Productivity and profitability of alternative steer growth paths resulting from accessing high quality forage systems in central Queensland – a modelling approach.

Abstract

Beef producers in central Queensland (CQ) generally only have a limited area of suitable soil on any particular property for sowing to high quality forages such as perennial legume-grass pastures or annual forage crops (Bowen et al. 2016). Therefore, they need to make choices about how best to allocate high quality forages amongst different age groups of steers in their herd. This study assessed the most profitable way of incorporating high quality forages, such as perennial legumegrass pastures or annual forage crops, into the whole-of-life steer growth path in CQ. Twenty-two growth paths (liveweight change over time) from weaning to marketing were developed from interrogation of existing data sets. These were investigated for steers grazing buffel grass (Cenchrus ciliaris) with and without access to leucaena-grass pastures (Leucaena leucocephala spp. glabrata + perennial, tropical grass (C4) species) or forage oats (Avena sativa) for varying intervals throughout their growth path. The production, economic and financial effect of each growth path was assessed by comparison to a baseline scenario producing finished, slaughter steers (605 kg) from buffel grass pastures which is the typical production system for the region (Chudleigh et al. 2017). The relative profitability of marketing steers at feedlot entry (feed-on) weight (474 kg) instead of slaughter weights was also assessed. The growth paths were applied within two beef enterprises, (i) steer turnover enterprise and (ii) breeding and finishing beef enterprise, over a 30-year investment period. Integrated herd models and property level, discounted cash flow budgets were developed for each scenario using the Breedcow and Dynama software (Version 6.02; Holmes et al. 2017). For both enterprises, grazing steers on leucaena-grass pastures from weaning until they achieved feedlot entry weight was substantially more profitable than any other growth path. Compared to the base scenario, this optimal growth path improved profitability by 121 and 37% for the steer turnover and the breeding and finishing enterprise, respectively. The purchase of additional breeders for the latter enterprise was required to optimise utilisation of the leucaena-grass pastures. The seven most profitable growth paths for both enterprises incorporated leucaena-grass pastures. These results are in agreement with those from gross margin analysis conducted for commercial properties, and whole-farm case study analysis, where leucaena-grass systems were identified as the most profitable forage option for beef cattle production in CQ (Bowen et al. 2015, 2016). However, incorporation of leucaena-grass in to steer growth paths also resulted in increased peak deficit levels and financial risk to the business compared to buffel grass-only production systems with payback periods for the most profitable growth path of 8 and 14 years, for the steer turnover and the breeding and finishing enterprise, respectively. While providing a high quality forage for any period during the growth path of steers reduced the age of turn-off compared to that expected on average from buffel grass-only pastures (26.2 and 34.0 months for feed-on and finished steers, respectively) it was not always more profitable to do so. For example, a growth path providing forage oats twice, in dry season 1 and 2 after weaning, and with leucaena-grass in between, resulted in the youngest age of turn-off at finished weights of any scenario (22.8 months). However, this growth path was only marginally more profitable than the base scenario for the steer turnover enterprise ($2,014 extra profit/annum) and resulted in $28,236 less profit/annum than the base scenario for the breeding and finishing enterprise. Incorporating forage oats into a buffel grass-only growth path always reduced the enterprise profitability. Furthermore, all growth paths that incorporated forage oats resulted in lower economic and financial performance than comparable growth paths that incorporated leucaena-grass. Additionally, implementing forage oats into either beef enterprise substantially increased peak deficit levels and financial risk. There were no meaningful relationships, across scenarios within an enterprise, between change in profit and the number of extra weaners produced or the amount of extra beef produced per ha. This finding reflects the principle that the most profitable level of output is achieved when marginal cost almost equals marginal revenue, never when production is maximised. This analysis provides insights which can be used by beef producers to guide business investment decisions. Further research is required to better understand compensatory growth effects in northern cattle production systems and also effects of utilisation rates of buffel and other sown grass and legume species. This would allow improvement of existing modelling capabilities which, in turn, will better inform whole-farm economic analysis.