Graianfryn Project update - Final
Key Results from the Graianfryn Beef Finishing Enterprise Review:
- Net Margin: £19 per finished animal or £0.03/kg liveweight, significantly outperforming the industry average loss of £0.31/kg for beef finishers.
- Variable Costs: £116,158 in 2023, with feed costs (£84,748) being the largest expense.
- Fixed Costs: £41,002, leading to total production costs of £157,160 and a net margin of £2,009.
- Finishing vs Store Cattle: Finishing cattle at 600kg proved more profitable than selling at 450kg as stores, with profit margins £130.45/head higher indoors and £195.90/head higher outdoors. These figures are based on 2023 market prices.
- Feed Management: Use of home-grown barley helps offset feed costs, though adverse weather challenges feed production.
Background
Graianfryn Farm is a 295-acre operation with a stocking density of 1.84 livestock units per hectare, using rotational grazing and a TMR feeding program, including homegrown spring barley. The farm manages 300 dairy beef cattle and 500 North of England Mules. A recent review identified opportunities for improving the beef enterprise, such as diversifying homegrown protein and considering selling cattle as store/weanlings instead of finishing. This proposal outlines a study to assess different cattle systems, review technical and financial performance, and explore management changes to improve efficiency, contributing to sustainable land management goals.
Purpose of work
- Identify inefficiencies within Graianfryn's current system that affect profitability and explore potential improvements.
- Assess alternative management options, including breed or genetic changes, to optimise cattle performance.
- Conduct a cost-effectiveness analysis comparing on-farm calf rearing versus purchasing weaned calves, with an evaluation of financial implications, risks, and strategic advantages.
What we did
The desktop study reviewed existing farm data, identified inefficiencies in cattle performance, and explored management adjustments, breed changes, and strategies to optimise protein use. A cost-effectiveness analysis compared on-farm calf rearing to purchasing weaned calves and store cattle.
- Data Collection and Review:
- Gathered production and financial data (growth rates, feed conversion, health data, costs, gross margins, etc.).
- Benchmarked against AHDB and Farm Business Survey data.
- Cost Analysis:
- Compared costs of rearing calves versus purchasing weaned calves.
- Estimated labour, veterinary, and feed costs for calf rearing.
- Scenario Development and Modelling:
- Assessed ration optimisation, breed selection, and health management.
- Compared finishing costs vs store sales for 18-month old cattle.
Outcomes
The enterprise review shows that Graianfryn's dairy beef finishing operation is marginally profitable but highly sensitive to fluctuations in feed costs and cattle sale prices, which could result in a loss. Continual monitoring is essential to ensure long-term viability.
- Feed Costs: The largest expense is feed, totalling £84,748, which accounts for 73% of variable costs and 54% of total production costs. This highlights the need for further analysis of cattle rations and home-grown forage to explore cost-saving opportunities without sacrificing output, which could improve profit margins.
- Profitability: In 2023, the business achieved a net margin of £19 per finished animal, or £0.03/kg liveweight sold, which is an improvement over the industry average loss of £0.31/kg for beef finishers. While profitable, this margin is narrow and vulnerable to cost increases.
- Expansion Strategy: The business is expanding cattle numbers, which should help reduce overheads per unit and increase profit margins, assuming gross margin figures remain stable. This expansion could offer economies of scale and further improve financial performance.
- Finishing vs Store Sales: Financial analysis shows that finishing cattle to 600kg is more profitable than selling them at 450kg as stores, with profit margins higher by £130.45/head for indoor systems and £195.90/head for outdoor systems. However, additional labour and overheads need to be considered.
- 2023 Transition Period: The 2023 figures reflect a transition to a new system, including additional rearing costs not yet balanced by sales. A follow-up review once the system stabilises will provide a clearer financial picture.
In conclusion, improving feed cost efficiency, expanding cattle numbers, and refining management practices can enhance profitability and ensure long-term sustainability.
5-Step Guide to Implementing Beef Enterprise Improvements on Your Farm
- Monitor and Assess Current Financial Performance
- Review your farm's financial data, including production costs, feed expenses, and cattle sale prices.
- Calculate your net margin per finished animal and compare it with industry benchmarks.
- Analyse Feed Costs and Improve Feed Efficiency
- Identify the proportion of feed costs in your total production (as with Graianfryn’s case, feed costs were 54% of total costs).
- Review cattle rations and explore ways to increase the use of home-grown forage and reduce reliance on purchased feed.
- Evaluate Alternative Management Options and Breed Selection
- Assess whether switching to different breeds or breed crosses could improve feed conversion and performance on your forage-based system.
- Experiment with alternative finishing methods (e.g., indoor vs outdoor systems) to identify the most cost-effective and profitable option.
- Compare Rearing Calves vs Purchasing Weaned Calves
- Calculate the costs of rearing calves on your farm versus purchasing weaned calves or store cattle.
- Include all relevant costs in your analysis, such as feed, veterinary care, labour, and potential mortality risks.
- Develop a financial model to compare the cost-effectiveness and profitability of each approach.
- Scale Up and Monitor
- If resources allow, consider increasing cattle numbers to benefit from economies of scale and reduce overheads.
- Continuously monitor financial performance and market conditions to adjust strategies as needed.