For the last 20 years, one of the mainstays of Teagasc advice has been to focus on farm output and stocking rate to maximise profitability on beef farms.

If we take a look back at the most recent open days in Grange, stocking rate and farm output featured front and centre, conveying the core message of the open day across to farmers.

Optimising output from grass was key to making more money. New research from Grange could be about to turn this advice on its head.

Farming enterprises have undergone huge change in terms of cash in and cash out in the last few months.

Fertiliser price has gone from €300/t last year to over €1,000/t on many farms in 2022.

Ration prices have increased from €270/t this time last year to over €400/t today.

Contractor charges, diesel, energy bills and living expenses have also increased over the last few months. On the outputs side, beef prices are currently trading over €1/kg higher than this time last year.

Autumn grazing.

The question is, does the beef price increase fully cover the increased cost of production on beef farms? The answer isn’t simple and the change in input/output costs affect different farms in different ways.

Paul Crosson, beef enterprise leader at Teagasc Grange, looked at some scenarios comparing high-stocked farms with low stocked farms.

Table 1 outlines the data that was used for the analysis. It’s taken from the Teagasc roadmap for suckling published in 2020.

These roadmaps give an indication of the expected size and shape of the different sectors in Irish agriculture and help to form policy around the future direction of the Irish beef industry. They also outline key technical performance indicators and levels of profitability within each system.

In formulating these roadmaps, Teagasc made a number of assumptions on input and output prices in the development of these roadmaps.

Back in 2020, they used a beef base price of €3.75/kg, a concentrate price of €255/t, urea was costed at €390/t and silage contractor costs were in at €250/ha.

Input prices and output prices have changed a lot since then, so Teagasc undertook an exercise to see what effect the 2022 prices would have on margins on farms. Teagasc used a beef base price of €4.50/kg, a concentrate price of €330/t, urea is increased to €950/t and the silage contractor costs move to €350/ha.

Results

Table 2 outlines the results of inputting the new costs and beef price.

It’s important to remember that these figures are based on high performance, be it a low or high stocking rate. Under the low stocking rate system, net margin actually increases.

The low-stocked farm gets the beef price swing upwards and isn’t hit as hard with input cost increases due to lower fertiliser being spread and less silage being made.

Net margin on these farms sees an increase from €274/ha to €351/ha, an increase of €77/ha.

In the high stocking rate scenario, gross output takes a massive jump from €1,494/ha to €2,505/ha, an increase of €1,011/ha.

Variable costs take a bigger increase though moving from €651/ha to €1,529/ha under the 2022 scenario.

This leaves a net margin decrease from €440/ha in 2020 to €367/ha in 2022, a decrease of €73/ha.

One of the most alarming pieces of the analysis is the fact at today’s prices there is just a €16/ha difference in running a stocking rate of 2.6 LU/ha compared to 1.6 LU/ha.

The one area where progress can be made on higher-stocked farms is incorporating clover to help reduce fertiliser usage.

The message is loud and clear. Unfortunately, full-time intensive beef farming days are numbered and the Teagasc analysis highlights that even with a record beef price, it’s still not enough to deal with high input prices.

The future for Irish suckler cow systems looks like extensive, low-input, low-output operations.

Organics could well come into play adding a further €170/ha on to low-stocked farms.

Policy will put further pressure on suckler cow numbers. Higher-input prices may be the final push across the cliff edge that sees suckler cow numbers drop to give Ireland it’s much sought after “stable” national herd.

With more and more support payments being linked to extensification the day of high-stocked beef farms could be over.

  • Production costs have increased by 15% to 28%.
  • Beef price increases (+75c/kg) fully offset increase for low-stocked, low-input systems.
  • Net margin for high-stocked systems reduced by 17%.
  • Opportunity in the longer term to alleviate cost increases using clover.