Seven ways to ramp up your business performance
02 July 2015
Incremental changes across key areas can significantly improve profitability for northern cattle producers, participants were told during a webinar last week.
The webinar was presented by Ian McLean of Bush AgriBusiness, co-author of MLA’s recently released producer manual, Improving the performance of northern beef enterprises .
“The producer manual was developed to provide practical advice on the factors determining the profitability of the top 25% of producers in the Northern Beef Situation Analysis Final Report ,” said Mr McLean.
“What we found was that herd productivity, rather than price received, is what drives profitability.
“What’s most interesting is that, although there is no one silver bullet for profitability, small steps in different areas - including sale weight, reproductive weight and mortality rate - can really add up.”
The webinar addressed seven strategies to increase profitability:
- Run as many adult equivalents (AE) as you can, but not more than you should. Determine your Long Term Carrying Capacity (LTCC) and Land Condition. Then base long term planning around LTCC; match stocking rate to available feed in the short term; and maintain land in good condition and improve land not in good condition.
- Focus on maximising the kilograms of beef you produce in the long term. This is the most effective way to increase the income of a beef business.
- Ruthlessly scrutinise and optimise herd expenditure. Every dollar spent must return much more than one dollar.
- Achieve labour efficiency of 1,500+ AE/FTE. Labour has tentacles which go throughout the cost structure of a beef business. At any given scale, reducing labour is the most effective way to lower the overhead costs of a beef business.
- Honestly assess your situation with regard to scale. Determine if you have a part time job or a standalone business that either has sufficient scale, or has the capacity to profitably grow.
- Don’t pay too much for land. Do sums very carefully when buying land, or considering any major capital investment. What you can afford to pay for it will be a function of what it will make you and what return your require on your investment.
- Become a professional business manager. Acquire the knowledge and skills required to successfully run a multi-million dollar business in the 21st century. These are not the same as the knowledge and skills required to successfully run a cattle station in the 20th century.
MLA General Manager, Livestock Productivity Dr Jane Weatherley said the webinar was a valuable introduction to the producer manual and how to take advantage of the findings of the Northern beef report.
“There is no doubt the northern cattle industry has faced significant challenges in recent years, and is incredibly resilient.
“The findings of the report and producer manual effectively provide producers with a behind the scenes look at the determining factors of profitability for the most successful enterprises in the north,” Jane said..
Download MLA’s manual Improving the performance of northern beef enterprises
Future Beef is a joint initiative of MLA, the Queensland Government, the Northern Territory Government and the Department of Agriculture and Food Western Australia. The program aims to support sustainable and profitable productivity gains for northern beef producers.
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