Time for a reality check

NWF Agriculture beef specialist Lachie Maclachlan believes beef farmers must take a hard look at their system and need better support from the retailers if the industry is to remain sustainable.

The prospects for beef production are not particularly encouraging. While dairy farmers are starting to see some long overdue milk price increases and arable farmers are enjoying the prospect of strong cereal prices, beef prices are lower than 12 months ago. Deadweight prices have declined by around 10p/kg.

At the same time feed prices have risen and for an average animal on an adlib system it is now costing around £70 per animal more to achieve a finished product than it did last year. This is the same irrespective of the system used. The price increase is similar whether the animals are fed on purchased concentrates or home grown cereals.

“The reality is that it is highly questionable whether farmers on adlib systems will be making any money unless they are achieving growth rates is excess of 1.5kg/day,” Mr Maclachlan stresses.

“A 500kg animal will be eating 10kg of feed which at £150/t give a daily feed cost of £1.50. This requires a price of £1/kg lwt just to cover feed costs at the target 1.5kg/day growth rate. Lower prices and growth rates are a recipe for losses.”
Mr Maclachlan believes beef farmers must strive to develop a dairy farmer mentality when it comes to forage production as this is the only way to significantly reduce purchased feed use and maintain growth rates.

“Forage is an expensive product but too much of the forage fed to beef is average at best and is often poor quality. The consequence is that concentrates have to be used at high rates to achieve the finish.

“Whether farmers are making grass or maize silage, or are grazing animals the aim must be to maximise the nutrients supplied from forage and minimise the need for purchased feeds. This may seem an unusual thing for someone working in the feed trade to say, but it is the reality of the current situation.”

To monitor performance, Mr Maclachlan urges beef producers to keep a close eye on the true feed costs/kg lwt. He believes too few producers know what it is costing to rear animals and must accurately cost in all forage. He stresses that underestimating costs is like Nelson putting his blind eye to the telescope and proclaiming he could see no ships – it is just hiding the truth.

“Faster growth rates are crucial to reduce feed costs per kilo along with reducing the total cost of feed through increased use of higher quality forages. However it is also important to sell animals before they put on too much weight. Additional kilos are rarely economic.”

While highlighting areas where beef farmers can look to improve margins, Mr Maclachlan also believes farmers need encouragement from the retail trade.

“Retailers need to decide if they are interested in a sustainable domestic beef industry producing a high quality, traceable, local product. If this is what they want they must be prepared to pay a fair price for it. To send the right message to the industry a price increase of 20-30p/kg deadweight should be the starting point.

“This would reinstate the decline in prices seen in the last 12 months and give producers the encouragement needed. Combined with better use of forage this could lead to a rebuilding of margins and farmer confidence,” Mr Maclachlan concludes.