Stocking rates, productivity and profitability

Bill Schulke
Formerly Queensland Government

We often hear the saying, ‘more cattle means more money’. But is this always the case? At Grazing land management EDGE and Nutrition EDGE workshops many producers have described how they have improved profitability by using conservative stocking rates.

This article uses three sets of data which explores this balance of stocking rates, productivity and profit. The first set of data from Galloway Plains shows the relationship between stocking rate and production. The next two data sets, from the coastal and inland Burnett, add the finances to this relationship and show greater profit with less stock compared with heavy stocking.

Impact of stocking rate on beef production

Figure 1, from the long running Galloways Plains grazing trial, demonstrates the relationship between stocking rate and animal production. Animal production can be measured in terms of individual animal production (kilograms per head) and production per unit area (kilograms per hectare).

Annual liveweight gain graph
Figure 1. Impact of stocking rate on annual liveweight gain

If we halve the stocking rate (i.e. from a beast to one hectare to a beast to two hectares), individual weight gain increases by 49kg/hd/yr (59kg/hd/yr to 108kg/hd/yr). At the same time, gross production has dropped only 5kg/ha/yr (from 59kg/ha/yr to 54kg/ha/yr).

If you reduce the stocking rate by half again (from 2ha per beast to 4ha per beast), your individual animal performance increases a further 25kg/hd/yr from 108 to 133kg/hd/yr while the production per hectare reduces by 21kg/ha/yr from 54 to 33kg/ha/yr.

Notice though that halving the stocking rate has not halved production. There are fewer animals but they are growing faster. This effect is more pronounced when you reduce from a very high stocking rate.

Generally speaking, you produce more beef at heavier relative stocking rates. But does this mean you are making more money? What effect is a heavy stocking rate having on the long term health of your pasture?

Less cattle is more profitable – coastal Burnett

From 1999 to 2002, a grazing trial was conducted on a commercial property in the coastal Burnett. The aim of this trial was to investigate the impact stocking rate has on the density of desirable native grasses in paddocks that have become dominated by blue couch. In this trial we split a commercial paddock (dominated by blue couch) into two paddocks of roughly equal size. One paddock (called the couch paddock) was managed at a stocking rate typical for the area. In the other (called the speargrass paddock) we reduced the stocking rate by up to half. We weighed the steers four times per year.

In Table 1, we can see that with the first draft, there was a better return per hectare for the heavier stocked paddock. However, as all the steers in the speargrass paddock graded Jap Ox, you could expect a 15¢/kg premium for these steers. When this is taken into account, there was not a great deal of difference in the returns per hectare (about $5 per hectare or $330 for the paddock).

Table 1. Gross margin for first draft of steers

1st Draft: December 1998 to December 2000 Couch Speargrass Speargrass premium#
Paddock area (ha) 65.50 69.50 69.50
Start number (head) 30.00 15.00 15.00
End number (head) 23.00 13.00 13.00
Mean stocking rate (ha/hd)* 2.50 5.00 5.00
Start weight (average) (kg) 317.50 327.30 327.30
Finished weight (average) (kg) 537.10 599.50 599.50
Accumulated gain (kg/ha)** 87.30 58.80 58.80
Value of gain per hectare (at $1.30/kg or $1.45/kg#) $113.50 $76.40 $85.30
Total purchase cost per hectare (at $1.30/kg) $167.00 $85.70 $85.70
Interest on purchase cost per hectare (at 10%/yr) $33.30 $17.10 $17.10
Variable costs per hectare (at $25/hd)*** $14.20 $7.10 $7.10
Gross margin $/ha $66.10 $52.30 $61.10

Notes for Tables 1 and 2:
* The stock numbers in the paddocks varied during the trials.
** The accumulated gain is taken from each weighing and takes into account the changes in stock numbers.
*** Variable costs include $20 freight, $3.50 levy, $1.50 tags, $10 husbandry.
# All of the speargrass paddock steers graded Jap Ox, therefore the $0.15 premium.

However, by the time the second draft of steers went through (Table 2), the heavily stocked paddock was starting to lose condition. This required numbers to be reduced in the heavily stocked paddock. Even without a price premium, it is obvious that the lighter stocked paddock resulted in a better gross margin.

