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Cost of feedlot dags to Australian beef industry

Project start date: 10 May 2017
Project end date: 15 May 2018
Publication date: 14 February 2019
Project status: Completed
Livestock species: Grainfed cattle
Relevant regions: National
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​Dags are the build-up of mud and manure on the hides of cattle that can lead to operational and economic challenges to the industry. Prevention of dags by implementing appropriate feedlot pen management is widely considered to be the best currently available strategy to mitigate the impacts of dags. However, the capital and operational costs of feedlot management infrastructure mean that chemical and mechanical measures to prevent or remove dags are also an important option for the industry.  In addition, despite best pen management practices, dags can cause problems, so alternative measures are also required.
This project was conducted to evaluate and quantify the cost of dags to the Australian beef industry, through an assessment of the cost to each impacted part of the supply chain
The approach followed for estimating the magnitude of the dag problem was to calculate the attributable average cost of dag management per head for those businesses that provided data with a sufficient robustness and completeness that would allow replication. Data was grouped into seven major cost categories:
•           Labour;
•           Water;
•           Effluent disposal;
•           Energy;
•           Infrastructure (CAPEX);
•           Infrastructure (OPEX); and
•           End product downgrades.
The findings suggested that, on average, the cost of dag management in the 2016 season would have amounted to approximately $ 10.72 per head, comprised of a $ 6.34 and $ 4.38 cost borne by processors and feedlots respectively. The higher cost borne by processors suggests that the charge backs that processors are currently imposing on suppliers is, on average, insufficient.  
Contributor interviews have surfaced an average variability of dag presence of approximately 33 per cent to 50 per cent and have stated that 2016 was a year of low dag presence. At face value, this would suggest the cost of dag management per head ranges from $ 10.55 to $ 16.02 per head depending on the prevalence of dags.
Taking this into consideration, the cost of dags to the Australian beef industry would sit between $ 4 million and $ 10 million, equivalent to between 0.02 and 0.05 % of the Australian beef and cattle industry value of production. In turn, this is equivalent to between 0.16 and 0.39 % of the feedlot industry’s value of production.

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Primary researcher: ACIL Allen Consulting Pty Ltd