Options for Cattle Producers in a Shrinking Market

By Alan Dillon, Teagasc Beef Specialist and Green Acres Calf to Beef Program Manager

The current market conditions facing Irish beef farmers could never have been foreseen, with Covid-19 wreaking havoc with prices for finished beef and wiping out markets linked to the hospitality trade.

Farmers now find themselves with finished beef prices languishing well below the cost of production and have a host of issues to deal with in the short term, waiting for a picture to emerge on how or at what level beef is producing it. market will operate for the next 12-24 months.

The main issues are cash flow, governing the cost of production, the farming system and planning for the future size of the farm. Other problems involve being able to move cattle when needed – either alive or as finished cattle.

Beef price

Right now, beef markets are at their lowest in years and farmers are receiving much lower incomes than expected this spring.

In contrast, prices for live cattle have so far remained relatively high, with good quality store cattle fetching relatively high prices, comparable to live prices received when prices for finished beef were much higher than current levels. .

This leaves farmers the possibility of selling live animals between 12 and 20 months without grass and eliminates the risk of investing 300 to 400 € / head in fattening a steer or a heifer the following spring.

Farmers can look to cash in at the one-year stage now for grass buyers or take the risk of hauling them through the summer months and getting cheap live weight gain, while hoping that the markets will have stabilized by the fall.

Reasonable prices received for one-year stocks may now be a better bet than betting on the fall price holding – especially if income has already been hit this year by weaker stock sales. provided that.

While this high live price is good news for those with cattle to sell, those who buy these cattle should be careful about their expectations for beef prices when the stock is fit for slaughter and do their math with it. care.

Production cost

While costs in many areas of production cannot be skimped, such as herd health, there are other areas where costs can be saved in the short term.

Investments in areas such as drainage, roads, reseeding, and new buildings or machinery should all be postponed unless it is inevitable.

However, some areas of investment like liming land give instant return on investment and should be pursued.

Every beef farmer needs to sit down and budget for income and expenses based on lower than expected beef prices and plan where the money will be spent for the rest of the year.

Manufacturing system

There are a number of farmers who are feeding cattle in sheds currently aiming for late slaughter in the spring. The question asked is:

With prices dropping each week to levels that will leave no margin for the farmer, should they instead stop feeding the cattle with flour and put them back to the grass by targeting a slaughter at the end of the season? summer or early fall?

The advice would be that if the cattle are within one month to six weeks after slaughter – and have been built up to a high level of feed per meal (6-10 kg / day) – it is best to continue to feed during slaughter.

Power

If livestock have not been reared to high meal feed levels – and farmers can cope with the short-term cash shortage and have enough grass – then this may be an option to enable the cattle to gain low-cost grass weight and give the market time to take hold.

Breeders finishing bulls under 16 months of age have few options for pushing to the end and the best advice here would be to maintain contact with your processor regarding the stock near the slaughterhouse and the limits of. weight.

Cash requirement

Going from a spring sale to a fall sale presents obvious on-farm cash flow challenges. If farmers are considering this option, it may be a good idea to talk to your bank about increasing overdraft facilities until the stocks are sold.

Banks may also need to discuss existing loan repayment commitments due to lower than expected yields from finished cattle.

Table 1 (below) shows the effect of switching to a summer or fall finish out of the grass versus a spring finish in March out of the shed.

Table 1

While a beef price of € 3.40 / kg and € 3.30 / kg has been assumed, farmers will have to wait and see what effect Covid-19 has in the markets and how it matches beef prices at as summer progresses.

What the table shows is that farmers can handle a lower price of beef on the grass in the summer or fall much better than in the spring after an expensive winter finishing period.


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *