News

Dairy Bulls Offer Extra £12 Million in 2005 Margins

Here is the latest beef briefing from EBLEX. My view is that there may be potential in cereal beef from Holstein bulls but the EBLEX budget shows only a modest gross margin and I think is based on an optimistic carcass weight of 280 kg - 260 kg is nearer the mark. The margin is damaged if the calves are reared by a rearer who wants part of the margin and if the calf is transported very far. In practice bull beef producers rarely follow the cereal beef system in full and end up slaughtering bulls at 15 - 16 months.

English beef producers could make an additional £12 million in margins as well as saving the industry over £160 million in lost retail sales by taking full advantage of favourable prospects for purebred Holstein bull finishing in 2005, even without headage payments.
This is the conclusion of the latest costings from the English Beef and Lamb Executive (EBLEX) showing the vast majority of the 250,000 bobby calves likely to be lost to the food chain next year are perfectly capable of generating 2005 gross margins of over £80/head. And this with some fairly conservative assumptions on carcase value.
The prospects for dairy bull finishing over the coming year are underpinned by a relative shortage of manufacturing grade beef across the UK and European Union; an imbalance that has led to significant increases in cow beef prices across Europe in recent months.
With Intervention stocks no longer available and manufacturing beef import volumes from third countries close to their ceiling, this shortage looks sets to continue for the foreseeable future. What is more, providing UK bone-in beef exports are resumed, it is unlikely to be affected by any possible return of over thirty month (OTM) animals to the UK food chain in 2005.

Alongside this favourable market dynamic, dairy bull calves are trading at just £20/head and concentrate prices are a good £25/t lower than a year ago. This makes the cost side of the bull finishing equation particularly attractive.
Under these circumstances, intensive beef finishers across the country are strongly advised to consider finishing several pens of dairy bulls alongside their existing cross-bred stock on the basis of careful individual costings. This approach could well offer a valuable extra margin- earning opportunity for many, as well as a way of reducing overhead costs on all the animals.

Pure-bred Holsteins are well suited to cereal finishing at around 12 months of age, although producers must be realistic in their carcase quality expectations. Only small, weak and infirm calves are unsuitable: the key requirement being for healthy, colostrum-fed stock. Rearing on whole milk is ideal and can save significantly on early feeding costs to improve margins.

Projected 2005 Costings for Holstein Bulls Cereal-Finished at 12 Months of Age (MLC)

Calf value (assuming 5% mortality) £25
Rearing to 12 weeks £50
Finishing concentrate (2 tonnes @ £85/t) £170
Vet, med, bedding & sundries £65
Total costs £310
Income (280 kg @140p/kg for –O3) £392
Gross margin £82