Farmers finishing cattle this winter will need at least €7.50/kg for beef, according to Irish Cattle and Sheep Farmers' Association (ICSA) beef chair Edmund Graham.

Anything less will be a "complete loss-making venture" given the escalation of costs and the assumption that ration could cost €500/t.

Graham has called on the meat industry to begin negotiations with their customers in order to deliver this price for winter finishing systems.

"[The] ICSA has been analysing figures for winter finishing and the results are a big wake-up call," he said.

"We see dairy farmers getting well in excess of 50c/l for low-cost summer milk.

"It now needs to be acknowledged that winter finishing is by far and away the highest cost system of farming and it is also the highest risk," he said.

Higher store prices

Store prices are substantially higher than last year and rising on a weekly basis, he said.

Store producers also need higher prices to cope with escalating costs, but this all feeds into the economics of winter finishing, he added.

"These figures are based on examining Teagasc models, but also take into account factors that Teagasc are not facing up to.

"For example, on the variable costs, Teagasc figures are not realistic in terms of accounting for mortality. We have included a calculation based on 1% mortality.

"Teagasc figures also tend to overestimate kill-out percentage and weight gain, particularly in the context of decreasing beef merit in the dairy herd," he said.

Graham added that the Teagasc figures also assume top-class silage and tend to ignore weight loss at purchase and at housing and assume no setbacks.

The price of a wheel for a wheelbarrow has trebled

"Then there is the elephant in the room regarding fixed costs. Traditionally, some models used to assume that subsidies covered fixed costs and some variable costs.

"But that doesn’t take into account the fact that most winter finishers traditionally had high payments per hectare because their system was built around high slaughter premium and special beef premium payments.

"These payments have been decimated in recent years and will be further reduced in the coming CAP," he said.

While much of the commentary, he said, has zoned in on a trebling of fertiliser and a doubling of feed and fuel costs, we also need to take account of how everything else is rocketing in price.

Enormous impact

This, he said, is having an enormous impact on fixed costs.

"While it may not seem much, the price of a wheel for a wheelbarrow has trebled. But this is just a simple example of huge escalation in all hardware costs, from fencing to steel to timber.

"All of this must be factored into decisions on whether to feed cattle or not. It is also nonsensical if we don’t allow that a winter finisher needs to factor in labour costs, nobody should be expected to work for free anymore," he said.

He said that it is now time for the beef processing sector to step up to the plate and the ICSA believes that a starting point must be a guarantee of a viable price for winter finishers.