Saturday, April 20, 2024

Head to Head: A comparison of dairy bull beef and traditional beef R2 finishing policies

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Rising two-year dairy bull beef production is more efficient than rising two-year traditional beef steer production. However, when comparing policies from all aspects there is a place for both in our well-run sheep and beef farming systems. So how do they compare and where do they fit? If we compare researched performance data we know that as a rule, like for like, our dairy bulls will grow 15% faster than their traditionally bred steer counterparts. Half of this advantage comes from their increased intake, due to increased appetite, and the other half comes from an increase in efficiency. This is a result of bulls laying down a higher ratio of muscle to fat than a steer. It takes more energy to produce 1kg of fat than it does to produce 1kg of muscle.
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However, the Farmax historic database has demonstrated that on average bulls have, in fact, earned 22% more than steers, not 15%. Where does this additional 7% come from?

When we compare our finishing enterprises and look at the relationship between store pricing levels relative to the schedule over the past 15 years we see that steers have a higher purchase price relative to the schedule. That reduces the finishing margin when compared with bulls. This difference accounts for the additional 7% difference and can be seen in table 1.

If we take the above 15% difference in biological efficiencies and the 7% advantage in pricing level of bulls into account, at the average schedule value for the 2012 calendar year of $4.29/kg CW for bulls and $4.22/kg CW for steers, we see that the dairy bull policy has a gross margin advantage on a cents/kg of drymatter basis of 4.4c/kg DM (16c/kg DM versus 11.6c/kg DM). This is summarised in table 1 and in this policy example under current schedule markets this is a 28% difference.

We all know that these better figures are not the only consideration. We must also think of practicalities such as how each of these systems will fit with our existing policies and what advantage either system might bring to your farm.

To decide which policy to choose, we need to consider areas other than the efficiency and price advantages (as above) that might influence our choice of system. These should include infrastructure and flexibility together with pasture control and other advantages either policy might bring to the whole farm system.

To begin with let’s look at infrastructure. The obvious advantage to steers is their temperament. On more extensive properties with a limited number of paddocks or properties with greater paddock areas, steers can be run successfully in large mobs.

On the other hand, running bulls in large mob sizes can result in behavioural problems potentially resulting in performance loss, injury or death along with increased labour and repairs and maintenance costs. Bulls could be integrated with other stock classes, such as ewes, to create larger mob sizes, however, as ewes and R2 bulls have different pasture height requirements this could compromise bull growth rates, especially through the main growth season.

There are some key flexibility issues. With many more bulls traded than steers, bulls are more readily bought and sold. This tends to mean steadier market pricing, less risk and as a result more flexibility. Bulls can also be slaughtered at a wider range of carcase weights and degree of finish. This flexibility of bulls allows farm covers to be manipulated to maintain quality and maximise leaf area (and therefore pasture production).

Bulls have a further flexibility advantage which comes in the form of compensatory growth. Through winter, bull intakes can be dropped to a maintenance level, allowing greater numbers to be bought at lower pre-winter prices and then carried through to spring.

After maintaining or growing slowly through winter, if fed well through spring, a bull will not only grow at its normal rate but will regain a portion of the lost winter growth, for no extra pasture intake. With the ability to carry more bulls through the winter at maintenance we can achieve better spring pasture control resulting in less pasture loss from spring surpluses, an improvement in pasture quality and gains in overall pasture growth.

However, steers can have an advantage over bulls when it comes to pasture control and flexibility. Where infrastructure is limiting, the ability to mob up R2 steers for larger paddock sizes, use these larger mobs for pasture clean-up duties and do this without excessively compromising performance (because of less time in each paddock allowing a more regular pick) can result in better pasture quality and as a consequence better overall stock performance.

Also, this ability to mob up R2 steers allows for more control on winter rotation lengths, helping to push a wedge of feed into spring and maximise early season animal performance.

It is this early spring animal performance which generally sets the high performing operations apart from the average performing operations.

Other factors to consider will be that steers tend to perform better than bulls in adverse conditions such as cold environments, steep contours and poor quality pastures. One obvious flexibility advantage steers have over bulls is where female stock policies are also run on farm. Steers are also generally, overall, easier to manage than bulls.

If bulls are considered to be a policy option it is a good idea to objectively quantify all the advantages/disadvantages to accurately compare the sum of all effects on the whole farm’s performance.

Risks such as poor bull performance where intensive bull units are not feasible can be quantified. For example, if we assume bulls grow at 0.3kg LW/day less in the shoulder growth months of April, May, August and September and .2kg LW/day less through winter (due to a lack of pasture quality in autumn and lower covers in the early spring along with a tighter winter rotation as a result of integration with sheep, for example) we find we hit the breakeven point with R2 steers at a gross margin of 11.6c/kg DM. This is assuming steers are run in a large paddock system and performing well. This comparison can be seen in table 1.

But, of course, looking at enterprise gross margins on a dry matter eaten basis alone does not quantify the impact on other enterprises nor does it quantify the value of feed eaten during the different seasons or maintaining covers within optimum levels.

We have some good tools available to us to quantify these impacts. Farm simulation software such as Farmax will allow you to quantify these impacts based on your own set of assumptions unique to your farm. If you do not have access to a tool such as Farmax your local consultant will be able to help.

So bulls have significant advantages with the greatest being higher potential financial returns at an enterprise level. However, on some classes of land and properties with more extensive paddock sizes, the performance of bulls might not be high enough to outperform steers when accounting for all impacts to the whole farm system.

We can conclude that if infrastructure development of an intensive bull system is not feasible steers might very well be the better option. It would be well worthwhile quantifying this objectively for your own situation.

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