Can a return to small ruminants increase profitability and drought resilience in the semiarid rangelands of northern Australia?

Abstract

Context: The semiarid rangelands of northern Australia have high climate variability and a history of suffering periodic severe droughts. To remain viable, livestock businesses in the rangelands need to build resilience to climatic and market variability by regularly producing a profit and increasing wealth.
Aims: Our aim was to use the farm-management economics framework to conduct a contemporary assessment of the profitability and resilience of alternative livestock enterprises in the semiarid rangelands of northern Australia.
Methods: Livestock options were examined for a constructed, hypothetical property representative of the central-western Queensland rangelands (16 200 ha; long-term carrying capacity 1071 adult equivalents). First, the profitability of beef cattle, wool sheep, meat sheep and meat goat enterprises was assessed in a steady-state analysis using herd or flock budgeting models. Second, farm-level, partial discounted cash-flow budgets were applied to consider the value of integrating or fully adopting over time several of the alternative enterprises from the starting base enterprise of either a self-replacing (1) beef cattle herd or (2) wool sheep flock.
Key results: In the steady-state analysis of existing enterprises, meat sheep and rangeland meat goat enterprises produced the greatest rate of return on total capital (3.9 and 3.7% per annum respectively). The operating profit, of all self-replacing herds or flocks, was most sensitive to meat prices. Where full investment in a wild dog exclusion fence around the boundary of the property, and some refurbishment of existing infrastructure, was required to convert from beef to small ruminant production, the investment increased the riskiness and indebtedness of the overall enterprise. This was the case even when the long-term operating profit of the property could be substantially improved, e.g. by a change to rangeland meat goats (extra A$45 700 profit/annum).
Conclusions: Existing small ruminant enterprises in the semiarid rangelands of Queensland are profitable and resilient alternatives, based on contemporary prices. However, when changing from the predominant beef cattle enterprise, and incurring significant capital costs to do so, financial risk is substantially increased, which has implications for property managers.
Implications: The farm-management economics framework should be used by individual grazing businesses for their specific circumstances, to support decision-making.