Contracts are a must for rearing

01-05-2009 | Not Specified

Contracts are the number one thing in the calf rearing business.

That's the message from Steve Drake, whose Hawke's Bay-based business last year sourced just over 4000 calves from Waikato dairy farmers.

"It's important to get things contracted because it's a fickle industry. I would go as far as to say that the whole meat industry needs to be looking at forward contracts."

He can't understand while there are futures trades for all kinds of products in the United Staes, why our meat companies can't guarantee farmers future prices.

"I think they can; they just don't want to."

He says the only industry with more uncertainty is the apple industry.

This coming spring it will be especially important to have contracts, as 100kg calves will be in short supply.

Last year the bobby kill was up 28% across the country, which indicates that there were far fewer calves reared.

"There is a shortage of stock, and if finishers don't make arrangements for the coming season, they could be farming empty paddocks. As the East Coast restocks from two droughts, the demand will be strong," he says.

The rearers who were burnt last year in the spec market are very unlikely to rear again this year, he says.

Last year a lot of people had to dump calves on the market because of the dry October and November on the East Coast. They couldn't sell the calves, and got burnt as a result.

Steve says 600 of the 828 calves he reared last spring were contracted through Ross Dyer Livestock. Ross has contracts which are binding on both parties, and works pre-season to ensure both parties requirements are met, and can plan accordingly.

"A top agent like Ross takes most of the hassle out of the job for both parties," he says. He has written binding contracts with buyers, and says that gives certainty to both parties.

All the indications show an increasing demand for finished bull beef, he says.

"Rabobank reports the American beef cow herd is as low as it has been since 1952. While there is a global recession people still eat, and the McDonalds of this world are having a royaler."

He says with two droughts on the East Coast, numbers of beef weaners are well down. Four to five years ago there were 5000 weaners sold at Stortford Lodge, but this year only 800 were offered.

Where will finishing farmers get their beef cattle from, he asked?

He has already had calls from finishers, when usually calls for next spring's calves begin in May. But rearers will not bother to rear unless they have a contract.

"They can't be the meat in the sandwich all the time."

"If finishers want a guaranteed supply they need to either rear their own or get them contracted."

Dairy farmers are stretched at calving time,

and will only rear their heifer replacements. And their payout is still about the third best ever, which is another reason they won't be rearing calves.

Bobby calves only make up a tiny percentage of gross income so farmers' attitude is to put them on the bobby truck, which comes every second day.

Steve went dairying when he left school, and stayed in the industry until he was 28.

He farmed around Putaruru, Matamata and Morrinsville, building up to be a sharemilker. In 1980, his last year in the industry, he reached the finals of the sharemilker of the year competition.

But he couldn't see himself being able to buy a dairy farm, and instead left the industry and moved to Hawke's Bay with his new wife Donna, a chartered accountant.

At first he bought a horticultural block at Clive, but didn't enjoy that. Then one day he visited a guy who sold woodburners for glasshouses.

"He was out, and his wife said, come and have a cup of tea. I asked her what she did with a 10 acre block, and she said, I rear calves if I can get them.

"I said I will get you some calves. She never bought any, but that was the beginning of the calf business in 1981."

The first year he advertised and sold 100 four-day-old calves, and built up the business to a peak of just over 8000 in 2001.

"I do enjoy it; I enjoy all the farmer contact at both ends. I have more contact at the Waikato end than I do here because I do all the picking up of the calves."

He starts the two-month season at the end of July, and in a typical day picks up between 100 and 200 calves.

"I do the pick ups, and we are normally loaded by 1-2pm, and the driver delivers the calves and then goes home and sleeps. The truck travels about 1000km a day."

First thing in morning he starts collecting the calves again from four different districts: north of Morrinsville, Matamata, Reporoa and Putaruru-Tokoroa.

He spends two nights in Morrinsville and Matamata and two nights in Taupo, going backwards and forwards on a four day repeating cycle. The biggest hassle is being away from home for two months.

"I still enjoy the calves, but it is physically very hard on you lifting them all when they weigh 40-50kg."

"You can be lifting 200 calves a day, with half of them needing two lifts onto the top deck of the truck. I've had two shoulder reconstructions but that's just part of the job."

As more dairy farmers move over to Jersey-cross animals-Steve estimates every year 10-15% more of the Friesian herd is mated to Jersey bulls-it becomes more and more difficult to source straight Friesian calves.

"There's no demand for Jersey-cross bulls. If a rearer has to sell them it is just a wipe-out. There is only one place for Jersey calves and that is on the bobby truck."

Steve says if demand increases again for bull calves, up to say the 8000 calves a season, he'd find it very difficult to simply source that many calves.

He says 90% of the calves farmers want are Friesian bull calves, followed by Friesian heifers, then Hereford heifers and bulls.

Farmers don't want Angus-cross animals because of the possibility of Jersey-crosses, and dairy farmers are not using many Angus bulls compared to 10 years ago.

Dairy farmers value reliability, he says. His business has lasted 28 years because he guarantees to pick up calves every four days through the whole season. Rearers also appreciate getting batches of calves rather than a dribble all the time.

Steve visits from 100-120 farms in each four-day cycle to get enough calves to fill orders, and has verbal contracts with these farmers.

"I will be there and I have only missed one pick up in 28 years, which is when we were snowed in and were a day late. People understand that. They want to know their calves are going out the gate for the whole season."

He says on average he would pick up from 40-50 calves per farm over the season. The average herd is 320 cows, and the farmers keep 25% replacements.

Steve says there are now an awful lot of crossbred herds, and there's intense competition for suitable calves.

He guarantees all the calves for 48 hours against detectable defects.

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