9 ways you can take advantage of the ‘beef trifecta’

Debt reduction will be the chosen option for many beef businesses. However, with interest rates being so low, it may not be the best use of increased cash flow (unless debt reduction is essential to the immediate survival of the business).

Instead, highlighting the improved cash flow and higher equity levels to your bank manager will support the case for reduced margins on interest rates. Explaining plans in detail to a current or prospective banker during a property visit is the best environment for this discussion.

Further support: The MLA and ABDI ‘Lender ready program’ is designed to support red meat producers through business planning and discussions with lenders.

Assuming there are no water distribution limitations to cattle accessing all parts of the property, improving land condition based on several basic principles of grazing land management is the best way to lift carrying capacity.  

Matching stocking rates to carrying capacity is the most important management practice. Forage budgets address this challenge in an objective and effective manner.

Wet season spelling within any grazing system will allow new pasture plants to establish and increase the health and vigour of existing plants. Timing and duration of the spell must be tailored to the needs of specific paddocks. Ensuring that underlying stocking rates at the whole of property scale allow for paddocks to be locked up for a wet season without putting undue pressure on other paddocks is crucial.

Management burns can address several needs; manipulating pasture composition in favour of some of the preferable species, controlling fire-sensitive exotic woody weeds, managing the early stages of native woodland thickening, creating a seedbed and reduce pasture competition when sowing improved pasture species, changing grazing behaviour in areas that are under-grazed by cattle and creating early dry season fire breaks at the time of year when fires self-extinguish overnight.

Controlling exotic woody weeds by developing and implementing a pest management plan using integrated pest management principles will help to maintain land condition. The costs of weed control can be high, but the ramifications of ignoring weeds is a dramatic and long-term decline in carrying capacity.

The establishment of dense, vigorous and stable pastures is also costly, however sown pastures are one of the most economically favourable options on northern cattle runs. Selecting the highest fertility soils and the most suitable pasture species will give the highest and quickest returns. Either over-sowing legumes into native pastures in larger paddocks or establishing exotic grasses/legumes as a replacement pasture in smaller, special use paddocks, are the two extremes on most northern stations.

Being realistic about the final carrying capacity and the rate at which it will be reached is essential. Sown pastures are neither a silver bullet, nor are they bullet-proof; however, if well managed the rewards are substantial and long lived.

Helpful information: Future Beef ‘Stocking rates, productivity and profitability’

Capital infrastructure represents a huge investment, usually over several generations on all cattle properties. This includes fences, stock waters (and water sources), stock yards, roads, sheds, airstrips, quarters and the main house. An inventory based on functionality and a whole-of-property infrastructure plan that suits the chosen grazing system is a good starting point before upgrading infrastructure.

Fencing to separate land types with different grazing preferences will allow for better management of land condition. Fences located on ridges (where possible) will minimise erosion risk and reduce the number of flood crossings required.

There is a sweet spot for distance between stock waters which is based on the carrying capacity of the land and the cost of additional watering points. Generally, the lower the carrying capacity of the land, the higher the cost per head of extra waters. Waters located on non-preferred land types will help to spread grazing pressure. A maximum walking distance of 2km is more than adequate for cattle (topography permitting). Critically assess the reliability and yield of new water sources (dams or bores) during severe drought before commencing work. Enlist the services of soil conservation professionals to design dam bywashes and provide tips on constructing stable dams and bywashes.

Well-designed and constructed stockyards are essential for WHS and animal welfare. Other considerations include accessibility, site suitability (soil type and compatibility with the existing/proposed paddock layout), legacy chemical residues (at old yards/dips), availability of water and dust problems if close to residences and quarters.

Good roads save time and reduce maintenance costs on vehicles and machinery. Roads located either on ridgetops or directly downslope are preferable to those that are diagonally cross-slope. Properly surveyed and constructed whoa-boys at the time of installation prevent roads from becoming gullies, particularly at watercourse crossings.

Commence with the smallest areas with the biggest potential production benefits and progress to the largest areas with the lowest potential production benefits last.

Some examples include weed management, feral animal control, dryland salinity outbreaks, degraded stream frontages, gullied and scalded lands and legacy mine sites where heavy metal contamination of livestock is a high risk.

Related resources:

• PestSmart provides best practice information on how to plan, manage and improve pest animal control programs in Australia.
• Weeds Australia is designed to connect you with knowledge to make informed decisions about managing invasive weeds within Australia.

Agistment is used primarily during drought, but it can be a useful management option to finish or background cattle where the agisted country is superior to that at home, or to improve land condition at home by destocking several paddocks during good seasons when agistment cost are lower. A business approach to agistment is important; therefore, confirm the agreed details in writing and pay agistment a month in advance to develop lifelong business relationships. Seeking agistment late in a drought is very fraught, with the land available being of very poor quality and/or in very poor land condition.

On most properties that breed and finish cattle, the breeder paddock is almost invariably the poorest quality land and is in the most degraded condition. So, destocking the breeder paddock is the best option. However, sending breeders on agistment is the least desirable class of cattle to have away; growing cattle are far easier to manage and cheaper per head to truck to agistment. Assess the feasibility of spelling breeder paddocks by sending growing cattle on agistment and moving the breeders to grower paddocks at home.

Increasing the area of land in the business may satisfy some personal goals including succession planning. Often the borrowings to purchase additional land cannot be serviced by the earnings from that land. However, consider how much debt the whole enterprise (existing and new assets) can service (interest and principal) under less favourable interest rates, cattle prices and seasons and be aware that cash flow and profits service debt, equity does not.

Use Estimated Breeding Values (EBVs) as an aid to selecting bulls with the required attributes. There are more than 20 EBVs covering fertility/calving, weight gain, carcase characteristics and a range of other attributes. However, low fertility land types may not have the capability to support high breeder performance rates, so use culled cows to improve cash flow rather than leaving them as freeloaders in the herd.

Also be aware that the benefits of superior genetics will only be realised if nutrition is adequate and animal health/welfare standards are high. This means having good land condition, allowing the pastures to provide the highest quality diet possible by running light stocking rates, controlling a range of livestock diseases and adopting the latest animal husbandry practices. 

Helpful hints: the MLA genetics hub features practical information on the use of genetics in tropical beef herds.

With current record cattle prices, beef producers are less inclined to purchase additional cattle to rebuild herds. Purchasing weaners or PTIC breeders may be a more palatable option. Most producers will elect to breed back at home, which has the advantage of allowing pastures and land condition to recover while cattle numbers are low after a drought.

Related resource: Track cattle prices using MLA’s market reports

There is a wide range of training opportunities available to owners, managers and other staff. Check out MLA’s EDGE network courses at: mla.com.au/edge-network