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Swing in semen use will affect beef market

Many farmers have switched from dairy to beef semen as a way to reduce production costs in the short-term.

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Changes in semen use

July 2014 to June 2015 vs July 2013 to June 2014
Conventional dairy -5.3 per cent
Sex sorted dairy +1.4 per cent
Beef +7.6 per cent

This swing is likely to have immediate consequences for beef calf prices, according to Promar regional manager Emma Thompson.


She says: “Comparing the years to July 2015 and July 2014, there has been a clear swing away from dairy semen and there is no evidence this has reversed.” (See table).


“At the same time there has been a large balancing movement to beef straws and an increased reliance on natural service beef bulls,” she says.


While this swing will not affect the number of dairy heifers in the pipeline in the immediate term, Mrs Thompson says its impact will be rapidly felt in the beef sector.


It is predicted there could be an additional 17,500 more beef calves produced per month from dairy breeds.

Registrations

Beef cross calf registrations will increase to somewhere approaching 60,000 per month as we enter spring/summer 2016 which could create a short-term rise in animals entering the cross-bred beef sector.


“On an annual basis, this is an additional 210,000 beef cross calves per year. While using less dairy semen and more beef could be seen as attractive in times of high beef calf prices, the same may not be true if prices drop back. Are prices likely to hold with a significant increase in the supply of calves? There are already signs prices are beginning to weaken.”


Mrs Thompson says demand for beef calves, and consequently prices, will be influenced by other events on-farm. If the increase in dairy slaughterings is maintained as the number of herds continues to reduce and dairy farmers look to cull poorer producing cows, then this will further increase beef supply and suppress prices.

Analysis

With any industry-level analysis such as this, Mrs Thompson emphasises it is the impact at individual farm level which is important and farmers need to plan and understand the implications for their business of any decline in prices.


Nothing can be done about the increase in supply nationally, so the focus must be on what can be done on-farm.


Mrs Thompson advises farmers to consider the impact on their business and what can be done to make the best of an increased supply of beef calves.


“Do not assume calves will make a good price if sold at market. If there is no alternative to selling calves, there may be ways to improve price, perhaps by selling under contract or coming to an agreement with a local rearer or finisher. Whatever you do, consider the impact of reduced prices on cashflow.


“It might be possible for dairy farmers to keep calves on and rear them to sell as stores or finished animals, particularly if forage supplies are good. These animals could be ready to sell when the current increased dairy slaughterings are in decline, which might see stronger prices.


“For specialist rearers, lower calf prices could provide a welcome boost to their business by reducing production costs.

Confidence

“Whatever the farm situation, careful planning will be required to make the most of beef calves in a market which will see a surge in supply which could continue until we see an upturn in dairy confidence, particularly as replacement dairy heifer supplies are currently adequate to meet demand.”

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