Finishing dilemma as thin margins hit Ynys Môn beef farm

The Jones family run around 300 Angus-cross, British Blue and Hereford-cross cattle, sourcing calves year-round from local dairy farms as two to three week olds.

Calves are fed milk replacer, concentrates and straw pre-weaning before moving onto a total mixed ration (TMR) or turned out to graze, supplemented with concentrates until they are six months old.

Cattle at Graianfryn are taken through to finishing At approximately 400-450kg they are transitioned to a finishing diet of either grass and ad lib barley mix or a TMR of silage and concentrates.

A review of the business carried out by Farming Connect show a net margin of £19/head of cattle finished, or £0.03 per kg of liveweight sold.

This compares favourably to the latest Farm Business Wales Survey figures which shows that on average beef finishers who buy young and forward store cattle or finish home bred calves are making a loss of £0.31/kg.

Gerallt Jones, who farms Graianfryn, at Llanfachraeth, Anglesey, with his wife, Hâf, and his parents, Alun and Rhiannon, enlisted the help of Farming Connect to help inform decision making around the future direction of the business – the farm is part of the Farming Connect Our Farms network.

All cattle are taken through to finishing – at 400-450kg the cattle are moved on to a finishing ration for up to three months.

Depending on the time of year they are either finished indoors on a TMR ration or on grass with a barley mix.

In 2023, 107 cattle were finished at an average liveweight of 600kg and sold to Woodheads or Kepak, but Mr Jones questioned if supplying the store market could be more profitable.

He worked with Trystan Sion and Gareth Griffiths, of Mabis Amaeth, to review the operation.

They carried out detailed analysis of the three month finishing period and compared it to what could be achieved if the cattle were sold as stores at lighter weights.

Variable costs associated with the beef enterprise totalled £116,158 in 2023 with cattle feed at £84,748 accounting for the most significant of these costs; as well as purchased concentrates including milk replacer, home-grown barley from the farm’s arable enterprise is also fed.

Fixed costs totalled £41,002.

At a total cost of production of £157,160, the beef enterprise achieved a net margin of £2,009 in 2023.

This equates to £19 per finished animal and £0.03/kg of liveweight sold.

Mr Sion points out that the figures are during a year of transition and the business is in the process of expanding cattle numbers; increasing the scale of the enterprise will dilute the overheads associated with the dairy beef enterprise.

“It should increase net profit margins if gross margin figures remain as they are,’’ he predicts.

What the analysis shows is that the Jones’ wouldn’t be better off selling the cattle earlier, as 450kg stores, even weighed up against a housed finishing system.

Using an estimated store price of £1,098 for a 450kg animal, Mr Sion calculates that the margin at Graianfryn is £130.45/head higher if the cattle are finished in a housed environment and £195.90/head in an outdoor system, compared to selling at that store price.

The store value has been based on an average deadweight price of £1,464 at Graianfryn for a 600kg animal, giving an estimated liveweight price of £2.44/kg.

Mr Sion points out that the market price for stores, as well as deadweight prices, will have a big influence on whether cattle should be finished or not.

“A store price of £1,150 for example would reduce the margin of indoor finishing to £78.45/head compared to selling as stores.

“On the other hand, a store price of £900 would leave a finishing margin of £328/head.’’

The calculations for Graianfryn only take into account variable costs and ones which are specific to its own business; these variable costs would be different for every farm.

The additional fixed costs associated with the finishing period such as labour, power and machinery and water, should also be considered, however these costs are likely to be much less significant than the variable costs.

The enterprise review exercise at Graianfryn shows that the dairy beef finishing enterprise is marginally profitable after accounting for all costs, Mr Sion advises.

“As the enterprise is only marginally profitable an increase in feed costs or a decrease in the sale price of cattle, for example, could well lead to a loss rather than a profit.

“Therefore continually monitoring the enterprise is essential to keep an eye on viability.’’

For Mr Jones, the exercise was a valuable one as, although he closely monitors gross margins and always has.

He will seek to reduce his costs to improve net margin but with costs across the business already tightly controlled he admits it will be difficult.

“We will look at producing more of our own feed but after a terrible growing and harvesting season this year that is easier said than done.’’