Managing for rainfall variability: long-term profitability of different grazing strategies in a northern Australian tropical savanna

Abstract

Several grazing strategies are recommended to manage sustainably for rainfall variability in northern Australia, but there is little objective data on their profitability relative to less sustainable management systems such as heavy stocking. In 1997, a large cattle grazing trial was initiated in northern Queensland to quantify the relative performance of a range of grazing strategies in a variable climate. These strategies were (i) moderate stocking (MSR) stocked at the calculated long-term carrying capacity (LTCC), (ii) heavy stocking (HSR) at twice LTCC, (iii) rotational wet-season spelling (R/Spell) at 1.5 LTCC, (iv) variable stocking (VAR), with stocking rates adjusted in May based on available forage and (v) a southern oscillation index (SOI)-variable strategy, with stocking rates adjusted in November based on available forage and SOI-based seasonal forecasts.Rainfall varied over the 12-year trial period, with sequences of dry and wet years. Gross margins (GM) in the HSR were initially high but collapsed in drier years due to high costs and reduced product value. GMs only recovered in later years with a reduced stocking rate and increased rainfall. The VAR and SOI were also initially very profitable, but GMs plunged as rainfall declined due to reduced animal performance and the sale of poor-condition cattle. This sharp cut in stocking rates nevertheless allowed GMs to recover well in subsequent years. In the MSR, GMs remained relatively constant across most years due to low costs and a higher product value. The R/Spell also performed relatively well despite being compromised by an ill-timed fire, drought and the subsequent sale of poor-condition cattle.Net present value (NPV) after 12 years was highest in the VAR ($11 962/100 ha), followed by the MSR ($11 873/100 ha), the SOI ($11 167/100 ha) and the R/Spell ($10 665/100 ha). NPV was by far the lowest in the HSR ($6930/100 ha). Profitability also varied the most in the HSR, with a negative GM in 6 of the 12 years. Incorporating the costs of natural resource decline would further reinforce the case against heavy stocking. These results challenge the assumption that sustainable management in a variable environment is unprofitable.