The relative profitability of calf rearing and bull beef finishing

Abstract

Calf rearing is capital intensive, has high risks associated with animal health and is a short term intense activity. It occurs at a time of the year when out-of-season procurement premiums reflect slow processing throughput, rather than the market outlook for beef. In addition, schedules for bobby calves are announced only one week prior to processing which gives the market little time to settle on costs and the margin for calf rearing. This paper looks at viability for rearing and finishing and seeks to define margins for both sectors. This has been calculated using a margin per calf reared to 100 kg and a margin per week for the finisher. Calf rearing is a prescriptive feeding regime in a housed facility, where the performance range is small - i.e calves reach 100 kg liveweight in 12 weeks. By contrast, bull finishing extends over 1 to 2 years, depends on pastures produced in a wide range of climates, topographies and management systems and has a wide range in performance. The major factor impacting on margins in both sectors is the bull schedule. Hence an analysis has been undertaken to look at the impact on both sectors and provide a more equitable basis for establishing the value of the 100 kg calf. The market might not accept the model, but the discussion generated is likely to go some way towards resolving the unsatisfactory status quo position where the decision to rear calves has to be made before 100 kg contract prices are established in the market. Keywords: beef finishing, bobby calves, bull schedule, calf milk replacer, calf rearing, margins, procurement premium, whole milk