Breeding and feeding the ultimate money makers

Author: | Date: 19 Aug 2015

Take home messages

  • The equation should be sheep and crop, not sheep versus crop.
  • Mixed systems provide an amazing versatility and capacity to adapt and have predictability of income regardless of season.
  • Grass and grains can be efficiently converted into saleable high value products (wool, lamb, skins, sheep meats, etc.).
  • Drivers of profitability within grazing systems can be managed and require small capital outlays.
  • Genetic improvement is permanent and cumulative.

Background

Craig Wilson & Associates is an independent genetic consultancy firm, advising some of Australia’s largest and most influential sheep and wool growing businesses in NSW, Victoria and Western Australia. Approximately 70,000 ewe hoggets are classed annually and over 600 rams are purchased annually. The business has also been involved with coordinating wether trials and Merino challenges since 2004.

Figure 1. Peter Westblade Memorial Merino Challenge wethers grazing cereal stubble.

Figure 1. Peter Westblade Memorial Merino Challenge wethers grazing cereal stubble.

Grazing can increase nitrogen availability improving yield and protein of the subsequent crop provided summer weeds are sprayed prior to grazing and 70 per cent residue cover is maintained on all areas of grazed paddocks at all times, there is unlikely to be a negative effect of grazing stubble on soil water accumulation and crop yield. Grazing can increase available nitrogen availability, improving yields and protein levels (Hunt et al. 2008-2012).

Opportunities within sheep and cropping:

  • Capacity for livestock to use and add value to non-crop and low productive soil types. Sheep do compact soil, but only at the surface and there is no evidence that trampling by livestock reduces crop yields (Hunt et al. 2008 – 2012).
  • Risk management - provide income in the low years in a cropping system.
  • Crop stubble, legume based pastures and grazing crops may be value added. Breaking disease and adding N.

Genetic benchmarking:

  • Traditional wether trials – Merino Bloodline Analysis.
  • Sire Evaluation – across site comparison of rams
  • Sheep genetics – MERINOSELECT and LAMBPLAN – Australian Sheep Breeding Values (ASBVs)
  • Peter Westblade Memorial Merino Challenge – Wool and Meat Components

How do you pick the ultimate money makers?

Any mob of sheep is made up of individuals with a huge range in profitability (Figure 2). How can you identify the animals that are costing you money to run?

Stocking rate continues to be a major profit driver in sheep and wool businesses, trials suggest between 5-25 per cent of individual sheep are producing a net loss.

Figure 2: Genetic benchmarking helps businesses determine which sheep are costing them money.

Figure 2: Genetic benchmarking helps businesses determine which sheep are costing them money.

Same sheep – different environment

To highlight the effects of nutrition and management on raw production figures, two teams of wethers were selected from the one drop of wethers and run in two different environments (Table 1). This data clearly highlights that production information can be greatly affected by stocking rate, nutrition and management. Interestingly the wool values are very similar, showing how higher stocking rate doesn’t always equate to lower per head values.

Table 1: Comparison between different traits at different locations

Trait Taralga – NSW
15 DSE Ha
Warren – NSW
5 DSE Ha
Greasy Fleece Weight 4.6 6.0
Yield 71% 65%
Clean Kg 3.26 3.90
Fibre Diameter 16.8 18.2
Prices 1400c/kg = $45.64 1150c/kg = $44.85

Merino Challenge

The Merino Challenge measures both wool and meat values over the trial duration. It provides a platform to benchmark and evaluate the relative performance of a range of traits in merino sheep under genetic control. The aim of the challenge is to show the importance in making well informed decisions based on quality unbiased information. It also provides a forum for progressive merino breeders to share and compare.

Figure 3: Wool challenge and Merino challenge

Figure 3: Wool challenge and Merino challenge

The Merino Challenge eliminates the effects of nutrition, climate and management.

Peter Westblade Memorial Merino Challenge (PWMMC)

Figure 4: 750 wool challenge wethers representing 50 entrants from New South Wales, Victoria and Western Australia.

Figure 4: 750 wool challenge wethers representing 50 entrants from New South Wales, Victoria and Western Australia.

