The increased cost of feed, fertiliser and fuel means beef farmers are losing almost £100 a head on every finished animal, according to latest costings from SAC.
That was despite higher prices for beef cattle, SAC beef specialist, Ian Pritchard, told beef farmers at an Aberdeenshire open day.
Mr Pritchard said the costings were based on figures supplied by the 16 farmers in the Quality Meat Scotland-sponsored North East Focus on Finishing Group, who between them finished more than 15,000 cattle a year.
“Many beef farmers are not aware of how much money they are losing because they don’t do the sums. The finishing group has been established to monitor the financial performance of beef units and the figures will be presented to supermarkets to help them understand the economic pressures farmers are under.”
Mr Pritchard said the top-third of beef finishers needed 308p/kg deadweight to cover increased costs and achieve a modest margin of 5%. Beef cattle prices in Scotland peaked at 285p/kg two weeks ago, but had slipped back 5p/kg a week since then to 275p/kg.
But Mr Pritchard said “average” producers would need even more to achieve a return, while the figure of 308p took no account of suckled calf producers, who also needed a higher price. A return of £3.20kg would be required if finishers paid an extra 10p/kg for suckled calves, or £3.38p/kg if an extra 25p/kg was paid.
But even this falls short of the price beef producers should receive if cattle prices had kept pace with the Retail Price Index. “The food index has been increasing at 3.4% a year, but the index for beef has risen by only 1.7%,” Mr Pritchard said. “Beef cattle prices should be 360p/kg to keep up with the retail price index.”
He said beef producers should present a united front to secure higher prices, but several speakers said farmers could do more to help themselves by improving efficiency and cutting costs.
QMS expert, Charlotte Maltin, pointed to the wide disparity in liveweight gain figures in finishing units and suggested farmers should pay more attention to animal health, improved genetics, nutrition and marketing. Keeping an animal an extra 50 days to achieve a higher weight was inefficient and costly, as feed conversion efficiency dropped dramatically when an animal started laying down fat and most abattoirs discounted fatter animals.
Other speakers highlighted the benefits of better grassland management. SAC’s John Weddell, said a good white clover sward could fix about 180kg/ha of nitrogen, worth £150 at current prices.