20 March 1998

Beef – radical reaction

With both beef and milk

prices tumbling, survival

may depend on radical

restructuring. Emma Penny

and Simon Wragg report

THE likelihood of continuing low beef prices means serious consideration should be given to restructuring businesses say industry consultants.

SACs rural business adviser, Peter Cook, says beef prospects are less than rosy, and producers will have to live with lower prices.

"Alternative meats are currently cheap, and theres a big EU beef surplus which wont disappear quickly. The pound doesnt show much sign of weakening – it may even strengthen if the single currency doesnt go as well as expected. Also, Agenda 2000 proposes a 30% cut in intervention price."

According to Mr Cook, knowing cost/kg beef produced is vital for survival, particularly for finishers. "Even for good winter finishers, cost/kg can be about £1, which just doesnt work when you are getting 90-95p/kg for it."

Reducing fixed costs is crucial. "Most costs are tied in with winter feeding – particularly silage making where theres a large investment in machinery – and buildings. Aim to make less silage and graze cattle for longer."

Peter Pitchford, partner with Andersons, says that some producers are running systems which are just too expensive. "Sucker cows in particular just dont justify capital expenditure; there are still people buying machinery and using expensive equipment such as forage boxes. Look at what youve got and prune even where you think its impossible."

Mr Cook says that while most producers could make better use of grazed grass, those considering a radical restructure could select breeds which will put on condition at grass and can lose it overwinter when fed expensive diets.

Besides selecting for animals which thrive off grass, he advises choosing smaller breeds with lower maintenance requirements.

Easy calving – which would help to reduce labour requirements and vet costs – and increased longevity are also important, he says. "Choose bulls with good calving EBVs to reduce likelihood of concerns. And with such low cull cow values, breeds with good longevity are increasingly important."

Both Mr Cook and Laurence Gould farm management consultant Peter Hall suggest switching to spring calving. According to Mr Hall this would reduce wintering costs. "Cows could be over-wintered on straw. This would also reduce labour requirements."

Labour costs should be scrutinised closely, he says. "On some lowland farms an extra half person is employed just because of the winter labour associated with cattle. It may be less costly to employ students at busy times."

On farms with both cattle and arable enterprises he suggests working out production in cost/ha. "Look at whole farm profitability; theres an opportunity cost of keeping cattle where you could be growing cereals," he says.

BEEF RESTRUCTURING

&#8226 Know production costs.

&#8226 Cut fixed costs.

&#8226 Consider breeds.