Improving the performance of beef enterprises in northern Australia.

Abstract

The relative and absolute value of changing herd management strategy across key beef production regions of northern Australia was assessed using the Breedcow and Dynama programs and associated processes. In all cases, a change in the current herd management strategy was considered. That is, there was an investment and herd already in place and the analyses consider alternative management strategies that may improve the efficiency of the existing beef production system. The analysis was a marginal analysis, predominately over a uniform investment period of 30 years.
The alternative strategies were assessed for their potential impact on:
• the current wealth of the beef property (NPV);
• the average annual improvement (or reduction) in profit (Annualised return);
• the maximum cumulative cash deficit /difference between the two strategies (Peak deficit);
• the number of years before the peak deficit is achieved (Years to peak deficit) and
• the number years before the investment is paid back (Payback period)
The strategies were selected from production strategies identified by producers, industry and researchers over recent decades. Although the Breedcow and Dynama programs are capable of considering changes in management strategies such as different ways of financing the beef property, these other equally critical aspects of managing a beef property are not considered here.
The key insight gained from the analyses undertaken was that where a profitable beef production system was already in place it was difficult to find strategies that both improved profit and reduced the riskiness of that system. As the majority of analyses undertaken compared an existing investment in a relatively low-input, low-output operation with an alternative investment in a more intensive operation, the riskiness of the change was as critical a part of the assessment as the expected impact on profit of the change.
Even so, there is always room for fine tuning and the consideration of new technologies so we would recommend the process applied in this document as much as the results of the analyses. As identified by Makeham (1968), the two major challenges to the property manager remain:
• How to incorporate new technology profitably into their existing production system;
• How to be sufficiently flexible, mentally and financially, to adjust resource management to meet both changed economic circumstances and widely varying climatic conditions.
These challenges can be considered via the application of a comprehensive planning and assessment framework that applies the principles of Farm Management Economics. The Breedcow and Dynama program and associated processes facilitates the application of this framework for north Australian beef production systems.
Keeping in mind the constraints that apply to this form of analysis, the relationships in the following sections were found for a range of alternative management strategies available to change the performance of beef production systems in the respective regions.