Evaluating the business case for investment in development of Precision Livestock Management (PLM) technologies and applications

Summary

The set of analyses in this report for the MLA investment in Feedlot R&D builds on a set of economic evaluations carried out by Agtrans Research for Meat and Livestock Australia (MLA) in 2006. The 2006 analysis was effected by randomly selecting a representative sample of 50 projects funded by Livestock Production Innovation (LPI) that received funding over the five years from July 2001 to June 2006.
Five Feedlot projects were drawn in the sample and, through linkages to other projects, led to a total of 15 projects that were analysed in the Feedlot sample. The 2006 evaluation for the Feedlot investment was then modified according to the ACIL-Tasman guidelines to meet the requirements of the pooled sample. The Feedlot report, together with that for Lamb and Sheepmeat and the Environment investments were submitted by MLA in April 2008.  
The investment by MLA in the Feedlot cluster was $5.2 million in nominal dollar terms. The MLA investment in the 15 projects included in the sample reported here totalled $2.3 million in nominal dollar terms and had a present value of costs of $3.1 m in 2007/08 dollar terms as of 2007/08. This investment by MLA was estimated to produce a present value of benefits of $9.92 m, giving a benefit-cost ratio of 3.2 to 1 and an internal rate of return of 16% per annum over a 25 year benefit period. Given that the sample of projects analysed made up nearly 50% of the population, there can be some confidence that the performance of the overall population would have been similar.
A range of types of benefit was evident. The predominant group of benefits was private in nature and captured predominantly by cattle producers and feedlotters with some benefits being passed along the marketing chain to processors and consumers. Consumers will also benefit from improved beef quality. However, significant social benefits were evident in the form of animal welfare benefits and improved biosecurity management.