Stock to crop ratios to be driven by three factors this season

According to ABARES, there are 50,365 broadacre farms in Australia.

Many of these producers operate mixed farming systems and so must make decisions around what ratio of sheep to crop they should produce each year.  The graph below shows the relationship between the total area cropped in value and the flock size each year. What can be seen is that as producers favour cropping, the number of sheep on farm declines. This is the opportunity cost between cropping and sheep production that is seen in these enterprises.

Stock and land correlations

There is also a correlation between the number of sheep run and the amount of land used for cropping, especially in medium sized farms.

This ratio shows the relationship between cropping and sheep production and the number of sheep produced for every one value unit of area cropped. In larger farming systems, there is less of a correlation as producers are less likely to change their ratios if they have a larger land area in operation.

Influence of external factors

External factors such as weather predictions, fuel prices and labour costs and availability can all influence a producers’ decision making for the growing season.

Weather

If favourable weather conditions are predicted and commodity prices are high, producers may choose to use more land for cropping as higher yields are to be expected with good returns. Alternately, if there are favourable weather conditions predicted but the price of lamb is up, they may choose to retain their flock as there will be more feed on ground and greater potential for higher weight gains.

Fuel

Higher fuel prices can particularly impact the cost of production, especially in the cropping system. The operation of heavy machinery and the cost of transport can increase dramatically with changes in the fuel prices.

Labour

Labour costs can also play a large role in decision making around enterprises operated. If there is a lack of skilled labour available, such as shearers, then this may affect the number of sheep producers decide to run.

The season ahead

For autumn, the Bureau of Meteorology (BOM) have predicted a neutral weather pattern and higher than average rainfall. Subsequently, the BOM have predicted favourable growing conditions for the near future.

Commodity prices for grain have been relatively high in the last six months, especially for barley and canola. With canola prices in particular climbing for the last three years, these high prices are incentivising producers to plant more crops instead of running sheep or retaining their flock numbers.

Lamb forecasting survey

The most recent MLA/AWI February Lamb Forecasting survey indicates that 31% of producers are looking to increase their flocks in the next 12 months. Meanwhile, 60% of producers are seeking to maintain their flock, while 7% plan to decrease their flock size.

Trade lamb prices have been softening since August last year and could put producers to plant more crop. The prices for various products will have to be monitored as enterprises move into seeding, where producers will have to make their decisions about the coming season.