Speaking at BEEF2022 in Teagasc Grange on Tuesday, Alan Dillon outlined that through increased input costs such as fertiliser, concentrate, veterinary and contractor will see an increase in the cost of production on either a kilo liveweight or per-kilo carcase weight on both suckler and dairy-beef systems to the tune of 40%.
It is worth noting that the assumptions are made that input levels are the same as previous years.
Dillon remarked that, in reality, most beef farms will have made at least some changes to input levels this year in response to higher prices.
Alan Dillon @teagasc outlining the impact of higher input costs at farm level. Overall cost/kg production has increased by almost 40% assuming same level of inputs as 2021. @FJBeef @farmersjournal pic.twitter.com/6FLMVf2wxI— Declan Marren (@MarrenDeclan) July 5, 2022
Cost of production
It sees the cost per kilo liveweight in a dairy calf-to-beef system rise from €1.85/kg to €2.53/kg (37% increase), while the same cost for a suckler system rises from €1.96/kg to €2.70/kg (38% increase).
On a carcase weight-basis, this sees dairy-beef systems rise from €3.62/kg carcase to €4.95/kg carcase, while in suckler systems, the increase sees the cost move from €3.56/kg carcase to €4.92/kg carcase.
Positive beef market
On a positive note, the strong beef trade both in livestock markets and beef prices has meant that the increased cost of production are covered, even at the same level of inputs as last year.
The need for strong markets for the remainder of the year was emphasised, as concentrate prices continue to increase coming into the second half of the year.
Mark McGee speaking @teagasc BEEF 2022 open day on the economic and environmental costs of not hitting production targets at all points along the production system. @FJBeef @farmersjournal pic.twitter.com/bBsE7QUHGB— Declan Marren (@MarrenDeclan) July 5, 2022
With farmers reducing inputs this year on the back of high prices, currently it looks to have paid off in many cases and Teagasc expects farm profitability to increase on some of these farms with a decent level of output this year.
What is more worrying is that if input costs remain high in the medium term and farm inputs remain suppressed, what will be the long-term impact to farm output and profitability in the future.
Read more from Teagasc BEEF2022 both online at www.farmersjournal.ie and in print in this week's Irish Farmers Journal.