An economic framework to evaluate alternative management strategies for beef enterprises in northern Australia

Abstract

Context. Beef producers in northern Australia are continually presented with new technologies and opportunities to enhance beef production. They need to be able to accurately and efficiently assess the potential impact of alternative strategies on profitability, risk and the period of time before benefits can be expected. Aims. Our aim was to demonstrate the value of the farm-management economics framework for assessing alternative management strategies applicable to beef cattle enterprises in northern Australia. Methods. Beef cattle herd models incorporated into a farm-level partial discounted cash-flow framework were used to evaluate the potential effects of alternative management strategies on the performance of enterprises. This was undertaken using constructed, representative beef enterprises developed for the following three regions in Queensland: Central, Northern Downs and Northern Gulf, and the Katherine region of the Northern Territory. The analysis considered the expected response to change in the management of the base herd. Strategies that targeted (1) overall herd or property performance, (2) breeder reproductive performance, (3) steer growth rates, (4) alternative beef cattle marketing options, or (5) enterprise expansion were assessed. All of the changes considered to the current management strategy of the base herd and property were put forward by industry participants as potentially positive. Key results. The framework efficiently identified substantial differences in net benefits among strategies and allowed ranking of the alternatives at the property level. Strategies that improved profitability also generally increased management complexity and financial risk. While strategies that could substantially improve profitability were identified, many other strategies were likely to reduce profitability at the property level. Key insights were gained into the time taken to implement the strategies, the complexity of implementation, and the level of financial risk incurred. Conclusions. This study (1) demonstrated the appropriate framework to compare management options and support decision making, (2) efficiently indicated the potential range of outcomes, and (3) provided insight into the risks associated with development processes and technology adoption. Implications. This farm-management economics framework could be used to assess alternative strategies for individual beef enterprises and to guide appropriate adoption of technology.

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

“…In the present study, the greater returns from the steer finishing enterprise than from the SR beef cattle herd (2.8% cf. 2.4% rate of return on total capital) is in agreement with scenario analysis for the northern downs region of Queensland where conversion from a breeding to a steer turnover enterprise generated an additional A$62 500/ annum (Bowen and Chudleigh 2021c). Furthermore, the steer turnover enterprise may have additional benefits in increasing drought resilience due to increased flexibility to sell steers in response to poor seasons and to restock in drought recovery.…”

“…The farm-management economics framework was applied at the property level to assess alternative livestock enterprises for profitability and resilience. This framework is described by Bowen and Chudleigh (2021c) and follows the principles outlined by Makeham (1971), Makeham and Malcolm (1993) and Malcolm et al (2005). The Breedcow and Dynama (BCD) herd budgeting software (Holmes et al 2017) was used to conduct analyses for beef cattle enterprises.…”

“…We have previously demonstrated the value of the farmmanagement economics framework to assess alternative management strategies for impact on profit and financial risk, and thus to support decision-making (Bowen and Chudleigh 2021c). The objective of the present study was to use the farm-management economics framework to conduct a contemporary assessment of the profitability and resilience of alternative livestock enterprises for a hypothetical grazing property in central-western Queensland, as an example of the semiarid rangelands of northern Australia.…”

Opportunities to build resilience of beef cattle properties in the mulga lands of south-western Queensland, Australia

“…Strategies likely to increase the profitability of beef cattle enterprises in the Mulga Lands bioregion were consistent with those for other geographical regions in Queensland and the Northern Territory, and included increasing the age of steer turnoff from weaners to the optimal, and provision of mineral supplements (particularly P) in the pasture growth season where deficiencies occur (Bowen et al 2020b;Bowen and Chudleigh 2021a). In addition to improving profitability, increasing age of steer turnoff to the optimal can improve drought preparedness because of a reduced breeder herd relative to growing cattle at the same grazing pressure.…”

“…The farm-management economics framework (Bowen and Chudleigh 2021a) was applied to the hypothetical, representative property to assess: (1) a range of management strategies to improve the profitability of the property when operated as a beef cattle business; and (2) two alternative investment options, rangeland meat goat production and carbon farming. The farm-management economics framework applies the economic principles outlined by Makeham (1971), Makeham and Malcolm (1993) and Malcolm et al (2005).…”