Author: Lee Matheson, Perrin Ag
The oncoming winter is presenting its normal challenges around feed supply, on again/off again demand for store stock and limited processing space – all amplified this year as a result of drought and Covid-19.
Many farmers are still reliant on the months of March through June to generate a significant part of the year’s revenue but forecast profits can often wither away as finishing stock fail to grow at budgeted liveweight gains or the low store market prices for unfinished lambs and cattle remain in place for another week or two. Invariably the calculators come out and people start to project if their lambs growing at the mythical 250g/day can outpace drops in the lamb schedule, or how much does the store market have to lift to allow the two- year cattle to still make budget.
While this season is presenting many new challenges, the impacts are still basically the same to what many of us have experienced in the past – limited kill space, falling schedules and looming feed deficits. While this situation may take the financial gloss off many farmer’s seasons, we need to remember that next season is still coming like a stream train and we must make decisions about that now.
Understanding what the priorities are in our farm systems and how we achieve these will make these decisions easier, even when the short-term impact on the bank balance isn’t great.
So, what are some of the ways we can identify these priorities?
What was my original plan?
Most farm systems are based on a set of policies that are repeated year after year. A breeding ewe policy, an 18-month bull policy, a once-bred heifer policy etc. These tend to be established based on a farm’s pasture curve and medium-term market signals. To be profitable they also tend to rely on the well-coordinated balance of livestock coming and going.
This means if the feed budget required all the R2 bulls to be sold by April to allow the R1 bulls to hit winter weight targets, then the R2 bulls must be sold by this date. If the desired sale weights weren’t achieved, then the system needs to be examined. But in the short-term, keeping the R2 bulls longer won’t create more feed for their younger cohort. All they will do is break the system for another year. If in doubt, go back to the plan.
Show me the money
Farmers with breeding flocks probably make more money out of breeding lambs (to weaning) than finishing them. At a $6/kg lamb schedule, a flock of 3,000 ewes lambing at 135%, weaning at 28kg liveweight and then finishing 3,250 lambs at 17.5kg carcass weight makes $263,900 from breeding lambs (28kg x $2.90/kg per lamb) and $78,000 from finishing them (based on [17.5kg x $6/kg] minus the $81 weaning value).
By the time we get to autumn, decisions need to be about where we get the most value from the feed to be eaten over the next six to eight weeks, not trying to extract marginal value from the feed already consumed.
A 37kg lamb that could dress out at 16kg carcass weight needs approximately 1.5kg DM/day of quality pasture for two weeks days to hit 39.5kg and a 17kg carcass weight – 21kg DM to make an extra $6. Over 300 lambs, that’s 6.3t DM to capture $1,800 in revenue versus killing them at 37kg. If that same marginal feed could go into (the bottom 10%) underweight ewes to lift BCS from 2.5 to 3.0, then 308 ewes could be fed an extra 0.6kg DM/day over 34 days and might expect to increase the lambing percentage of those ewes by 5% (an extra 15 lambs) and increase weaning weight by 1kg (415 extra kg at $2.90/kg at 135% over 308 ewes) - an extra $2,450 in lambs on-farm at weaning.
This a simplistic example and completing one marginal analysis on its own isn’t the best way to make complex farm systems decisions – but at this time of the year we need something simple to help make prompt decisions.
But the concept is valid - where do I get the biggest return from the feed in my system? By the autumn, feeding trading stock at the expense of breeding stock isn’t likely to be a winner.
Identify your “drop-dead date” for winter numbers this year
All farms should have a clear, non-negotiable date that they need to be at winter stock numbers by. This should be based on an understanding of the required (and expected) starting pasture covers, likely winter and early spring pasture growth rates, any supplement and crop on hand to use, what level of spend is possible on nitrogen, and the expected feed demand of the stock to be on hand.
This will vary from farm to farm and within farm from year-to-year. The best way of developing this understanding is a feed budget. Having done a draft one early is better but doing one now will provide you with a lot of useful information to use over the next three to six months.
Making sure you can stick to the “drop-dead date” requires discipline and planning – marking the silage stack so you don’t eat winter feed in the autumn, booking killing space in advance and being hard-nosed about selling stock store, even if you don’t like the price.
Going through this process could well identify things in your system that need to change in the coming season, all part of the value of the planning cycle. But for now, the focus needs to be understanding the situation right in front of us and prioritising the right elements of our current farm system.