decline.
The abolition of milk quotas across the EU in 2015 has lead to expansion on Irish dairy farms and, as a result, dairy cow numbers have increased by 167,500 head over the past two years.
Meanwhile, figures from the Central Statistics Office (CSO) show that there were 11,200 fewer suckler cows in Ireland in 2016, compared to the corresponding time in 2015.
The rise in dairy cow numbers will ultimately lead to an increase in the number of dairy calves, whether they are pure dairy or beef crosses, becoming available on the market.
‘How much can I pay for calves?’
Before purchasing farmers need to ask themselves the question: ‘How much can I pay for these calves?’
Teagasc recently published a guide for farmers to help take some of the guesswork out of costings for calf-to-beef systems.
According to to the Agriculture and Food Development Authority, the initial costs of investing in dairy calf-to-beef systems are relatively low, but the cost of keeping these animals can quickly add up over the production cycle.
For calf-to-beef systems to be profitable, it says, 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;
- A net margin per head.
Farmers also need to estimate production costs and carcass value they are aiming for, to ensure that the calf-to-beef enterprise will return a profit.
When own labour and the calf purchase price are excluded, the guideline shows that it costs approximately €950 to bring a Friesian steer, €850-900 for an early-maturing steer and €650 for an early-maturing heifer to slaughter.
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) = Break-even calf price. When based on the current market prices for ‘O+3=’ for both early-maturing steers and heifers, and ‘O=3-‘ or ‘P=3-‘ for Friesian steers, the break-even calf purchase prices (excluding labour) are as follows:
Carcass weight x Estimated beef selling price (€/kg) – Total costs (€/head) = Break-even calf price.
When based on the current market prices for ‘O+3=’ for both early-maturing steers and heifers, and ‘O=3-‘ or ‘P=3-‘ for Friesian steers, the break-even calf purchase prices (excluding labour) are as follows: