Beef Returns on the Margin

Twice yearly, we as consultants get updated information books (Bibles on all things farm data & financial costings) via ABC publications.  We use these as reference sources and recently I compared the Gross Margin Budgets for different beef systems from Nov 2017 and Nov 2022, a five year gap.         

Points to Note

1. Margins declining further though beef sale prices increasing.
2. Gap between grass fed and intensive cereal eliminated by large increase in cost of forage vs cereals.
3. The longer cattle are held to slaughter, the more expensive to keep and the lower the margin.
4. Forage costs have increased threefold per head in the last 5 years (includes the inflated cost of fertiliser).

Though the supply of beef is lower now underpinning higher prices, the outlook for beef prices is under pressure in the next 12 months as more beef from Australia & NZ and South America (tariff reductions and more favourable exchange rate) will be on offer to compete in a marginal industry.

The key at the moment is buying quality well reared calves in the market place, which need to be at the low prices on offer currently to help make a margin.  The way forward is to look at ways to reduce costs by benchmarking and being part of a profit focused beef discussion group to learn innovative practical ways of reducing costs without reducing output.  For example, I came across a farmer recently who was recycling horse straw bedding which was free of charge collected and had no effect on the cattle bedded on it, but saved the farmer thousands of £s in bedding costs.

Contact Tom at tommalleson@fcgagric.com or on Tel: 07496 760242, on how to join a local discussion group and challenge your beef business to become more profitable.