PWMMC 2012 - wool over meat

Figure 5: Combined wool and mutton values – 5 year average prices

Figure 5: Combined wool and mutton values – 5 year average prices

Figure 5 indicates the variation in the relative wool and carcase values which highlights the opportunities to improve performance. All evaluations in all environments have had a similar range in production data.

Figure 6: Fibre diameter and clean wool weight comparison.

Figure 6: Fibre diameter and clean wool weight comparison.

Figure 6 clearly shows how Team A regardless of the season had a lower fibre diameter and more clean wool per head than both the average of the trial and Team B.

Table 2: PWMMC net profit per DSE comparison

  2011 2012 2013 2014 2015 Average
Net Profit per DSE
Team A  $26.39 $44.80 $35.34 $31.07 $38.52 $35.22
Team B $14.53 $26.79 $20.99 $18.69 $24.69 $21.14
Var. $11.86 $18.01 $14.35 $12.38 $13.83 $14.09
% Var. 55% 60% 59% 60% 64% 60%

Table 2 indicates that across the five years of evaluation Team A has average 60 per cent more profit than Team B. Team A is still able to generate returns in lower production years that match Team B in high production years. These results suggest that investment in genetics can be seen as a way to manage risk.

Figure 7:  PWMMC net profit per DSE comparison.

Figure 7: PWMMC net profit per DSE comparison.

Figure 7 indicates that regardless of the year of assessment, age of the sheep, year that they were born, pre-trial nutrition and average productivity of the other teams in the evaluation, Team A has maintained their superior returns per DSE. Figure 7 also highlights that the Average Net Profit per DSE is improving over time, which reflects genetic improvement within the industry.

Table 3: PWMMC net profit per hectare


2011 2012 2013 2014 2015

Average
Net Profit per Ha

Team A $316 $537 $321 $319 $424 $384 
Team B $174 $321 $195 $210 $270 $234
$ Var. $142 $216 $126 $109 $154 $150
% Var. 55% 60% 59% 60% 64% 60%

Table 3 indicates Team A generates on average approximately $150 per ha more net profit per hectare than Team B. While net returns varied across years, Team A always generates more profit per hectare compared to Team B.

Across the five years of the evaluation the average profit of all the teams has improved approximately $50 per hectare (Figure 8). Over the past five years Team A has increased its profitability advantage over Team B by 9%.

Figure 8: PWMMC net profit per ha comparison.

Figure 8: PWMMC net profit per ha comparison.

Determine your own profit

1,500 ha mixed farming operation with 40 per cent land allocated to grazing merino wethers. Winter stocking rate of 10 DSE/ha, includes grazing of 900 ha of cereal stubble.

Table 4: Profits generated by Team A and Team B in a typical wheat/sheep operation

  6,000 DSE
Annual Profit
5 Years
Lifetime Profit
Team A $211,344 $1,056,720
Team B $126,828 $634,140
Var. $84,516 $422,580

Table 4 simulates the extra profits generated by Team A over Team B in a typical wheat/sheep operation.

A return to mixed farming:

  • The amalgamation of livestock and grain production has several synergies that can improve both net profit and risk profile of farming businesses in Australian agriculture.
  • When deciding what enterprise mix to use be mindful of what impact genetics will have on the business profit.
  • Benchmarking is vital to identify genetic merit and profit capacity.
  • Predictable profits can be generated from good genetics and sound management.
  • Genetics offer growers the capacity to improve Net returns by as much as $150 per ha per year.

Investing in genetics:

  • Benchmarking is vital to identify genetic merit and profit capacity.
  • Predictable profits can be generated from good genetics and sound management.
  • Genetics offer growers the capacity to improve Net returns by as much as $150 per ha per year.

Tying it together:

  • Livestock and cropping can complement each other.
  • Use of high performance genetics matched with good management and informed decision making adds up to a strong farming business.
  • Concentrate on the things that you can control.

Acknowledgements:

Thanks to Moses and Son – Woolbrokers, Sally Martin Consulting, Zoetis Animal Health, Phil Graham (NSW Department Primary Industry), Fletcher International Exports, Australian Wool Innovation, Holmes Sackett, Proway

Contact details:

Craig Wilson
Craig Wilson & Associates
0428 250 982
craigwilsonlivestock@bigpond.com
www.craigwilsonandassociates.com.au