Weigh up the costs of rearing for beef
BEFORE keeping dairy-bred calves on farm after the end of the slaughter scheme consider the effect on profit and cashflow, says Melton Mowbray-based Andersons consultant Francis Mordaunt.
Mr Mordaunt says that although low calf value and cereal prices make rearing calves for beef seem attractive, other costs, premiums and potential sale value must also be considered.
He estimates variable costs, such as feed, vet and bedding, for a 12-14 month barley beef system could be £250 a head, plus a possible calf value of £15 for pure dairy calves and £65 for Continental crosses (see table). However, overhead costs are unlikely to be less than £100 a head when labour is employed, he adds.
Labour could cost £65-97/calf for a 12 month rearing period at £6 an hour, depending on enterprise size and mechanisation. "When unpaid family labour is used do not forget the opportunity cost of that time and potential stress of a 365-day commitment," says Mr Mordaunt.
Building repairs, slurry disposal, new equipment, water and machinery running costs also need to be considered.
Even though calves may have little or no value in November, keeping them will reduce cashflow for the 12 months they are on farm. Selling calves at low value, and saving on straw, feed and overhead costs may be preferable because cashflow on many farms is critical while milk prices are low.
Rearing costs and calf valuations on a group of 90 animals may require a peak additional cashflow investment of £28,000 before the first animal is sold. Interest on that sum will cost £1400 at current rates, or £13 to £16 an animal, he says.
Mr Mordaunt predicts a possible sale price of 65p/kg liveweight for black-and-white finished cattle. It is, however, possible that black-and-white bull beef could be unsaleable, and carcass grading is likely to be poor. Prospects for Continental crosses may be slightly better, with a possible price of 80p/kg liveweight, but even these calves may be better cashed in November.
Bull calves kept entire may be eligible for beef special premium of up to £102/head, but payment rate varies according to the green £ rate, and forage area limits. Without beef special premium, calf rearing will be unprofitable for most producers, with gross margins of £85 for Continental crosses or £44 for pure dairy calves, he says. When overheads are above £100/head it will clearly be unprofitable to rear them.
Keeping calves healthy is also critical to ensure maximum returns. Feeding and health management are more difficult when animals of different ages or sizes are reared together. Batches of calves must be evenly sized which will be difficult where calving patterns are spread. Also, buying-in calves to optimise batch size risks bringing disease onto the unit, warns Mr Mordaunt.
Possible rearing costs for a black and white bull calf
Calf value 15
Milk powder and concentrates to weaning 60
Cereal feed 104
Misc (vet, bedding) 50