- 27 January 2017
Merino's - Truly the most profitable breed!
Merino's - Truly the most profitable breed!
Case study – WESTERN AUSTRALIA
Name Ed Riggall
Company AgPro Management
Position Farm Management Consultant
Location Narrikup, via Mount Barker, WA
Clients Works with producers across WA, from mixed cropping and sheep enterprises, cattle to 100 per cent sheep
Why Merinos? My top 3 reasons
1 Profitability – Benchmarking figures for Merinos in WA’s Wheat Belt Region ranged from $35 to $40-plus dry sheep equivalent a hectare in 2015-16
2 Low risk enterprise – The Merino’s dual-purpose abilities to grow meat and wool make them an excellent on-farm option
3 Management options – Planting a legume rotation can provide great sheep feed, and also provide nitrogen and nutrient benefits for soils and future crops
Merinos remain benchmark to enterprise success
MERINOS remain a “fantastic” option in a mixed farming operation, says AgPro Management’s Ed Riggall, Narrikup, via Mount Barker, Western Australia.
Ed, a farm management consultant, says benchmarking figures for Merinos in WA’s Wheat Belt Region ranged from $35 to $40-plus dry sheep equivalent a hectare in 2015-16.
“Out in the Lake Grace region, with a DSE of 4-6/ha, producers were benchmarked as making $200 to $250/ha which, next to 2 tonnes/ha of wheat or barley, is a very comparable enterprise,” he said.
“The other benefit of sheep, and a Merino enterprise, is they have a much lower risk potential. They are a very reliable and cost-efficient operation to run. Having said that, sheep and cropping are two hugely complementary enterprises.
“Having a legume rotation can provide great sheep feed, and also provide nitrogen and nutrient benefits for soils and future crops. Sheep also play a huge role in weed management.”
Ed says output per hectare was the real driver of commercial success.
“Producers should talk more about their sheep, like they do with their crops,” he said. “Concentrating on gross margins and benchmarking allows clients a real opportunity to see where they fit and keep it real with their income/ha. It’s about optimising your management and the environment that you live in.
“There’s a huge opportunity for farmers in terms of what they put into their operations. Whenever I benchmark a group of businesses, it’s the income per hectare where the real variation is, not the costs.
“Financially successful businesses spend money on things that generate income, whether it’s feeding the appropriate amount, bulking up pastures to improve stocking rate and lambs per hectare or ensuring they have healthy, parasite-free animals.
“If you spend some money in the right area, for example, if you sow crops for feed, if you have sparse pastures then this can then potentially go straight to profits as you increase the amount of DSE/ha you are able to run.”
Merinos dominate WA
Ed says Merinos comprise 80-90 per cent of the WA ewe flock.
“From an economic perspective, sheep meat and wool indicators are fantastic. If you’re not enthusiastic about the prospects of sheep meat and wool now, you’ll never be. On a sheep confidence index I would rate it as a 10 (out of 10),” he said.
Ed has a mix of clients across WA, from mixed cropping and sheep enterprises, cattle to 100 per cent sheep. He financially benchmarks clients’ enterprises to analyse their operations, highlighting areas for improvement.
“If producers want to optimise the money they make per hectare, they need to run the optimum amount of stock per hectare while considering their environment, genetics and management capacity,” he said. “Wool is such a great product, it forgives a lot of management sins, and wool is at a fantastic price.”
Key management decisions
Ed says there are three key factors of management:
Lambing ewes onto green feed helped to maximise stocking capacity.
“It’s hard to optimise stocking rates and lambing percentage if you’re lambing onto dry paddocks with no feed and having to feed out high levels of grain for every extra ewe that’s being run,” Ed says.
Ed said Merinos were a particularly low risk enterprise, because of their dual-purpose abilities to grow meat and wool.
“The dual income is fantastic,” he said. “The genetics that are available in the Merino breed also mean there are vast opportunities for whatever you want to concentrate on, whether that be wool, or meat, or a dual income. You need to select animals that suit your management style and whatever it is you want to do.”
