Factors
The main factors that influence the beef enterprise profits are:-
Weight and purchasing costs (pence per kg)
Daily growth
Feeding costs
Weight and selling costs (pence per kg)
Stocking rate (foraging systems)
Fixed costs (use of buildings and machinery)
Income Sources
Income from beef cows typically comes from several key sources. Each can be influenced by market prices, herd management practices, and the specific breed or crossbreed of cattle used.
Here’s a breakdown of primary income sources:
- weaned calves
- store cattle
- finished cattle
- breeding stock
- cull cows
Expenses
Variable costs are costs that change to reflect the size of the enterprise. If the number of animals kept are higher, then the costs will be higher.
The main variable costs in a beef enterprise are:-
- Concentrates
- Feed
- Vet and medicine
- Marketing
- Straw
- Others
Â
Profit and Loss Analysis
- Low market prices for cows.
- High feed costs, particularly in bad weather years when grass is in short supply.
- High mortality rates.
- Disease outbreaks or health issues that increase veterinary expenses.
- Poor management of herd health leading to lower productivity and higher costs.
- Reduced subsidies due to changes in agricultural policy.
Key Factors Impacting Profit and Loss
Click the circles to see further information.
Feed Costs
Market Prices
Animal Health and Welfare
- Poor health reduces productivity and increases costs through veterinary treatments, slower growth, and higher mortality rates.
- This would have an effect on the vet and medicine costs to the business.
Fertility
- Efficient breeding programs ensure a steady supply of calves and can increase farm profitability. Poor fertility or calving intervals lead to fewer calves and lower income.
Key Considerations:
- Short calving intervals (around 365 days).
- High fertility rates (more cows successfully bred).
- Good genetics for growth, feed efficiency, and meat quality.
Carcass Yield and Meat Quality
- Higher carcass yield and quality (fat cover, muscle development, marbling) can secure better prices and access to premium markets.
Key Considerations:
- Efficient finishing systems for optimal weight and quality.
- Monitoring of carcass classification (conformation and fat scores).
- Targeting markets that pay premiums for superior quality (e.g. PGI Welsh Beef)
Subsidies and Government Support
- Welsh beef farms, like others in the UK, rely on government subsidies, such as those from the Basic Payment Scheme (BPS), agri-environment schemes, and potential post-Brexit subsidies.
Key Considerations:
- Eligibility for subsidies (cross-compliance) and chance in subsidies plan.
- Changes in post-Brexit agricultural policy.
- Access to environmental schemes that reward sustainable farming practices.
A Simple Example of Profit and Loss
This is a simple example, but prices may vary widely based on factors like herd size, market conditions, and efficiency. As this is only a vague picture for intensive beef finishing, prices would be very different for semi-intensive, extensive and for a suckler system.
It is always best to complete a more comprehensive Gross Margin to analyse costs of production compared with other systems and more specific costs.
These figures are based average prices for 2023/24, they may vary between different breeds and systems and locations across the country.
Income
- Sale of fat cows = £200,000
- Subsidies (e.g., BPS) = £10,000
- Total Income: £210,000
Loss
- Feed and forage = £60,000
- Veterinary and health costs = £5,000
- Labour (1 full time labour equivalent (ftle)) = £30,000
- Utilities, transport, and overheads = £20,000
- Land rent = £40,000
- Total Expenses: £155,000
Net Profit
- £210,000 (income) - £155,000 (expenses) = £55,000 profit