Higher costs threaten beef finishers – Teagasc

Beef finishers face a very difficult challenge this winter following an unprofitable experience last year.   Increases in the cost of concentrate feeds are threatening all finishing systems where there is a heavy dependence on concentrates in the diet. Good quality forage, in the form of grass and maize silage, will help to minimise the impact of the rise in feed costs.   Teagasc Drystock Programme Manager, Bernard Smyth said: ‘Winter beef finishing is a high cost, high risk business and farmers need to closely examine their systems of production to minimise costs and reduce risk, if they are to generate profit.’   He advised that home-grown cereals and fodder beet will help to reduce farmers’ exposure to the concentrate cost increase, but a greater contribution from quality forage will also be needed. With home-grown fodder beet, feed costs could be 10 percent lower.   Teagasc has produced guideline budgets for a range of cattle finishing systems that show the beef selling price required for efficient operators to generate a modest margin having covered a low level of overhead costs.   The Teagasc Programme Manager said: ‘A price rise, from purchase to sale, ranging from 15 to 30 percent is essential, depending on the system, even for efficient finishers to achieve a modest margin. Discussion with meat processors is necessary to achieve some minimum guarantees on selling price to reduce the risk.’   He warned that if winter finishing remains unprofitable then producers will revert back to producing beef on a more seasonal basis, making it more difficult to service the UK and European consumer markets.   Teagasc budgets show that steer beef systems require a beef price of at least €3.30 per kilogram carcase weight to leave a modest margin of €50 per head. That assumes continental stores can be purchased at €1.60 per kilogram liveweight and uses a cost of €240 per tonne for concentrate.   Bull beef systems based on concentrates plus straw appear to be unattractive. With this system a price of €3.50 per kilogram carcase weight or higher in April to June 2008 would be needed.   Bernard Smyth advises all farmers, intending to finish beef this winter, to examine their individual system and performance and act to minimise feeding costs and reduce risk by entering discussion with meats processors.