What makes a profitable producer?

21 August 2015

How would you like to increase your annual farm enterprise profit by more than $100/ha?

Well, according to senior consultant John Webb Ware from the MacKinnon Project, that's the money there for the taking if the average southern Australian livestock producer was to move into the top 20% bracket.

Using data generated by the long running South West Victoria Farm Monitor Project, John said for the 2013-14 year, the average producer had a net farm income of $62/ha, while the top 20% recorded $200/ha.

"The most profitable farms usually produce more wool, lamb and beef per hectare, but at a lower cost of production," John said.

"They achieve this by adopting simple proven management systems, grow more grass and utilise it through higher stocking rates and profitable enterprises." 

Here is John's list of the attributes of a profitable livestock enterprise, as shared with the recent MLA-sponsored Grassland Society of NSW annual conference.

While individual properties have limitations due to soil type, topography, rainfall and land class, these principles apply to all properties.

  • Good management: The best farm managers have three consistent features - they understand the profit drivers of their livestock enterprise, they monitor their business performance and they understand the relationship between pasture supply and livestock demand.
  • Efficiency: Enterprises are run with a farm plan with clear goals on the direction of the business based on an enterprise and management system that’s most profitable for the available resources.
  • Grass: Investment is first made in ensuring nutrients are not limiting then persistent high quality pasture species can be sown. Stocking rates are then managed to enable efficient use of pastures.
  • Enterprise mix:: Are your enterprises complementary and what works best to capture the maximum value of the assets - a breeding or a trading enterprise?
  • Timing: The management calendar matches the pasture growth curve.
  • Herd/flock structure: To successfully run high stocking rates, timing is crucial - such as length of joining, age of weaning and age of turn off.
  • Well-managed animal health: When making decisions about prevention and treatment, the focus should be on increasing production rather than decreasing costs and good animal health is critical to optimise utilisation of available pasture.
  • Genetics: Developing breeding objectives and using tools is consistent with making more profit.
  • Drought management: All producers will potentially be affected by drought at some time.  Controlling the impact with careful planning – such as building up feed reserves, setting aside funds for feeding and strategic sales of livestock – is essential.
  • Marketing skills: Understanding the potential markets for your livestock and ensuring a high proportion of your livestock meet the market specifications that fit your livestock production system that maximises profit.

Where to start? MLA has a number of tools and calculators and programs, including More Beef from Pastures and Making More from Sheep, to help your business.

Information

John Webb Ware E: j.webbware@unimelb.edu.au

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