Farm business outlook 2022: Beef efficiency must improve

Making a profit in beef suckler and finishing herds has become increasingly difficult, despite current high prices.

Overhead costs continue to grow, labour is hard to find and support payments are reducing.

Producers will be forced to become more efficient and sustainable if they wish to continue, say authors Charlotte Dun, a consultant with Andersons Northern and Ben Burton, senior consultant at Andersons Eastern.

Beef prices have remained strong since mid-to-late 2020, well above the long-term average, mainly due to tight supply and support from British retailers.

See also: Advice on feeding yearling heifers to calve at 22-24 months 

Home-produced beef has benefited greatly from increased domestic demand during lockdown. Consumption has moved from the service sector, where imported beef tends to do well, to the home.

As food service re-opens there is likely to be some reversal in this trend.

Another factor to consider may be increased media attention on the environmental and sustainability credentials of red meat, following the publication of the National Food Strategy and events such as the COP 26 climate change conference in Glasgow.

Tight numbers in 2022

Supply data suggests the number of cattle available for slaughter in 2022 may show some modest recovery, but numbers look set to remain tight.

With the UK only 70% self-sufficient in beef, imports are necessary to meet demand.

Most imports come from Ireland, where Irish cattle numbers have also been restricted. Irish slaughterings have fallen by as much as 6% this year, with only modest recovery anticipated for 2022.

It may also potentially become easier for Ireland to export elsewhere.

Changes to import requirements from the EU, such as additional paperwork, export health certificates and other requirements such as physical checks will increase costs and frustrate logistics.

This could also add to the competitiveness of home-produced beef.

The overall effect suggests beef prices are likely to remain above the £4/kg mark for the long-term.

Fears over rising fuel prices, Christmas expenses and Veganuary mean values are likely to slip in coming months before increasing as normal into summer, aided perhaps by tight supply.

Costs and efficiency must improve 

With typical variable costs for suckler producers and finishing herds averaging £165.31 and £428.60 respectively for each cow put to the bull, it is clear something needs to be done to reduce expenditure and increase efficiency, particularly as support payments reduce.

Some changes we have seen in recent years include:

• Better utilisation of forage – rotational or mob grazing can greatly improve grassland use, extend grazing periods and produce healthier animals
• Outwintering – outwintering where possible reduces labour, straw, feed, and silage costs
• Breeding smaller – smaller more native breeds can be finished on a low-input system and provide provenance benefits
• Consistency of production – this is easier to achieve with smaller traditional breeds or dairy beef cattle.

Following pressure from dairy processors and retailers, we are seeing an increase in the number of integrated supply models between dairy herds and beef finishing units, not least to address the issue of male dairy calves.

The focus on market requirements has led to increased popularity and demand for dairy-cross beef cattle, which can produce a far more consistent end product that suits supermarkets.

The advancement in genetics has allowed firms to identify heritable traits that help reduce the cost of production, methane, and carbon footprint.

These measurable traits in dairy-beef cattle can be implemented quickly across the supply chain because of AI.

In suckler herds there are too many variables, such as breed, topography or farming system, meaning development of new traits is difficult to monitor and slow to implement.

Continued reduction in the suckler beef sector is likely in the years ahead.

With changes in support, the system may only be viable where premium prices can be achieved or when linked to managing land for public goods payments.