Calf rearing can make money
Calf rearing can make money
RELATIVE stability has returned to the UK beef market after BSE made the headlines in 1996, even if high finished prices havent.
Cattle are still trading at a discount, but the Meat and Livestock Commission points out that prices have been reasonably consistent for over 18 months.
That should at least give finishers confidence to start looking at costings. Particularly, as feed and calf prices have slackened allowing some compensation. Even so, it seems that pessimism among finishers is hitting demand for calves.
Managing director of Warks-based Quality Calves, Peter Hambleton, says: "We have a beef shortfall of 120,000t/year in the UK and yet 100,000 valueless bull calves are being slaughtered because finishers think they will not make money. But few have costed it out."
In the past financial year ending Jun 30, the co-op – which handled 46,500 calves (up 22% on the previous year) – saw average values fall from £96.75 to £90.48/head.
Calf rearers remain reasonably optimistic. Ken Roberts, who farms at Kingsland, Herefordshire, sees a continued demand for reared youngstock as the basis for most of his income. Taking into account a shrinking UK beef herd and reduced labour on most units, the demand for taking calves to three months old or 100kg remains.
"The market is there, although margins have been squeezed," says Mr Roberts who finishes about 1500 calves each year. "The lower price is driving efficiency."
His rearing system is straight forward enough, but influenced by finishers orders for the type and breed of calf required. "We handle mainly Continental breeds, but have had batches of Angus and Hereford for finishers supplying retailer schemes such as Waitrose."
Calves arrive on-farm at about two weeks old and are taken through to sale weights of 100kg at about 12 weeks old. They are bought in and sold at an agreed price offering some protection against sudden dips in value. There is also a bonus payment for extra kgs over specified delivery weights to cover feed costs.
"Margins are tight, but the demand for calves remains relatively strong – particularly for Continental breeds," says Mr Roberts.
Despite optimism among some rearers, finishers are less convinced. Margins are slim and in many cases largely dependent on subsidy. Richard Fuller, manager at JSR Farms Givendale unit, East Yorkshire, has detailed costings for its beef unit and his records show just how delicate beef finishing systems can be. (see table).
According to Mr Fuller, where feed costs/kg gain can be cut from 48p/kg to 40p, savings of £27/head can be made. But if daily liveweight gain falls by 0.1kg/head it represents an extra 20 days feeding.
Mr Roberts agrees that the future of calf rearing relies on the ability of finishers to generate sufficient margins. *
Typical beef margins
Bulls Heifers
Start weight (kg) 120 100
Finished weight (kg) 650 530
DLWG (kg) 1.7 1.2
Killing out (%) 55 52
Reared calf cost (£) 260 150
Feed cost* (£) 238 206
Carcass value (£) 630 470
Fixed costs (£/head) 140 120
Margin before -£8 -£6
premiums (£)
* Based on 45p/kg for bulls and 48p/kg for heifers
Source: JSR Farms/BGS Stafford 2001-2002