Bright season prospects
Ed said the 2016 season had been one of the best stock year in memory for most of WA.
“Wool cut is up 10 per cent, as we’ve had a much longer growing season thanks to an earlier break. There’s been solid lambing percentages and lambs are getting up to weights quickly due to being lambed onto good feed,” he said.
“The wool indicator is in the ninth to top decile. Average farm sheep sales are about $80 to $90 per head, last time we enjoyed this was during an incredibly hard 2001 season so it’s fantastic that farmers can enjoy a great season and great prices.”
Case study - South Australia
Farmer Martin and Howard Ramsay
Location Warooka, Yorke Peninsula, SA
Property size 1214 hectares
Average annual rainfall 450 millimetres
Enterprise mix Three-quarters self-replacing Merino flock, one-quarter sharefarmed crops
Why Merinos? My top 3 reasons …
1 Profitability –Gross margin returns in the past four years have averaged $241-$250 per winter grazed hectare
2 Performance – electronic identification has helped to put a dollar value on each hogget ewe, ranging from $95-$147 each
3 Enterprise fit –Merinos suit Martin’s enterprise as a sole operator after big returns with limited cropping land
Stocking rate, bodyweight and fleeceweight drive Merino profitability
MERINOS are the breed of choice at Martin Ramsay’s Glenayr property at Warooka on South Australia’s Yorke Peninsula.
Martin, who runs the property with his father Howard, says while he had dabbled in crossbreds, for the past 20 years he had focused solely on his self-replacing 1000 ewe Merino flock, running about 2700 Merinos including lambs and hogget ewes.
For 15 of those 20 years, Martin has benchmarked his flock, making solid improvements in increasing dollars per hectare. The current average gross margin is $94 per hectare per 100 millimetres of growing season rainfall.
Martin says the economic returns helped him to decide to focus solely on a self-replacing Merino flock. This was because while the returns were similar for Merino and crossbred production, it was the fleece potential from the Merino wether lamb that caused overall Merino profitability to come out on top.
While about 374 hectares of arable land at the 1214ha property is sharefarmed, Martin focuses on livestock working with Landmark animal production specialist Daniel Schuppan to process benchmarking data.
Merino profitability on-farm is driven by three key factors – stocking rate, bodyweight and fleeceweight – which Martin closely manages. Stocking rate had grown to 7DSE per winter grazed hectare with wool production at 24.5 kilograms/winter grazed hectare.
“While these key factors vary year-on-year, I’ve seen a steady improvement in all of them since I’ve been benchmarking. This takes the guess work out of measuring profitability and you can get a clearer picture of where you’re going season to season,” he said.
“Only half the land we have is arable and suitable for cropping, and we only sharefarm a portion of it. It wasn’t economically viable for me to run cropping in comparison to livestock due to machinery costs, and not having any machinery agencies or mechanics nearby to service or fix machines when needed.
“Beforehand, two-thirds of my income would have come from cropping, now livestock would be three-quarters.”
Average lambing percentage was about 110 to 115 percent, but was slightly lower this year due to “terrible weather” when ewes lambed in July-August.
Ewes lamb in July-August and all sheep are shorn in November-December. For the past four years, all wether lambs have been weighed after shearing, with the heaviest two-thirds put into paddocks with grain feeders, and the remaining lighter lambs run on Kikuyu pastures.
Lambs weighed, on average, about 25 kilograms liveweight at Christmas, and were sold in April-May at targets of 50kglw, dressing out at 20-22kg carcaseweight. He recently sold lambs for $5.20-$5.50/kgcw and was “very happy” with the price.
“The later in the season I can sell them, the better the price,” Martin said. “It also means I can shear a fleece off them which is extra profit.”
Electronic identification tags have been used to record bodyweight, fleeceweight and micron performance in ewe hoggets for the past two years. Martin says it creates better individual performance data in his flock.
For the first time in 2016, Martin also used current wool, sheep and lamb prices to calculate a dollar value for each ewe based on their bodyweight, fleeceweight and micron. Values varied from $95-$147, after firstly culling 20 percent visually.
