The four benchmarks achieved by the top 20% of prime lamb businesses

18 May 2017

By Sandy McEachern, consultant, Holmes Sackett

Top 20% prime lamb enterprises achieved a profit of $25/dry sheep equivalent (DSE) in the 2015-16 Holmes Sackett Benchmarking dataset. The average profit for benchmarking participants was $10/DSE.

That means there are producers out there making two-and-a-half times the profit of the average of all benchmarking participants.

How can one producer make so much more profit than another? It comes down to key benchmarks and understanding profit is driven by how much you produce, what it cost to produce it, the end product and what you are paid for it.

While sale price has a large influence over profit, the dataset illustrated efficiency of lamb production is the main source of variation on profits between producers. Despite the industry focus on lifting weaning percentages, you only need a consistent 120% weaning rate to achieve top 20% profit levels.

The four key benchmarks producers should strive to reach, while understanding their own profit drivers and business goals, to make the top 20% are:

  • one ewe joined/hectare/100mm of rainfall
  • 24kg of lamb (dressed weight) sold/ewe joined
  • 250g/day growth rate to sale. Producers get caught up on weaning percentages, without measuring growth rates which have far greater bearing on variation in profitability.
  • a cost of production of  $78/ewe joined (comprising $22 for labour, $14 pasture, $7 animal health, $9 shearing and crutching, $10 selling costs and $16 overheads).

The 2015-16 benchmarking project analysed the performance of 57 specialist prime lamb enterprises in NSW, Tasmania, South Australia and Victoria with an average flock size of 10,500 ewes joined.

Hear Sandy explain the key benchmarks in detail, along with how you can focus on these in your business, in this Making More From Sheep webinar.

More information: Sandy McEachern E:

Want support to improve your sheep enterprise?  Find out more about MLA's Profitable Grazing Program and BusinessEDGE training.

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