If current beef prices persist at €3.45/kg into next spring, a payment, in the region of €200/head, will be needed to cushion severe losses, according to Alan Dillon, Drystock specialist at Teagasc.
In a Teagasc advisory newsletter, Dillon stressed that last winter’s base price of €3.75/kg was loss-making “no matter what way it is looked upon”.
He said that this will be “cushioned somewhat” with the €100/head Beef Exceptional Aid Measure (BEAM) payment, which will be issued at year-end.
“With beef prices at their lowest level in over a decade, it is obvious among those with cattle to finish this winter that there are more questions being raised than ever before about the economics of investing in feeding stock to slaughter next spring.”
“Whether or not a second BEAM-type payment will be sanctioned remains to be seen.”
Winter finishing margins of steers at 24-months
This table - published in Teagasc's October advisory newsletter - outlines the required break-even steer finish price based on current input and store prices.
|Purchase weight (kg)||500||500||530|
|Price per kg (€)||1.58||1.88||2.17|
|Variable costs (€)||349||349||351|
|Fixed costs (€)||79||81||85|
|Break-even price (€)||1,218||1,370||1,586|
|Expected carcass weight (kg)||326||332||375|
|Break-even price per kg (€0||3.74||4.12||4.23|
Key economic messages provided in the newsletter:
- Improving efficiency still pays;
- Current beef prices make all suckler systems loss-making;
- Storing cattle with a view to finishing next autumn allows the market time to correct itself;
- Bull finishing is high risk and an agreement with processors should be made before finishing bulls;
- Costs must be cut wherever possible for the foreseeable future;
- Implement a very basic fertiliser programme – reduce phosphorus (P) and potassium (K) – continue with lime application;
- No investment in machinery or buildings and keep maintenance to essentials only;
- For dairy calf-to-beef systems – calf prices will have to fall to leave a margin – at last year’s calf prices, taking them through to finish will be loss-making in the current market; and,
- If beef prices remain low, dairy farmers must be conditioned for a difficult calf trade in 2020