“There was up to a $52 difference per animal between the top and the bottom of the ewes I classed, after first culling visually. It’s quite a difference,” he said.
Pastures were also a focus for the future, with Martin saying Kikuyu pastures had been planted to give more green feed over summer.
“One block had quite salty water, and previously we couldn’t run any young stock there, only about 200 wethers. We have now planted it to Kikuyu and have also connected the paddock to the mains water line, about three kilometres away, so we can have fresh water,” he said.
Case study – NEW SOUTH WALES
Farmer James Derrick
Location South of Gundagai, New South Wales
Property size 2050.5ha
Average annual rainfall 711mm
Enterprise mix 30% feedlot, 20% contract spraying, 30% Merino and 20% cropping
Why Merinos? My top 3 reasons
1 Feedlot performance – Merino wether lambs come out $30/hd above prime lambs
2 Ease of management – Single breed enterprise is profitable and easier to manage, operate
3 Weight gain – Merino lambs have a good average weight gain of 210 grams a day over six weeks in the feedlot
Merino wethers prove profitable in feedlot
MERINO lambs have proven, consistent returns up to $30 per head more than prime lambs at James Derrick’s Karoola Station feedlot in Gundagai, New South Wales.
James, who runs the property with the help of wife Sheryl and son Andrew, has run a feedlot for the past four years, finishing 90 per cent of his lambs through the system. He also buys in lambs to finish, depending on the season, prices and available grain and feed.
James says at current prices, a Merino lamb aged six months will cut about $18/hd worth of wool. Then fed for 42 days, and dressed out at 22 kilograms carcaseweight for a price of $4.80/kg, the lamb will gross $123.60/hd . If the $50 purchase price is deducted from this price, as well as the cost of feeding at $22 and a shearing cost of $5, this gives an approximate profit margin of $46.60/hd.
In comparison, a second-cross lamb aged six months will cut approximately $6/hd of wool and if fed for 42 days, will dress out to 22kgcw at $5.80/kg. This lamb will gross $133.60/hd, less purchase cost at $90, feeding cost $22 and shearing cost $5. This gives an approximate profit margin of $16.60/hd.
“There’s a $1/kg difference between second-cross lambs and Merino lambs, but once you add in the amount of wool that you can shear off a Merino, it becomes a $30 difference in the returns, with the Merino well ahead of the crossbred,” James said.
During the past 12 months they have averaged a sale price of $140/hd for crossbred lambs and $125/hd for Merinos.
Merinos sole focus
The Derricks run 4500 breeding ewes, comprising 1800 first-cross ewes and 2700 Merino ewes. James plans to switch the flock back to 100 per cent Merinos and is in the process of phasing out the first-cross ewe flock.
“I’ve done the calculations and Merinos come out on top,” he said. “I’m switching back for ease of management, it’s much simpler and more efficient to run a single breed enterprise. There may be a need from time to time to purchase second-cross lambs for the feedlot but I will no longer run terminal sires and breed my own lambs.
“I feel the Merino lambs will more than fill the requirements previously filled by the crossbred lambs.”
James said the feedlot began as he sometimes struggled to get lambs finished in time straight from the paddock.
“I commenced feedlotting to gain control of finishing sheep for market when natural conditions are ever changing. It is an opportunity feedlot. It’s very easy and simple to run,” he said.
“Now only finished sheep are sold, whereas before they had to be sold no matter their condition due to feed requirements or lack thereof. The feedlot makes it a more consistent income and keeps up a constant cashflow.”
Lamb turnover increase
While the feedlot was closed over June and July, due to excessive rainfall with 152 millimetres falling during these months, James plans to increase turnover from 6000 lambs per year to 10,000 lambs/yr.
The feedlot usually runs from February to May then August to November, during milder weather, but covers and shade are being built to ensure lambs have shelter in the yards.
Crossbred lambs enter the feedlot at 36kg liveweight and Merinos at 38kglw. All are shorn beforehand to clean them up and ensure they have a good, even pelt. Merinos enter the program at 38kglw so they meet weight gain targets more easily.
