Teagasc Guidelines on Store Cattle Prices
Issued 11thMay 2001
With farm to farm cattle sales resuming this week after a 10 week suspension, Teagasc has published guidelines aimed at helping farmers to decide what they can afford to pay for cattle.
Bernard Smyth, Chief Beef Adviser with Teagasc, stressed that all farmers must do their own sums.
''There is a huge variation on what farmers can afford to pay, depending on animal performance, costs, premium eligibility and the farmer's target profit level. Of course, the critical unknown is what beef prices will be next autumn'', he said.
Based on a beef price of 80p per pound next autumn, a farmer with low costs and high performance, and not eligible for the 21 month or extensification premium, can afford to pay £500 for a good quality 500kg bullock this week in order to make a profit of £50 in September/October.
If the animal is eligible for the 21 months premium of £107 and the highest extensification premium of £52, the guide purchase price for the 500kg bullock can be up to £650.
Bernard Smyth stressed that the price of 80p is not a Teagasc prediction for autumn beef prices. It is being used exclusively for calculation purposes.
For example, an autumn beef price of 70p per pound would bring the purchase price for the same 500kg bullock back to around £420, with no premia eligibility, in order to give a profit of £50.
He said significant outlets for beef will have to re-emerge in Europe and third world countries in order to have an autumn price of 80p per pound or higher.
"An autumn dependent on intervention could force prices into the low 70s. Plain cattle over 30 months could be most at risk" he said.
A special computer programme has been developed by Teagasc which will help farmers establish what they can afford to pay for stores.
By inputting the farmer's own information on expected weight gain, costs, premium eligibility and target profit, Teagasc advisers can provide a guide store price based on beef prices ranging from 70p to 85p per pound next autumn. Farmers can also pick their own autumn beef price.
The exercise can be completed in less than five minutes over the phone with the local Teagasc adviser.
