Key messages from the Improving profitability and resilience of grazing businesses in Queensland project
The key messages from the Improving profitability and resilience of grazing businesses in Queensland project can be summarised in 2 groups:
- Key messages that improve grazing business profitability and resilience, and
- Key messages for responding to and recovering from drought and disasters.
Examples of how farm management economics can benefit your grazing business are included at the end, along with a list of resources to help livestock producers with these business decisions.
Key messages to improve grazing business profitability and resilience
Queensland’s grazing businesses need to regularly produce a profit and grow capital so that they can build resilience to droughts, floods and market shocks.
The value of implementing alternative management strategies and technologies over the longer-term is best assessed using farm-management economics to estimate the extra costs, benefits and risks over time.
The critical first steps to improve profitability and build resilience of grazing businesses are:
- Manage breeder body condition through grazing management, weaning management and supplementing cattle with phosphorus when required.
- Target the most profitable steer sale age (always older than weaners) – determined by the relative profitability of breeders and steers.
- Determine the optimal breeder cull age.
Then assess alternative management strategies for their effect on business profitability over the longer-term:
- Increase profit and build equity by implementing profitable strategies.
- Consider riskiness when implementing profitable strategies.
Increasing profit and building equity by implementing profitable strategies
In each region assessed in this project, strategies were identified that could substantially improve profit compared to the existing property net profit per annum. Consistently profitable strategies across northern Australia included:
- addressing a phosphorus deficiency where it exists, and
- establishing adapted perennial legume-grass pastures (e.g. stylos, leucaena) to improve steer nutrition.
However, many strategies had a negative effect on profit, despite a positive production response. Strategies that consistently reduced profitability across northern Australia included:
- Production feeding (molasses, silage, grain)
- Annual forage crops (oats, forage sorghum)
Additionally, many strategies had a negligible effect on annual enterprise profit, that is, < ± $5,000 per annum. For example, strategies that had either negligible to large negative effects on enterprise profitability across northern Australia included improving the reproductive performance of breeders, such as genetic improvement of weaning rate, supplementing weaner or first calf-heifers.
Consider riskiness when implementing profitable strategies
The economic modelling gave important insights into the time it takes to implement strategies, the complexity of implementation and the level of financial risk associated (payback period, peak deficit).
Key insights included:
- Improving returns requires intensification which in turn increases income volatility, risk and increases demands on manager skills. For example, leucaena, stylos, steer turnover operation, and enterprise diversification into goats or meat sheep.
- Production systems that are less flexible and riskier may be more profitable if risk is well managed. For example, targeting alternative markets (organic beef or Wagyu), or strategies that affect market access (HGP).
See the individual regional reports for the summary of results.
Key messages for responding to and recovering from drought and disasters
Key insights from the project about responding to and recovering from drought and disasters are summarised below.
Responding to drought and disasters
Short-term, tactical decisions made in response to drought and disasters are focussed on destocking options.
- Assess all classes of livestock for sale, and
- Consider the impact on profit as well as cash flow.
Recovering from drought and disasters
Short-term, tactical decisions made in the recovery phase following drought and disasters are focussed on restocking options.
- Utilise available grazing capacity as it becomes available by buying or taking on agistment stock
- Avoid rebuilding livestock numbers by natural increase alone (retained progeny) as this will reduce business viability
- Agistment income can be good short term as it is low risk and improves cash balances, and
- Restocking by buying or trading cattle can be more profitable and therefore better for long-term recovery.
Examples of how farm management economics can benefit your grazing business
The story of what one family has gained from using farm management economics to assess their beef operation can be read here.
The very large economic benefits of phosphorus supplementation in central Queensland and the Northern Territory, where a deficiency is identified, is explained in this article: Improving beef business performance with phosphorus supplementation.
What resources can assist livestock producers in their business?
Resources that can assist livestock producers with business decisions developed from this project include:
- Regional reports and presentations summarising profitability and riskiness of alternative strategies
- A series of recorded presentations that explain and summarise the results and key messages
- Spreadsheets and supporting presentations to assess destocking and restocking options.
Collectively, these resources can assist livestock producers to make profitable decisions for their businesses.
The project was funded by the Queensland Government’s Drought and Climate Adaptation Program (2017-2021).
For more information about the project please contact the project leader—Dr Maree Bowen, DPI Rockhampton at maree.bowen@dpi.qld.gov.au.
Additional information
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