KAP property economic analysis and benchmarking

Summary

Reviews of indigenous pastoral property performance in the Kimberley and elsewhere over the past 15 years have consistently indicated low stock numbers in relation to carrying capacity, low turnoff (sales), poor profitability, governance problems, erratic cash flow and an inability to break out of a cycle of variable and inconsistent management. A “normal” outcome for most indigenous pastoral enterprises in the Kimberley is an annual trading loss.

The underlying causes of erratic performance are complex and reflect the difficulties experienced by indigenous land owners in reconciling traditional responsibility for country with running a commercial cattle enterprise on communally owned land. Remote indigenous communities remain among the most disadvantaged sections of our nation.

The manner in which indigenous pastoral enterprises are consequently structured and managed often reflects this confusion and also the social and cultural responsibilities and realities of day to day living in remote communities. As a result, indigenous pastoral properties are generally not able to function effectively as conventional commercial enterprises as:

• They are not structured to deliver sustainable profits.

• There are no incentives to invest in the future.

• There are no pathways to foster the potential of individual indigenous “entrepreneurs”.

Developing effective solutions that balance social and economic priorities and juggle indigenous and non-indigenous development aspirations has remained a challenge for remote communities and support agencies alike. The challenge remains to devise a management model that addresses the problems of variable and inconsistent management in a sustainable and affordable manner and at the same time resolving social and cultural relationships so that pastoral enterprises can function effectively on indigenous lands.

As a first step towards addressing some of these issues in a coordinated manner, the Kimberley Aboriginal Pastoralists Association has undertaken a review of the performance of a representative group of properties over a number of years in order to establish some baseline data about the commercial performance of these properties.

The project has identified areas within the management of these businesses which are impacting on profitable performance.

These include:

• Lower productivity of cattle, which is probably being caused by poor nutritional management and the generally lower genetic quality and potential of herds on indigenous properties.

• indigenous stations, on average receive a lower price for beef which is contributing to lower profit.

• Overhead costs are higher relative to the income being generated, particularly those associated with plant, vehicles and buildings.



• The majority of indigenous stations are smaller in size and located on less productive country types than non-indigenous stations. This has the effect of limiting livestock productivity and of increasing the area required to run a given number of livestock, which in turn results in an increase in overhead costs.

While there is a general trend of improvement in the profitability of these indigenous stations as a group, management strategies can be devised to accelerate this trend and in turn enhance the sustainable operation of these businesses.

Several possible solutions to these economic problems have been examined in this project and documented in this report, however implementing such solutions will not be simple. The outcomes will depend not only on the priorities of the owners of indigenous cattle properties, but also on the provision of appropriate opportunities for indigenous cattle station managers and employees to acquire the range of training, skills and experience that they need to make land-use decisions that are valued not only by themselves but also by other stakeholders. Results suggest that for indigenous stations to improve their profitability, and hence the living standards on stations and in communities, there is a need to support, encourage and assist managers to concentrate on increasing the productivity of the cattle and keeping overhead costs, relative to income, in check.

The way forward requires careful consideration by the communities involved, by their support agencies and by other stakeholders in the Kimberley pastoral industry. Understanding and agreement is a critical element of the process. This will be the primary tool of the next stage of this project. The communities themselves own the data about their enterprise performance and will be in a position, with the support of key stakeholders, to develop the most appropriate management strategies and support infrastructure for their particular situation. The communities themselves are where the best solutions are most likely to be generated. indigenous communities are diverse, and the manner in which they will meet the challenges of managing their country will be equally diverse.