The on-farm use of real time monitoring, genetics and fertiliser will deliver incremental gains in profit and productivity for producers in southern beef systems going forward.
Aggregate Consulting director Sandy McEachern, Wagga Wagga, outlined benchmarking results in profitability in extensive grazing systems at the Herefords Australia Breed Forum at Wodonga on May 14.
The benchmarking involves collating financial and production information from around 200 farms over the past three decades to deliver key profit indicators.
Mr McEachern said the margin per kilogram of beef liveweight had been up around 200c/kg for the last two to three years but dropped away in the last 12 months with falling beef prices.
“The trick is to keep the cost of production below that price and the key factors have been lifting production per hectare, efficiency, and labour productivity,” he said.
“Our production per ha has lifted from 200 to 250-300kg of liveweight over the last 30 years. In the first 10 years, it was mainly due to changes in systems with the advent of the feedlot industry and the ability to grow out animals to 400kg liveweight and shift them on to the feedlots.
“There was also a change in calving dates from autumn/winter to spring to better match feed demands. That drove an early lift in production for the industry generally and later as margins increased, it is now more about the input side of the business.
“Producers are spending more money on driving pasture production up, allowing them to increase stocking rates and herd production.”
In the enterprises benchmarked, the average production was 300kg of liveweight per hectare in 2023 while labour productivity was 14,000 DSE per labour unit and the average enterprise size 16,000 DSE.
The average annual stocking rate is 2 DSE per hectare for every 100mm of rainfall compared to the best practice of 2.5.
Total average expenses are $40 per DSE compared to best practice of $32/DSE, while the average cost of production is 211c/kg and best practice is 160c/kg.
The average labour productivity is 15,000 DSE per labour unit and best practice is 25,000 DSE per labour unit, and average profit is $36/DSE (at $4/kg liveweight) compared to best practice at $48/DSE.
The average profit for an enterprise in a 750mm rainfall zone is $540/ha rising to $900/ha for best practice.
Mr McEachern said useful tools in the future would include real time monitoring, a better understanding of marginal benefits including nitrogen, phosphorus, potassium, sulphur and lime applications, avoiding declines in product efficacy and early detection of nutrient deficiencies not previously encountered.
“We still have a lot of work to do in understanding the marginal benefits of the different inputs we already use – how much phosphorus and nitrogen, when do I put it on, should I do it in bulk applications, and does it work on this pasture?,” he said.
“What we struggle with is that next level of marginal increases and application. The two big ticket items are nitrogen and lime. Nitrogen has moved from being a supplement to a core part of the fertiliser strategy. There are a lot of areas we don’t have good information on what the cost benefits are going to be.
“We need to know more around the decline of product efficacy in animal health. The big one in the last few years is the control of liver fluke and round worms and there are real concerns about persistence in some of the products we have.
“We are getting deficiencies we have not previously encountered as we push our systems further.”
Mr McEachern said 10,000 DSE per labour unit was a good measure of labour productivity in the late 1990s but today enterprises were consistently achieving 25,000 DSE per labour unit.
“Labour and labour costs – people and vehicles etc – are the single biggest costs in a beef business next to fertiliser,” he said.
“And the scale has increased from an average herd size of 8000 DSE to 15,000 DSE.
“With beef, we can run more cows and keep it labour efficient – we don’t have to employ more people to keep expanding the business.
“In the next five to 10 years, we need to keep on achieving those small incremental gains in production per hectare.
“I don’t forsee another big structural change on the horizon or a dramatic shift in the production systems of calving dates or target markets.
“Can we lift our pasture production and productivity to bridge that gap between average and best practice?
“In the absence of further systems changes, future productivity gains will come from genetics, pasture production, more accurate operations, and economies of scale.”
Sandy McEachern
