Teagasc Expert Warns of Tight Margins for Dairy-Beef Farmers Amid Rising Calf Prices

The recent uptick in beef prices is finally reaching farmers, particularly those dealing with lighter store cattle. However, as Ireland enters its primary calf-trading season, many in the dairy sector are bracing for a surge in calf prices.
Alan Dillon, the manager of Teagasc's DairyBeef500 programme, cautions that although current beef prices have reached unprecedented highs, farmers might face significant challenges if these prices decrease in the coming years. He points out, "A moderate increase in calf purchase prices, especially on farms with a high stocking rate, can quickly erode profitability."
Buying Calves: Costs and Investments
According to Dillon, the initial cost of purchasing calves is relatively minor compared to the overall investment in a calf-to-beef system. With the cost of finishing a calf pegged at approximately €1,330, excluding labor and land charges, farmers need to achieve high beef prices to break even.
For instance, a Friesian steer, with purchase costs included, would need to sell for around €1,400 to break even, while Angus steers require prices of at least €1,530.
The Commercial Beef Value (CBV)
The introduction of the Commercial Beef Value (CBV) is expected to help farmers identify calves with better genetic potential, enabling informed purchasing decisions. The aim is to assist in supporting the calf-to-beef supply chain by balancing calf prices and aiding in sustainable farming practices.
Maintaining Buyer-Seller Relationships
Dillon stresses the importance of a balanced trading relationship, where calf prices are fair to both buyers and sellers. He warns that a significant dropout rate among calf buyers highlights the pressing need to keep this market viable.
"Dairy farmers need to be aware that only a fraction of those purchasing calves today will continue in the market over the next few years."
Next year could prove challenging as the Dutch export market, which purchases a significant portion of Irish calves, is set to reduce its intake of Irish produce.
Dillon emphasizes that enhancing margins and maintaining a fair price for calves will sustain the industry's future, both for dairy and beef farmers.