Finishing weaner deer best earner

12-01-2009 | Sandra Taylor

Buying and finishing weaner deer has outshone other livestock options in a comprehensive gross margin analysis.

A nationwide analysis was undertaken by farm consultants comparing the relative profitability of major types of livestock farming.

The South Island part of the analysis was carried out by Southland farm consultant Graham Butcher from Rural Solutions. It found, based on a return on cents per kilogram of drymatter consumed, finishing purchased weaner deer was the most profitable land use option. It was followed by summer and winter lamb trading then bull beef rearing.

Returning 22.64c/kg DM, finishing bought in weaner deer was a long way ahead of the15.10c/kg DM generated from an existing Southland dairy unit and the 13.68c/kg DM returned from a bull beef rearing operation. A Southland dairy farm conversion returned 11.90c/kg DM.

Breeding cows and ewes were the least profitable land use options.

Results were similar in the North Island where Deer Industry New Zealand (DINZ) facilitator Mark Macintosh, using Farmax models, found deer finishing to be 80% more profitable than intensive breeding ewes.

Deer finishing returned 26c kg/DM, while intensive breeding ewes returned 14.4c/kg DM.

Short-terming dairy grazing was the most profitable North Island land use option returning 28c/kg DM.

Intensive breeding ewes in the North Island returned 14.4c/kg DM and bull beef returned 16.5c/kg DM.

Land use conversion may be an option for sheep and beef farmers with an interest in deer, but Macintosh points out that deer farming is a lifestyle choice and it won't be for everyone.

The figures vindicate those who have stuck with the industry and are building deer numbers.

Butcher's analysis takes all direct costs into account reflecting the true cost of growing farmed animals.

While he acknowledges it is a relative rather than absolute approach, as individual farms' costs will differ, it is a good guide for profitability.

The returns from dairy farming are lower than many would expect, but the analysis has taken into account all the direct costs associated with each enterprise type to correctly compare bottom lines.

"The reality is that it takes more grass to graze dairy heifers relative to returns," says Butcher.

His results represent direct income less the true direct costs of production by including all management and pasture production expenses and he urges farmers to take a long and critical look at all the figures as they weigh up their long-term land use options.

"There are opportunities for improving production and improving returns from existing land classes, so objectively comparing gross margins on all livestock types is very important for farmers and their bank advisors to ensure decisions are based on solid data."

Farmers converting an existing sheep, beef or deer farm to dairying will increase pasture production, but if the farm is capable of growing substantially more grass they should look at how that extra drymatter can be best used.

It is easy to be swayed by attractive milksolid payout figures, but Butcher points out that there are considerable extra costs and increases in other farm expenses to factor in on dairy enterprises in day-to-day management compared to other land uses.

There are also more debt servicing and compliance costs involved with a dairy conversion.

Butcher urges farmers to take into account debt loading, tolerance of debt, lifestyle choices, long-term trends and market volatility.

Butcher has based his figures on a venison schedule price of $8.00 AP grade seasonal average and the live sale of weaners ranging from $3.80 for a 52kg average hind and $4.25

for a 56kg liveweight stag.

While returns for finishing purchased weaner deer are very positive, the profit on selling weaner hinds is still relatively poor, reflecting the disparity between weaner selling prices and the profits returned to finishers.

This was because the venison market firmed strongly this season.

Venison returns have strengthened in the past 12 months and the long-term outlook for venison remains reasonably positive.

Overseas demand for this country's venison has increased on the back of planned growth programmes and this growth in demand has coincided with a period of a reduced supply of farmed deer.

In carrying out the analysis, Butcher has based his assumptions on standard farm models using Farmax and StockPol and the analysis presents relative profit objectively comparing only the direct costs from each of the different production systems.

This takes into account direct income and direct expenses on stock, feed, animal health and management and the capital costs of stock and improvement specific to the production system, but not farm loans or drawings.

Costs of management, feeding and animal health that are inherently the same are not included in the calculation.

It also gives the profits from finishing and purchasing deer with no conversion costs, and then compares with the conversion factored in.

All the comparisons are regionally based to ensure benchmarking is valid, but the conclusions from Butcher's Southland analysis could be applied across all farms in New Zealand, with relevant factors taken into account.

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