Contracts offer security for changing enterprises

Switching from dairy production to another livestock enterprise can be a daunting enough experience, but when it’s beef production, particularly black-and-white bull calves, some cynics may question how worthwhile it will be.

But 18 months ago John Hoskin and his son Richard ceased milking their 200-cow Holstein Friesian herd on the 689ha (1700-acre) tenanted farm, simply because investment in modernising the farm infrastructure proved too costly.

“We were already having difficulty being in a Nitrate Vulnerable Zone and were told by an independent consultant that up to £330,000 would be needed to modernise the farm and parlour to see a profitable future,” explains John.

A way of matching the monthly milk cheque as well as finding some form of safety and guarantee had to be found.

And having already finished some of the beef cross calves from the dairy herd, the family began sourcing a forward contract for beef cattle.

“We chose a contract for the security angle.

We’ve heard enough knocking of the supermarkets for one reason or another.

They deal with the commodity product we produce, so it’s about time farmers learnt to live with them,” reckons John.

And although adding value to meat in the form of niche outlets or farmers’ markets is fine for some producers, the Hoskins felt that unworkable at Maiden Castle Farms.

“We’re looking for communication, stability and commitment for a product we know we can produce to a certain specification.”

The Hoskins now finish 700-800 head of black-and-white bulls and Continental cross steers and heifers, alongside another operation in Cornwall which is run by John’s other son Mark.

An end-price contract is operated with Blade South West for the black-and-whites along with a Cost Plus contract with Somerfield for the 400 Continental cross steers and heifers bought as stores.

It’s all about an open working partnership, adds Richard.

“We aim to meet Blade and Somerfield at least four times a year to talk through price agreements, kill sheets, nutrition and health management.

It’s vital both farmer and processor operate this style of relationship in future.”

For the Blade contract, cattle are reared according to a certain specification which has been devised with both farmer and processor requirements in mind.

“Black-and-white calves are bought in at 14-weeks-old, weighing 120kg.

The main aim here is to have them on farm as short a time as possible and we’re currently averaging 560kg liveweight or carcass weights of 290-300kg in less than 320 days,” explains John.

“But we’re still keen to improve feed conversion efficiency which currently averages 5.5:1 from 2.4t of total feed for each bull,” he adds.

And as the Hoskins have learnt, the key to success is costing every stage in production.

“The home-grown ration is costed at £95/t, putting in barley at £75/t and adding on a £10/t processing charge,” says Richard.

Similar costings are used for the Continental cattle, which come from either Cutcombe or Shrewsbury.

The farm also carries 900 ewes, meaning John and Richard don’t have time to buy at markets on a weekly basis, relying on livestock agent David Gore to source cattle suited to their system.

These are out-wintered on double-cropped sugar beet and stubble turnips.

For these cattle it’s all about growing frame, so a diet of 20kg grass silage, 0.5kg barley and a little maize gluten is also offered, which varies depending on age.

It’s vital the Continentals leave the farm finished at less than two years old, ideally 17-18 months old, says John, so the finishing period lasts no more than 90 days on a diet consisting of 3kg maize gluten, 3kg rolled barley, 15kg maize and 5kg grass silage, offered ad-lib at a cost of £1.10 a day a head.

“Working closely with our end supplier means we are now aiming to reduce finishing period further to just 60 days,” adds John.

With subsidies no longer available, the Hoskins must analyse every aspect of the cycle to ensure they make a suitable margin, which last year averaged £80-£100 for bulls and £50-£80 for Continental crosses.

“We work to an average paid price of £2/kg deadweight for finished cattle, so we aim for a production cost of £1/kg for an R4L or above, allowing for fluctuations in price and increases in variable costs.”

And knowing every aspect of the cycle means specific areas can be targeted for improvement, which has involved some investment, particularly where mortality is concerned for which we allow £17 a calf,” adds Richard.

“At the start we experienced a problem with pneumonia, but have since improved ventilation by altering the roof on some of the yards which has managed to reduce mortality down to 3-4%.

The next step is to reduce that further to 2%, but some mortality is due to the standard of the calf rearer,” he adds.

The Hoskins are also in the process of putting in electronic identification so that every animal on the farm can be monitored in terms of health and management.

“This will also improve communication further at the processing end, providing us with extra feedback once cattle are slaughtered.”

Looking to the future, both John and Richard are confident the move to beef production has been the right one.

“We have commitment from our processor through a workable contract and are now ideally placed for export opportunities.

Having built up a strong relationship he knows what we can deliver which can only prove profitable for us in the long term,” reckons John.