In the last few weeks I have been looking at the future feed budgets for the winter. I also reviewed animal and financial performance for several clients over the past 12 months.
The recent release of Teagasc’s average farm incomes for 2021 shows a clear difference between different farms.
Even with beef and lamb price increases in 2022, which have been very welcome so far, there is no reason to believe that average incomes on cattle and sheep farms will close the gap with incomes on dairy farms.
When comparing incomes on cattle and dairy farms, it is important to remember that farm size and soil quality vary widely, and that many cattle farms are now part-time.
Looking at the incomes from specific beef operations, the average income for mothering is €10,297, while beef processing is €16,416. Unfortunately, these incomes rank at the bottom behind the incomes from sheep, arable and dairy farming.
An income difference of just over 80,000 euros between a dairy farm and a cattle farm explains why many cattle breeders have switched to dairy farming in the last ten years.
Some commentators attribute the main difference between the beef and dairy sectors here in Ireland to the lack of a cooperative system and the presence of large companies in the beef industry.
Previous attempts by cooperatives to gain a foothold in the beef processing industry have failed. When present on the market, they contributed neither to a higher price return nor to a significant market share and, in most cases, were poorly supported by farmers.
In fact, many would argue that they behave just like the big corporations – only in coop clothes!
When conducting financial audits or forecasting, the most important variable costs are the purchase price of beef, the cost of feed inputs and the price of finished beef. The craziness of the last two years has made the task of budgeting and forecasting even more difficult. This time last year, market analysts forecast reasonable demand for beef cattle, with finished beef prices expected to hit €4.40/kg in the winter.
Shop prices ranged from €1.70/kg for non-continental cattle to €2.20/kg for continental cattle.
For those who bought all the feed they needed, stability in the feed market meant that intensively fed animals should cost €2.60 to €3 per day. Under these forecast circumstances only modest yields could be achieved per animal. Cattle fattening farms, especially winter or indoor fattening farms, have continued to increase in size.
These farms are highly efficient and do a great service to the entire livestock industry.
Large numbers of cattle are purchased from these farms across the country each week of the year, helping to keep sales, light and trucking buoyant.
These farms also provide well-processed livestock to the meat plants on a weekly basis.
Without this supply, meat plants cannot offer retailers and foodservice outlets a consistent product 52 weeks a year.
If this were the case, they could be induced to source their beef needs from other markets, such as South America, elsewhere.
With the professionalism with which they work, these cattle farms enjoy a high reputation in the feed trade, as they regularly use large amounts of feed.
A few years ago these large cattle ranches were smudged with the term “factory fattening”.
Dairy farms have grown significantly in size over the past decade, with it not uncommon to find herds of up to 1,000 heads.
For some reason, a cattle ranch that produces 1,000 animals a year can evoke more negative feelings than a comparable dairy farm!
Gerry Giggins is an animal nutritionist based in Co Louth
https://www.independent.ie/business/farming/beef/gerry-giggins-big-beef-finishers-deserve-respect-for-beefing-up-operations-in-face-of-dairy-dominance-41803166.html Gerry Giggins: Big beef finishers deserve respect for strengthening operations in the face of dairy dominance