Teagasc Issues Guidelines on Beef Profits

Issued 26 September, 2002

Figures published by Teagasc show that profit prospects for beef over the coming winter will continue to be tight.

Bernard Smyth, Beef Adviser with Teagasc, said a 500kg continental steer costing €800 today will need to be to be sold at 250c/kg (90p/lb) carcass weight next spring in order to have a profit of €70.

"Farmers who are paying up to €850 at present for these animals will be operating on a financial tightrope", he said.

"For 500kg Friesian steers, currently costing €650 in the marts, the factory price next spring would need to be 235c/kg (84p/lb) in order to leave a profit of €70 per animal", he said.

Speaking at the National Ploughing Championships at Ballacolla, Co Laois, Bernard Smyth said that lower quality silage on many beef farms this winter will add to feeding costs, putting additional pressure on margins.

"On all beef farms, the daily feed costs will exceed the value of the weight gained by the animal. On some farms, it will pay to feed an all-meal diet in order to get animals fit for slaughter earlier".

Bernard Smyth also said that given current beef prices and expectations for beef markets over the next 12 - 18 months, young stock are currently over-priced in the marts.

"Based on Teagasc guidelines, male weanlings are currently worth €2/kg, but are making upwards of €2.20/kg in the marts. Weanling heifers are worth €1.40/kg compared to current market prices of €1.50/kg or more".

"Eighteen month old steers are currently making at least €1.60/kg in the marts compared to a Teagasc guideline price of €1.50/kg", he said.

"This is not to suggest that farmers who are selling these animals are making big margins. It merely highlights that overall margins in beef production are tight and emphasises the importance of high animal performance, tight budgeting, low fixed costs and utilising all available EU premium payments", he added.

He said current strong prices for weanlings and stores may well be influenced by farmers seeking to build up maximum premium payments in 2002 following the publication of the EU mid-term review proposals.

"Any action taken by farmers to increase future premium entitlements after July 10, 2002, the date on which the proposals were published, is a high risk strategy. Clarification by the EU Commission on the base period for future area-based entitlements is an urgent requirement", he said.

The guideline budgets for a range of beef production systems were available on the Teagasc stand at the Ploughing Championships. They are also available at Teagasc offices throughout the country.

The Beef Budget Guidelines are available online for downloading and printing in Adobe Acrobat (50KB) and Word 97 (90KB) format.