What impacts success or failure?
Article supplied by Dr B.W. Schouten, BVSc
Veterinary Consultant to AgriVantage
Another calf rearing season is fast approaching, and dairy beef calves will soon become available for the dairy/beef market.
Questions you might be asking: What will be the price of a good quality calf? And, what will happen to the export beef schedule? Therefore, what profits can be made?
It’s a bit like asking what will happen to the payout on milk solids or the cost of petrol over the next year. However, one thing is certain, those rearers who can take a calf to finishing will always make a profit. On the other hand, rearing calves to sell as 100kg weaners is a much riskier venture, needing some careful planning and a sound budget.
What are the rearing costs to produce a 100kg weaner?
We can divide these into fixed and variable costs.
- Fixed costs
On average it takes 1.5 bags of calf milk replacer (CMR) and 3 bags of calf meal, plus grass to get to the weaner market on time.
In today’s prices this will be: milk and meal = $180 (approx.)
No doubt, small changes can be made to these costs, but don’t be tempted into buying an inferior feed. At the most you may save a dollar or two, but performance could be severely compromised. Stick to the reputable products that will give you good reliable results.
- Variable costs
These include the purchase price, animal health, mortalities, housing, electricity, transport, tagging and dehorning.
Let’s look at the 2 biggest variables:
- Purchase price = $80-150 depending on breed and sex and time of the year
- Animal health costs = $20-30 /head
Animal health costs include drugs (antibiotic and scour treatments) and deaths. These figures are based on a 3% mortality rate. The average mortality rate in NZ is about 5%. Losses above 10% are rarely profitable.
Other costs include electricity, transport, commissions, tagging (identification and NAIT tags).
Total rearing costs = $240-310 per animal
Sale price for a 100kg weaner = $350-450
That leaves a margin of $80-100/calf. (This has been the average margin over the last 5 years or so.)
It is easy to see that the quality and purchase price are the biggest variables affecting profitability.
- Quality: buy only the best calves as smaller animals will take more feeding.
E.g. a 32kg calf will need another 2 weeks to reach target weight.
Similarly, an unhealthy calf can easily succumb or need extra (expensive) treatments to survive. Don’t be tempted to take a punt on a poor or cheap calf, for any reason.
Consider paying a premium for better, bigger calves and for that calves that have had a guaranteed 4L of colostrum gold within 12 hours of birth.
- Purchase price: seasonal and buyer demands make this a difficult task but be realistic.
The breed, sex and even the colour and markings will influence the price - stick to your budget.
Try to buy directly from a reliable dairy farmer at a pre-set contract price if possible and beware of the saleyard hype.
Try to limit the number of farms you purchase from, the fewer the better.
Know your market well and, where possible, try to forward contract the sale price for your weaner.
If in doubt, discuss your venture with an established rearer, a stock agent and your financial advisor.
- Where can you source the best calves for your budget?
- Do you have the right facilities for the number of calves you want to rear?
- Do you have adequate housing, water (for milk mixing, cleaning and troughs) and staff?
- Have you done your homework on the best feed for optimal rearing?
Each part of the pyramid is critical to calf performance, if any part is not sound, the calf’s performance and your profit will be compromised.