Table 2. Gross margin for second draft of steers.

2nd Draft: December 2000 to July 2002 Couch Speargrass Speargrass premium#
Paddock area (ha) 65.50 69.50 69.50
Start number (head) 30.00 20.00 20.00
End number (head) 13.00 15.00 15.00
Mean stocking rate (ha/hd)* 3.00 4.00 4.00
Start weight (average) (kg) 246.00 244.70 244.70
Finished weight (average) (kg) 476.30 551.70 551.70
Accumulated gain (kg/ha)** 81.20 78.50 78.50
Value of gain per hectare (at $1.30/kg or $1.45/kg#) $105.60 $102.10 $113.80
Total purchase cost per hectare (at $1.30/kg) $105.00 $80.10 $80.10
Interest on purchase cost per hectare (at 10%/yr) $17.10 $13.00 $13.00
Variable costs per hectare (at $25/hd)*** $11.50 $8.80 $8.80
Gross margin $/ha $77.00 $80.20 $92.00

 

Fewer breeders – better pastures for the same money

A grazing trial during the mid to late 1990s investigated the impact of burning and spelling on pasture composition (increasing the palatable speargrass while decreasing wiregrass). To achieve this change, the stocking rate was reduced by a third in the demonstration paddock.

As you can see from the comparison in Table 3, you obviously produce less weaners when you cut your breeder numbers. But the reduction is not as great as you might expect. The weaning rate improved by 10% and the average weaning weight increased by 10kg. When variable costs for the breeders and weaners are taken into account, there is not a large difference in the gross margin.

When you take into account the money you have invested in your cattle and account for the interest on money tied up in these animals, then the gross margin is higher for the lighter stocked paddock.

Table 3. Gross margins for a breeder operation

Parameters Heavier stocking rate Lighter stocking rate
Paddock area (ha) 400.00 400.00
Production parameters
Number of breeders 100.00 66.00
Weaning rate (%) 65.00 75.00
Number of weaners 65.00 50.00
Weaning weight (average) (kg/hd) 190.00 200.00
Weaning weight (total) (kg) 12,350.00 9,900.00
Weaning value (total) ($/kg) at $1.80/kg $22,230.00 $17,820.00
Weaner variable costs
5-in-1 vaccination ($/hd) at $0.60 $39.00 $29.70
Tick fever vaccination ($/hd) at $2.93 $190.45 $145.04
Weaning costs ($/hd) at $20 $1,300.00 $990.00
Husbandry ($/paddock) $300.00 $300.00
$1,829.45 $1,465.74
Breeder variable costs
Health ($/hd) at $12 $1,200.00 $792.00
Supplements ($/hd) at $20 $2,000.00 $1,320.00
Husbandry ($/paddock) $300.00 $300.00
$3,500.00 $2,412.00
Cow value ($/hd) at $750 $75,000.00 $49,500.00
Interest on cows ($/paddock) at 10% $7,500.00 $4,950.00
Bull costs
Number of bulls 3.00 2.00
Bull purchase value ($) at $3,000 $9,000.00 $6,000.00
Bull residual value ($) at $1,000 $3,000.00 $2,000.00
Number of years used 4.00 4.00
Annual bull costs $1,500.00 $1,000.00
Interest on bulls ($) $150.00 $100.00
GM before interest $15,400.55 $12,943.27
GM after interest $7,750.55 $7,893.27
GM per breeder $77.51 $119.59
GM per hectare $19.38 $19.73

 

In summary, heavier stocking rates can maximise returns in the short term. However, the net return may not be so high when the capital tied up in livestock and variable costs are taken into account.

The ultimate risk of pushing the stocking rate is that the country is exposed to degradation. Country that loses condition has a reduced carrying capacity. The result of this is a direct loss of production, higher maintenance costs (supplementation, weeds etc.), rehabilitation costs (improving land condition costs money) or a combination of all three.

The quote from a grazier ‘I look after my pastures, the pastures look after my cattle and my cattle look after me’ seems to hold true for grazing enterprises.