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Enhancing your profits from sheep farming

sheep grazing

Australian sheep farmers are amongst the world’s most successful. We export more lamb than any other country, and our merino wool is a favourite of the fashion industry. That hasn’t happened by accident. Our top producers have had a business focus that has helped them remain productive and profitable.

Market prices play an important role in producers’ management decisions, but recent times have shown what a rollercoaster ride that can be – and it isn’t the most crucial factor for profitability. According to Meat and Livestock Australia (MLA), “producers have a much greater chance of improving profitability by managing the quantity of product produced and controlling their cost structures.”

Five habits for successful farming

Whether it’s running a fine wool flock in South Australia, or raising prime lamb in the Riverina, MLA has found successful producers are likely to follow a number of the following practices:

There are (prime lamb) producers out there making 2½ times the profit of the average of all benchmarking participants.

Sandy McEachern Principal Consultant, Holmes Sackett & Associates

Be prepared to spend a dollar to make two dollars

Farmers have to invest in new technology and infrastructure to stay ahead of the game. Outside of Harden, NSW, Oxton Park, with 100 years of family history, continues to thrive because it looks to the future. The farm has invested in innovative ways to raise animals in a low-stress environment, with automated handlers for drenching and vaccinating and an auto-weighing system. Jack O’Connor, a third-generation farmer, explains those purchases aren’t taken lightly. “We always look at those investments in terms of, ‘What return do we get on that investment down the track?’”

Have higher-than-average stocking rate for your district

Higher stocking rates allow farmers to develop economies of scale. Of course, this doesn’t mean you should keep jamming sheep onto your property. Overstocking will lead to long-term damage to pastures and a downturn in productivity. MLA has a stocking rate calculator to help you work out the optimum stocking rates for your property.

Know the cost of production per kilo of product (and be in the bottom 20% of your district)

It’s essential you understand the true cost of your animals, and can analyse all the inputs that go into producing your product. AgriWebb has allowed Oxton Park to monitor inventory levels as they change, and make adjustments on the spot. “When you’re working with resources as valuable as $500 a tonne, you want to make sure that resource is allocated as efficiently as possible,” Jack says. “We’ve been able to lower our cost of production because it’s made us more efficient as operators.”

sheep in yards

Benchmark against similar producers

Benchmarking your property’s performance can provide insights as to where you can improve it. For example, benchmarking work by Holmes Sackett shows that,

despite the prime lamb industry’s focus on weaning percentages, you only need a consistent 120% weaning rate to achieve top 20% profit levels. Sandy McEachern, from Holmes Sackett, warns, “Producers get caught up on weaning percentages, without measuring growth rates which have far greater bearing on variation in profitability.” This insight could improve productivity by driving a farmer to invest in optimising weaner growth rates.

Objectively assess and record pasture and animal performance

If you can’t measure it, you can’t manage it. Successful farmers know that accurate up-to-date farm records make for better management decisions. You can track weight goals or fat scores, to expose trends and discover underperforming sheep. Scanning records and fertility reports help you improve the fertility of your mob. You can measure feed on offer (FOO) and calculate grazing days remaining for better grazing management. Management decisions aren’t just made on gut feeling, they are backed by data and grounded in facts.

Sheep meat and wool enterprises have to deal with a lot of uncertainty, around markets and the environment. That makes it all the more important to control what happens on farm, as these points highlight. To find out how AgriWebb farm management software can help you with your operation, register for a free trial now.

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