CALVES MAY BE PROFITABLEBy Chrissie Lawrence
FINISHING PUREBRED Holstein bull calves could produce valuable additional profits in 2005 at current low calf prices, but care will be needed to ensure overhead costs are kept low.
According to the latest costings from EBLEX, such enterprises offer favourable prospects, even without headage payments. MLC beef economics manager Duncan Sinclair says most of the 250,000 dairy-bred bull calves currently likely to be lost from the food chain next year could generate gross margins of £80 a head (see table).
However, Dr Sinclair points out that his costings are based on rearing black-and-white bull calves as an additional enterprise, not a standalone one. Dr Sinclair, therefore, strongly advises intensive beef finishers to consider finishing several pens of dairy bulls alongside their existing crossbred stock on the basis of careful costings.
“This approach, where producers have space available, could offer a valuable extra margin-earning opportunity, as well as reduce overhead costs across all animals.”
But Richard Phelps of Southern Counties Fresh Foods, Somerset, reckons finishing black-and-white bull calves is a specialist area.
“Those professionally rearing calves would expect rearing costs up to 12 weeks of age to be closer to £100, rather than £50, when including labour,” explains Mr Phelps.
Added to that, quality black-and-white bull calves of more than £30 a head must be sought for them to grade O- or O+. “It will be hard to achieve a reasonable return from poorer grading bulls.
“As an abattoir we aim for a 12-14-month-old bull with an average carcass weight of 260kg. Beyond that is less efficient and won’t fit the specification we require.”
onsidering forward contracting could also help secure a profitable black-and-white future. “Entering into black-and-white finishing without a guaranteed end price could be a risky choice,” he reckons.
Senior lecturer at Harper Adams University College, Shropshire, Simon Marsh suggests looking to achieve gross margins of about 120. “It will be hard to cover overhead costs with a gross margin of £82.
A study at Gelli Aur College Farm, Camarthen, in 2003, concluded that overhead costs of a standalone Holstein bull beef finishing enterprise were £200 a head.
“However, based on a predicted beef price of £2.10-£2.20 for next year, Holstein bull calf finishers could be receiving a price of £1.55/kg,” adds Mr Marsh.
With intervention stocks no longer available and manufacturing beef import volumes from third countries close to their maximum, Dr Sinclair reckons a shortage in manufacturing beef looks set to continue, supporting prices.
However, Andersons” consultant David Thomas reckons that because the black-and-white bull is a commodity product, the inclusion of cull cows on the supply chain could reduce dairy bull beef prices, more so than on the prime beef market.