On the back of better prices, the past 12 months has brought with it some optimism among UK beef producers.
Breeding cow numbers appear to have stabilised at just under 1.6 million after a period of gradual decline following the decoupling of support from production in 2005, when numbers were more than 1.75 million.
Male dairy calf registrations appear to be reducing, as rearing these animals for beef continues to look marginal in terms of profitability. This has been offset by a small increase in beef calf registrations.
- Slaughter figures likely to hit seven-year high but fewer culls and retailer preference for lighter weights mean overall volumes are likely to remain relatively stable
- Weak pound could reduce imports and encourage more domestic supply, but threat of reducing subsidies post Brexit may overshadow these benefits
- Regular monitoring of farm businesses is key to a strong operation
Preliminary predictions for 2018 have slaughtering figures topping two million head, a level not exceeded since 2011, says Andersons consultant Jack Frater.
“However, with fewer cull cows, and retailers generally seeking a lighter carcass, supply to the domestic market is forecast only slightly higher over the next 12 months.
“Prices are unlikely to improve significantly, so producers purchasing store cattle should proceed with caution. Producers may wish to undertake sensitivity analysis to see what effect price variations may have on their business.”
The Brexit process will undoubtedly have an impact on the beef sector. At present the UK is a significant net importer, but should the value of the pound remain low, our market could become less inviting, says Mr Frater.
“This is good news for domestic producers, but could well be overshadowed by the threat of reducing subsidies, on which the beef sector is still so heavily reliant.”
The weakening of sterling has also added 5% to the value of exports. In 2016, 90% of beef exports went to the EU, primarily Ireland and the Netherlands. Exports of forequarter may well improve on the back of strong demand from Asia, says Mr Frater.
Possible trade deals with the US have caused some concern among producers and consumers regarding hormone treatment and GM feed, he adds. “However, we still need to look at practices in countries with lower costs of production and lower reliance on support payments to see what could work for the UK.”
There is much that beef producers can do on a farm level to optimise their position, regardless of the Brexit process outcome, he advises.
“Knowing how a system is performing, both physically and financially, is key to a strong operation and can only be achieved by regular monitoring.”
Finishing cattle to the correct specification is still a concern, with over half of all cattle slaughtered missing the mark. This can lead to big deductions and eroded profit margins.
“Producers may wish to estimate the deadweights and grades of cattle pre-slaughter and compare this data to the actual kill sheets in conjunction with the customer’s pricing grid to ensure that they can spot the signs of cattle ready for slaughter,” says Mr Frater.
Recording of feed conversion and growth rates is now common practice among producers and helps to manage feed costs and ensure right specifications are met. “Look at daily liveweight gain targets, which should be around 1kg/day depending on breed and target market. Greater is achievable, but careful management is required to avoid rumen health issues.”
Top-performing producers are going further, measuring, for example, the airflow through sheds to reduce the risk of respiratory diseases, improve growth rates and reduce veterinary costs,” says Mr Frater.
Effective handling systems can increase welfare, cut labour bills and result in a better and safer working environment.
Businesses that control fixed costs are more likely to be in the higher performing bracket, he says. Quality Meat Scotland (QMS) figures show that for extensive upland suckler herds selling weaned calves, the difference in fixed costs between the top and bottom third are as much as £85 a head, with labour and machinery requirements being two key factors.
“Changes to farming systems do not have to be large or widespread,” says Mr Frater. “Sometimes small changes can lead to a significant improvement in both performance and profitability.”