By Robert Logan, livestock business consultant, SAC Consulting.

Price sustainability and a need to better share the risk of market volatility is key if the sector – from retailers through to store cattle sellers – want to continue benefitting from having professional finishers selecting and delivering upwards of 40 consistent cattle per week every week of the year.

Whilst the suckled calf producer may be the engine, these finishers are now the sectors' five-star fuel of the 21st century. Large finishers are turning over enough cattle that they know what cattle work for them and whose are worth paying that extra few pence.

In theory this can incentivise future breeding decisions They also have the scale to group cattle for market requirements and have the time and attention to meet those markets specifications.

It is therefore increasingly worth being aware of such developments, knowing cost of production and responding accordingly.

Managing volatility while requiring a high level of working capital is a prerequisite to finishing cattle. We are also in unprecedented times, as the news feed continually reminds us.

Nonetheless, the reality is still difficult to contend with in practice without a more joined-up approach for those significantly invested. There is an underlying trend of beef finishers becoming more exposed to market price. Lower subsidy receipts provide less cash ‘insulation’ and there is less money across the sector to bridge and buffer price. Abattoirs themselves highlight narrow margins per head.

Until now, such challenges have largely been a problem argued between processors and finishers but it is clearly a much deeper issue; a longer standing obstacle that any price increases only paper over.

Driving price upwards through reduced supply may add value but we are increasingly searching for marginal gains. Low retail price inflation, the consumer price point for beef and the competitiveness of imported beef and other proteins (such as chicken) dictate that beef sales have an upper price limit.

Within the farmgate, what is a sustainable market price when there are wide ranging production costs? Meanwhile, exposure to market volatility can be partly managed through improved buyer/seller relations and calculating and negotiating the best time of buying and selling cattle, and required inputs.

SAC Consulting are revisiting work on different beef business models and contract arrangements (formal and informal). Greater work is also underway to demonstrate value in improved communication across the chain.

Processors and retailers are likely to be more receptive to credible proposals especially if approaching a period of reducing domestic beef supply. Beyond reviewing and promoting best practice, SAC have also added a number of project areas such as enhanced nutritional software, focused breeding programs, carbon footprinting measures, economic trend analysis, cattle’s place in managing grassland for production and conservation, grassland management and a few other developments besides.

It is now time to help deliver more profit from within the sector whilst better framing and measuring wider public and environmental goods derived from livestock production.

Confidence and commitment

It is always worth taking confidence from buying decisions and recent weeks have seen large consignments of growing cattle at ‘grass’ cattle sales being meet by keen trade.

Heavier cattle have lifted marginally but there is £20-50/hd more on 350-400kg cattle since the start of April, depending on the sale. Buyers have returned to the market, being well ahead with field work and with the smell of growing grass in the air. With grass available and domestic supply likely to contract, it shows continued commitment.