Extensive cattle finishing

Key points:

• Data from a sample of 60 mainly steer and heifer beef finishing enterprises gave, on average, a net loss (excluding non-cash costs) of £153.78 a head in 2005/06 based on an average herd size of 74 animals.
• Significantly lower fixed costs, lower variable costs and mortality shaped output for the top third. Variable and stock costs were almost £74 a head lower than the average due to the purchase of lighter cattle at a lower price, and there was less reliance on concentrates. A downside was relatively low daily liveweight gains and a longer finishing period.

• Fixed costs were also lower for the top third by approximately £61 a head, mainly due to lower overheads. Their paid labour cost was half that of the bottom third units. Even when the value of family labour was considered, their total labour cost was 12% lower than average and a massive 40% lower than on the bottom third units despite similar numbers of finishing cattle in the enterprise.
• Once all non-cash costs are considered, on average the loss in extensive finishing systems stood at £262 a head in 2005/06. Lifting of the export ban has improved finished prices and store cattle values, as well as input costs, particularly feed.

• Technical performance should be raised to achieve target liveweight gains of at least 0.9kg a day and exploit the latent genetic potential of the cattle they are finishing.
  
  

  FINANCIAL PERFORMANCE 2005/06 [£/HEAD]
  	Bottom third	Average	Top third
  Number of herds in sample	20	60	20
  Average herd size (head)	66	74	68
  OUTPUT (£/HEAD)
  Stock sales after valuation changes	931.91	776.35	782.36
  VARIABLE AND STOCK COSTS
  Stock purchases	659.87	518.49	495.06
  Variable costs
  Total concentrates	124.46	89.85	55.38
  Other feeds	9.24	8.44	2.78
  Forage	37.27	31.28	33.71
  Total feed and forage	170.97	129.58	91.86
  Veterinary	10.84	8.84	3.53
  Bedding	26.87	21.27	17.48
  Other costs	39.28	24.72	21.27
  Total variable and replacement costs	24.08	73.46	153.16
  Gross margin	24.08	73.46	153.16
  FIXED COSTS
  Paid labour	86.61	56.12	44.08
  Power and machinery repairs	81.93	54.81	38.53
  Administration	46.96	27.12	19.23
  Property charges	44.09	28.65	19.53
  Land resource costs (eg land rent)	39.30	23.55	11.06
  Machinery depreciation and fixtures	51.70	36.99	34.14
  Total fixed costs excluding non-cash costs	352.58	227.24	166.56
  Net margin excluding non-cash costs	-328.49	-153.78	-13.40
  NON-CASH COSTS
  Value of unpaid family labour	99.02	73.45	73.14
  Rental value of owned land	27.84	20.45	18.52
  Interest on working capital	18.59	15.25	14.93
  Total non-cash costs	145.44	109.15	106.59
  Total costs	1,405.84	1,039.29	902.36
  Net margin including non-cash costs	-473.94	-262.94	-119.99

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