Report Detail Page
Southern beef & prime lamb situation analysis
Beef situation analysis
This paper reports the historical and current profit and profitability of beef enterprises in southern Australia, with main focus on the last 3 years. The key differences between the most profitable producers and the others were identified in order to demonstrate the opportunity for improvement in profitability. The analysis was on data drawn predominantly from the Holmes Sackett benchmarking database over a 15-year period. The geographic area from which data has been collected includes southern Queensland, the New England, Tablelands, Slopes ,Wheat Sheep and pastoral zone of NSW, Victoria, Tasmania and South Australia The major findings include:
- Profits of beef enterprises in the last year are high in relative terms and second only to 2002 levels.
- When compared to alternative enterprise choices over the long term, average beef profits per hectare exceeded wool but lagged dual-purpose, prime lamb and cropping enterprises.
- Over the last 15 years the average maximum profit per hectare of beef enterprises was lower than alternative enterprises. This is part of the reason for the lower relative performance when compared with alternative enterprises over the long term.
- Greater per hectare production is a key driver of higher profits with the most profitable beef producers consistently producing an additional 75 and 100 kilograms liveweight beef per hectare than the average.
- Beef producers with relatively low profitability will generate more profit and greater profitability by focusing on improving efficiencies in their existing enterprises rather than by changing to alternative enterprises.
- Between-year variability in profit has been lower for beef enterprises than for all other livestock enterprises.
- Exceptional sheep meat and wool prices over the last few years have led to far higher sheep profits relative to beef profits. Crop profits have the greatest between-year variability and the greatest losses during drought.
- The most efficient and profitable beef producers have a combination of higher productivity and a lower cost of production. They do not have the individual highest productivity or price.
- There is a trend for increasing cost of production in beef enterprises but, at the same time, production per DSE and per hectare has also increased. A production increase has been necessary to offset the increasing rate of growth in both enterprise and overhead expenses.
- Labour efficiency is a good news story for beef enterprises. Top 20% producers have seen increases in efficiency of 7,000 DSE per labour unit while average producers have seen increases of 4,000 DSE per labour unit over the last 10 years. Some of these efficiencies can be created at low cost while others require additional investment. The best labour managers now exceed 20,000 DSE per labour unit.
- Improvements in productivity require assessment of return on investment. Implementing systems that match feed supply with feed demand by and improving pasture utilisation are usually the lowest cost gains and, thus, should be the first steps. Growing more pasture should be a secondary consideration.
In the main, increasing productivity in the herd is achieved through:
- Optimising stocking rate
- cost-effectively maximising and matching feed supply and demand, and the conversion of pasture into saleable product; o Ensuring optimum age and weight at sale
- cost-effective management of nutrition and breeding to optimise specification compliance with the target market(s). Lamb situation analysis
- It appears that lamb enterprises are struggling to compete with cropping and wool in less than 650mm rainfall zones. This is an area for further investigation to understand why and whether competitiveness can be improved in those areas.
- There appears to be more specialisation across benchmarked flocks than there was in 2008 with the percentage of self-replacing prime lamb flocks and dual purpose lamb production systems alongside specialist wool flocks increasing. There are fewer traditional 1st X ewe operations or dual purpose breeds than there were in this sample five years ago. This is across all rainfall zones. This should be interpreted in context of the benchmarking database being a skewed sample of the industry.
- The difference between top 20% profitability in lamb and average profitability is less defined by differences in production per hectare than it was in 2008. This may be due to the fact that more producers are near their optimum production levels per hectare as a consequence of a strong focus on this over the last decade.
- The difference in profit between the top 20% and average appears to be increasingly associated with production per DSE and cost control. This reflects the efficiency of generating the optimum production per hectare has become more important than the target optimum per hectare itself.
It is believed that the consequences of these findings from a research and extension viewpoint are:
o Opportunities for systems research in lower rainfall regions to allow prime lamb to compete better with wool and cropping.
o Opportunities for research into key cost saving technologies.
o Opportunities for extension aimed at improving producers understanding of the impact that systems have on whole farm cost structures.
o Opportunities for extension aimed at improving the lamb producer's ability to better tactically manage changes in seasons.
This page was last updated on 10/07/2017
Join myMLA today
One username and password for key integrity and information Systems (LPA/NVD, NLIS, MSA & LDL).
A personalised online dashboard that provides news, weather, events and R&D tools relevant to you.
Customised market information and analysis.
Already registered for myMLA?