When a land charge of 208 €/head of cattle is not taken into account (when the land is not rented), a total profit margin of 320 €/head is achievable from the organic finishing of the meat winter beef, according to figures from the National Organic Beef Open House Day. .
Over 1,200 farmers attended the National Organic Beef Open Day, held at John Purcell’s farm in Ross, Golden, Cashel, Co. Tipperary, on Wednesday September 28th.
The event was organized by Teagasc, Bord Bia, the Department of Agriculture, Food and Marine (DAFM) and the host farmer.
Substantial increases in the level of direct payments to farmers practicing organic production, coupled with rising fertilizer prices over the past year, have sparked the interest of conventional farmers switching to organic production, particularly in the beef sector.
Earlier this year, Agriland visited John Purcell’s farm and a full report of the farm visit can be read here.
At the National Organic Beef Open House at Purcell’s Farm this week, a clear breakdown of the farm’s financial performance was available to attendees.
At the event, Teagasc pointed out that, generally, organic cattle farmers are stocked in the region of 1.0 cattle unit (LU)/ha, but this can vary depending on soil type.
This stocking rate is lower than that of conventional beef farms, but due to the higher prices for organic beef (typically in the 15% premium range), the total value of farm gate sales can be maintained despite the rate. reduced storage.
When converting to organic farming, some costs will increase and others will decrease.
The cost of fertilizers will generally be eliminated. Organic flour is expensive, but utilization rates tend to be lower on organic farms, reducing the overall feed bill. However, other costs such as seeds, litter fees and license fees may increase.
Overall, one would expect the total costs of organic operations to be lower than their conventional peers.
The further increase in payment rates announced under the organic farming scheme will also contribute positively to the overall profitability of the farm.
Due to the requirement for livestock to have access to a bedding area, bedding costs are likely to increase after conversion to organic farming.
Farmers in areas of the country where there is a high concentration of tillage farmers should be able to access straw bedding at far lower rates than those who have to pay to transport straw longer distances. Conversely, farmers on heavier soils may have access to rush bedding to counter this.
The key consideration when assessing the profitability of organic conversion is to realize that there are many variables and that it is vital for all farmers to calculate their own figures for their own farm.
Teagasc pointed out that although the host farmers’ farm is well in excess of the national average farm, the figures give “a good idea of the kind of margins that can be expected from an organic beef fattening operation”.
The absence of a fertilizer bill or any purchased concentrate means that two of the biggest bills on most farms are eliminated.
John Purcell’s figures are for the year 2021, when buying prices for cattle were around 15% lower than in 2022, but selling prices for cattle were also lower by a similar percentage.
The farm relies heavily on hired labor and therefore this cost has been eliminated of the table to make the costs more representative, however, a full land charge of €208/finished animal has been included.
According to Teagasc, the average conventional farmer suffers a net loss per finished animal (excluding direct payments). Purcell organic cattle breeding ensures a margin of €110/finished animal. If a farmer owning all his land were to exclude land lease costs, then the profitability would be very positive.
The recently announced organic farming scheme offers dry cattle farmers €300/ha for the first two years of conversion and €250/ha thereafter.
When this is added to the figure above, it demonstrates that organic beef finishing systems can be profitable farming ventures.
In conclusion, organic beef finishing systems can be profitable, but producing high quality silage and reducing purchased concentrates is key to achieving this.
It is important that all farmers analyze your own numbers before making the decision to convert.