1) Practical intensive feeding on the farm and production factors to bear in mind

Basic facilities and resources required to finish calves or lambs on the farm include pens, water and feed facilities, water and feed supply, a scale and labour.

Pen size can be calculated at 12m ²/calf and 2m ²/lamb. Feeding space of 30cm/calf and 15cm/lamb is required. Water intake is on average 45-50L/calf/day and 5-6L/lamb/day. Factors that play a role in the profit margin include, among others, breed, sex, growth stimulants, the feed’s nutrient value, average daily gain (ADG), feed conversion ratio (FCR), feeding period, and dressing percentage (Oosthuizen, 2016).

Table 1:            Production factors for the finishing of calves and lambs

Breed		Calves	Lambs
		From:	To:	From:	To:
ADG	kg/day	1.5	1.9	0.22	0.38
Feed intake	kg/day	11	13	1.3	1.6
FTO	kg feed: kg weight	5.8	8.6	3.4	7.3
Result %	%	58%	61%	46%	48%
Feed period	days	100	140	55	65

2) Influence of input and output prices as well as price trends that can be beneficial

Input and output prices can make a significant difference in the profit margin of intensive feeding, in both weaned calves and lambs. Seasonal price trends can be used to examine favourable weaned calf and lamb prices as well as carcass prices in order to use timing for potential higher profit.

The price index in Figures 1 and 2 was calculated by plotting the last three years’ prices on a monthly basis against the specific year’s average and thus determining a monthly index. The indixes are plotted as an average from 2019-2021 in Figures 1 and 2, for cattle and sheep respectively. An index above 100% therefore indicates a higher price compared to the year average and vice versa. An 8-year average (2014-2021) showed the same trends.

Figure 1 indicates that the weaner calf price is low and below the annual average between April and July, which is the seasonal weaning time. Higher supply of calves in the market lowers the price. It is also clear that when the supply of calves is lower, the price tends to be higher, such as in the spring and summer months.

The carcass price is high in December due to the festive season which stimulates demand. The demand and therefore the price increase builds up towards December and drops drastically in January after the festive season. It would therefore be beneficial to market fed calves towards the end of the year to take advantage of the favourable carcase price.

The purchase of calves must therefore be scheduled between 4 and 5 months before the marketing time, thus August and September. The weaner price is already above average at this time. Contradictory, due to the influence of food and mouth disease, the weaner calf price is currently 5% below the year average creating an opportunity to realise potential higher profit margins by feeding calves yourself in the current scenario, with additional emphasis on the logistical challenges due to the virus.

Figure 2 indicates the weanling lamb and carcass price index trend.

A clear trend in Figure 2 can be observed where the weaner lamb price is below average between January and April and above-average during the winter months. This trend is mainly due to a high supply of lambs early in the year (seasonal weaning time) and reduced supply towards May.

As in the case of beef, the A2 lamb price is also high in December with the festive season’s demand. High carcase prices are also experienced in the winter months, mainly due to a low supply of lambs two months before, as discussed, which go through the feeding process to meet the carcass demand.

In the current period, it appears that December can offer a favourable carcass price with an average weanling lamb price as input. Feeding lambs yourself for the December market can therefore be beneficial when the price trend is taken into account.

3) Profit Margins (Value Addition)

Feeding and finishing calves on the farm can be divided into two phases, namely backgrounding and finishing. Backgrounding is the adaptation phase for the feedlot where calves’ rumens are adapted to the high-energy grain ration of the feedlot, they build up immunity and adapt socially. This phase is important for good production and therefore profit in the feedlot but can also realise a good profit margin.

Feed intake from purchased supplementary feeding to the field is low with relatively good growth in return. A minimum of 30 days is recommended. The period depends on the weaning weight of the calves, the ADG and the target weight for the feedlot. A maximum of 250kg feedlot entry weight must not be exceeded, as the profit margin in the feedlot then decreases.

In the scenario shown in Table 2, calves are weaned early at 190kg. This offers room for additional profit margins in the backgrounding and feedlot due to the lower entry weight. Early weaning also takes pressure off the cows and provides more time for recovery after winter.

The feedlot phase is the full-intensive feeding phase during which high production outputs must be achieved. The feed price-to-carcass price ratio limits the period for optimal profit margins to 100 days to still realize a carcass weight above 240kg. A feed intake of 3.6% of body weight and ADG of 1.75kg were used in the Table 2 scenario. The option to mix concentrate with maize and roughage yourself on the farm achieves a lower feed price which increases the profit margin but mixing facilities on a farm can be a limitation.

When finishing lambs, one phase in the feedlot is sufficient. A short rumen adaptation is done by just providing additional roughage in the pen. In Table 2, a general entry weight of 30kg was used. The final weight must not be more than 50kg, to avoid carcasses above 25kg. The ADG can vary considerably between different breeds which must be taken into account.

The wool income can also have a significant influence on the total profit margin, but this has not been taken into account in Table 2. The advantage of self-mixing on the farm can also reduce feed costs, but again mixing facilities may be a limitation. Furthermore, pelleting is recommended to feed lambs to limit wastage and stimulate intake. Pelleting equipment is however also a limitation at farm level.

The scenario in Table 2 excludes interest, labour and mortality. The 2% variation in production and price factors was achieved by calculating 10 scenarios of profit margin based on a 2% increase and decrease in purchase price, carcass price, feed price, ADG, feed intake, feeding period, purchase weight and result percentage. The minimum, average and maximum profit margins were calculated from this.

Table 2: Profit margins for backgrounding, finishing calves and lambs

According to the calculation in Table 2, a good profit margin can be realised in the backgrounding phase (11% ROI) and additional value can be added by feeding the calves for slaughter (12% ROI). The possible profit margin varies between R683 and R1151 with backgrounding and R793 and R1963 in the feedlot. The lamb finishing calculation shows good profit margins (8% ROI), considering that it is a shorter feed period compared to cattle finishing. The margins vary between R82 and R242/lamb. The self-mixing option also shows that additional margins can be obtained provided that this is practically possible on the farm.

With reference to the favourable price trends for the December market, the average to maximum profit margins can be realised, which holds good potential for value addition on the farm.

Reference:

Oosthuizen, P. L. (2016) ‘The profit-maximising feeding period for different breeds of beef cattle’, MSc study.