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Development and Demonstration of a Beef Industry Profit-Share Agreement
The Circular Head Beef Group (CHBG) formed 30 years ago to provide an opportunity for beef producers to come together to learn about technical, seasonal and other issues relating to production. Three years ago a sub-group call the Circular Head Beef Business Group (CHBBG) formed to allow those producers wishing to go into more depth in business analysis and management to do so. The group commenced activities by working through the MLA cost of production (CoP) calculator to initiate benchmarking between group members. The group have since taken their COP analysis further to assess their return on capital, as well as many of the physical aspects of their business and developed individual business strategies as a result of the benchmarking as strategic planning activities. As a result of the benchmarking using the MLA CoP calculator it was evident that each of the group members had considerable scope to increase business profit. The most important issues highlighted were:
From the above, the group decided to tackle the first issue as a priority by undertaking a pasture management workshop and establishing a 12 month program to:
1. That the utilisation of the pasture base was low and this was the biggest single limitation to improved business profit.
2. That risk played a very big role in diversification of enterprises (meaning that most producers were running breeding, agistment and finishing enterprises) and as a result of offsetting risk through diversification of enterprises, profit was compromised.
More pasture was consumed on a per hectare basis and the proportion of pasture going into beef production was increased. This was addressed by increasing stocking rate, but also by improving pasture management in order to finish cattle more quickly and improve the proportion of the feed that went into beef production. The group has on average increased pasture utilisation over the last 2 years by almost 50% and increased business profit by over 100%.
1. Practice skill development associated with pasture management.
2. To measure and monitor the impact of implementing these skills and management techniques in a commercial environment. In order to improve profit, business intensity (primarily stocking rate) was increased.
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Demonstration of profit sharing model
This page was last updated on 05/07/2018
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