Efficient breeding flock drives profit

11-08-2010 | Cathrine Peter

It is a simple system, yet incredibly profitable.

That is how both accountant Robbie Reynolds and scientist Dr Paul Muir described the Nelson Monitor Farm of Dennis and Trish Meades.

For the year ending June, 2010, the Meades have a gross farm income (GFI) of $937/ha with an economic farm surplus (EFS) of $464/ha. This gives a return on capital of 4.6%.

How do they do it? By running an efficient ewe-breeding flock that returns GFI of $101.36/su. Lamb kill weights averaged 16.6kg for $74.

At a recent field day at the farm, Reynolds said the strength of the Meades' financials is built around sheep. A high lambing percentage with all lambs finished is reflected in the bottom line. Cattle show a GFI of $59.91/cattle su.

Key objectives for the day were identifying stock-management strategies for improved sheep and beef performance. The day also focused on determining the key business drivers in the farm's financial performance.

Although cattle have a job to do managing the feed, they are required to perform. At this stage Dennis Meades runs a herd of 340 cattle of mixed heritage (Murray Grey, Simmental, Hereford, Friesian, Jersey, Angus). To reduce the impact of trampling over winter, reduce body weights and increase efficiency, he intends to establish a Jersey/Angus herd.

For the coming 2011 year he wants to increase cattle numbers by 6-10% - providing the right animals can be sourced. The community group questioned the ability of these animals to finish without carrying them through a second winter. It was generally felt that the extra milking ability of the Jersey should improve weights and in the past Dennis Meades has had no problems finishing this type of animal.

Although the deer herd returned $99.66/deer su, numbers have been reduced and the move to phase them out is under way. No replacements were retained from 2007 mating.

A close eye is kept on expenditure with the focus being to spend money only where returns will be received.

Reynolds suggested that when farmers are deciding on expenditure they look at four things:

• Their operating style and strategy. High or low-input systems?

• The lifestyle wanted, taking into account physical restrictions and what the farmer enjoys doing

• Returns on capital. Is the money better in the bank earning interest or will expenditure make money?

• Income, budgets, banks, tax. Is the income restricting expenditure? Will forward expenditure or delayed expenditure benefit?

Dennis Meades hires machinery or contractors, so vehicle expenses remain low. Animal health expenditure of $3.78/su is in line with the class average when compared with Greg Sheppard's (Sheppard Ag) figures.

Development costs are zero at this stage, though some extra subdivision and a water scheme have been identified as a priority. Fertiliser is the Meades' biggest expense at $18.85/su or $194/ha, followed by shearing at $5.14/su. Administration and standing charges are $4.40/su.

Sheppard also added that when working out a budget it is a good idea to work from the bottom up. Find out how much a hectare is needed to sustain the business, then generate income accordingly.

So what can the Meades do to improve?

Muir, who is from On Farm Research, noted that 42% of stock on the property is classed as finishing. This means many classes to juggle. In a review of the beef finishing operation. Muir's figures gave a return of $52/su. That is, heifers killed at 18 months weighing 225kg for $3.20/kg made $720.

Steers killed at 2.5 years weighing 295kg fetched $960. By selling those steers and heifers as weaners, Dennis could add an extra $8/su to his bottom line.

• Beef cows at 520kg LW, 94% weaned (8su)

• Weaner heifers @ 225kg, steers @ 250kg

• Average sale price = $2.15/kg

• Average calf return = $485/cow

• Return is $60/su.

Reducing cow size also shows an increased return a stock unit. A Jersey cross Angus cow weighs 400kg and 94% weaned (7.4su). Using the same calf weights and sale price will return $65/su. Added benefits are lower cow maintenance costs and reduced pasture damage.

Included in Muir's report was the possibility of adding extra flexibility to the system by finishing cull dairy cows. Purchased on a low schedule (90c/kg LW/sold at $3.04c/kg) they could be maintained through winter to harvest surplus grass in spring and slaughtered once the job is done. This returns $75/su.

Although the Meades' scanning index is impressive, Muir suggested to the group that improved weaning weights, earlier slaughter and heaver carcases could earn an extra $2.35/lamb. Of most interest was the discussion regarding the value of mating hoggets. Does this affect the lifetime performance of the animal? Key points:

• It needs to be done well. Particular attention paid to liveweight

• Minimum liveweight is more important than average liveweight. If hoggets are too light at mating then subsequent performance is likely to be compromised affecting the kilograms of meat produced/ewe

• Not all hogget lambs are a bonus. Every lambing carries a risk and the risk is greater for hoggets.

• Selecting rams on weaning weights rather than carcase weights should give better overall lifetime performance.

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