Will you make money on store cattle this year? Here are the maths
The store cattle trade is currently booming in marts throughout the country but what will these cattle have to make at slaughter to break even?
A budget conducted by Teagasc Head of Drystock Knowledge Transfer Pearse Kelly indicated that beef price for some of these cattle must be at least 414c/kg to break even in October 2016.
A hypothetical 350kg continental steer, purchased for €2.60/kg or €910, would need to make €1,637 or 414c/kg in the autumn of 2016 to break even.
The steer has an expected slaughter date of October 10, 2016 and will spend the 453 days in between on the farm.
Kelly says the steer will consume grazed grass for 345 days of this period and will be stored for the winter of 2015.
The animal will spend 115 days at grass in 2015 at a cost of €25 gaining 85-90kg. Following this it will be stored over the winter gaining a further 70-80kg.
Over this four-month winter, the store will consume 5t of silage and 210kg of concentrates costing €150 and €55 respectively.
The Teagasc budget also indicates that increasing the proportion of silage and concentrates in the diet will have a further negative impact on profitability as the grass portion is reduced.
The steer will return to grass in late February 2016. Grass will make up the majority of the diet with the exception of a short finishing period of 15 days. The finishing steer will be allocated 4kg of concentrate/day costing €60.
In total, the steer will consume €85 of grass, €150 silage and €115 of meal.
Kelly added that other variable costs include transport and levies (€45) and vet and dosing (€25) bringing the total variable cost to €420.
This hypothetical steer has an average daily gain of 0.82kg with an expected kill out of 55% producing a 396kg carcass, according to Kelly.
He said fixed costs are considered at the national average of €250/head when two steers are finished per ha and interest on half of the money borrowed was also included at €59.
Taking these figures into consideration the net margin produced will be €0/head or breakeven.
Kelly added that each additional 25c/kg increase in beef price will result in an increased net return to the farmer of €101.
If the store price paid/kg increased a corresponding increase in factory price would also be required.
A store costing €2.90/kg on the above system would require 440c/kg at slaughter to breakeven. While a store costing €2.77/kg would need 427c/kg.
Summary of production:
- Purchase mid-July 2015 weighing 350kg.
- Grazed grass till late October gaining 85-90kg.
- Stored on silage and 1.75kg of meal over winter with a live weight gain of 70-80kg.
- Dosed and TB tested at housing.
- Returned to grass late February weighing 520kg.
- Dosed twice during grazing period.
- 15 day finishing period late September – early October weighing 720kg at time of sale.
- Slaughtered October 10, 2016. Carcass weight of 396kg.
- Average daily gain of 0.82kg/day