Bought-in lambs have a five-day transition to being grain fed. First, they are trail-fed grain then introduced to feeders.
Lambs are weighed every 10 days and sorted into pens by weight differences of up to 4-5kg. On average, Merino lambs gain 210 grams a day over six weeks, in comparison to crossbred lambs at 240g/day.
They were sold at a maximum feed period of 42 days, or six weeks, at 22-23kgcw, and marketed either to a processor or through the Wagga Wagga Livestock Marketing Centre.
Crossbreds are sold at six months and Merino lambs sold at eight to nine months to allow for shearing.
“We’re quite lucky where we are located as we have a processor in Gundagai 20 minutes away, another at Junee 30 minutes away, then the Wagga Wagga saleyards also 30 minutes away,” James said.
“Usually we take out some contracts four weeks out, but we also spot kill through the abattoirs, which means you can book in, then the following week drop lambs off for slaughter. To date all Merino lambs have gone to spot market not allowing any feedback at this time.
“We constantly aim to have at least a $10 to $20 margin of profits for each lamb sold.
“We keep a close eye on prices throughout the season and keep calculating feed costs as we go to make sure it remains profitable.”
Crops such as canola, wheat, lupins and ryegrass silage are produced on-farm, with all except for canola used in the feedlot.
The average flock micron was 19M for Merinos and 26M for crossbreds, with genetics coming from the Derrick’s stud, Karoola Downs Poll Merino, started by James in 1987. Commercial adult ewes cut 7.2kg of greasy fleeceweight/hd.
Lambs drop in May-June for stud ewes and June-July for commercial ewes, with shearing in early October. Lambs are weaned early, from eight to 16 weeks, so ewes can put on condition quickly, ready for mating.
“I started out following the tradition of my father and grandfather,” James said. “It became my own passion and I got into the breeding of my own rams which led to me and my father starting our own stud with Poll Merinos.
“Merinos remain profitable and always have some income with wool and meat value particularly in poll genetics. Merino ewes are necessary for a maternal cross in a prime lamb enterprise. Medium wools are well suited to our rainfall and climatic area with pasture and range country.
“During my grandfather and father’s time the Merino enterprise basically contributed only a wool income. All other enterprises have been added in the past 10 years mostly through my own instigation and the need to diversify.”
Case study - TASMANIA
Farmer David and Jo Taylor
Location Campbell Town, Tasmania
Property size 1400ha
Average annual rainfall 475mm
Enterprise mix Three-quarters self-replacing Merino flock, one-quarter sharefarmed crops
1 Profitability – Merinosgenerate an income of about $70/DSE for wool, which helps to drive business profitability
2 Performance - Merinos remain a consistent performer, especially on the back of improved prices for mutton and wool
3 Enterprise fit –Merinos suit the Taylors’ land type, which varies from arable to bush and rocky outcrops
Merino’s $70/DSE wool income beats prime lamb and beef, benchmarking shows
Benchmarking data is proving that Merinos are the consistent financial performer in the farm business of Campbell Town, Tasmania, producers Dave and Jo Taylor.
Their property includes a 4750 Merino ewe flock as the backbone of their farming enterprise, as well as first-cross lambs, alkaloid poppies, season-dependent grazing wheats and small seed production. A Merino stud, DT Kenilworth, is also run, primarily for their own use. The business is run with Dave’s parents David and Tina and the family has farmed in the same district since the 1830s.
The Taylors have been part of a Holmes Sackett benchmarking group since the early 2000s with 18 other Tasmanian producers. The group compares the profitability of various enterprises, comparing their performance to national data.
Their most recent data showed Merinos generated an income of about $70/DSE for wool, compared with $60/DSE for prime lamb and $50/DSE for beef.
“Obviously, there are different cost structures and operating environments for these enterprises, but I think it demonstrates the ability of the Merino to generate income to drive a profitable business,” Dave said.
“Benchmarking data proves the Merino is a consistent performer, especially on the back of improved mutton and wool incomes. They’re a profitable animal and the backbone of the Australian sheep industry.”
The Taylors have held an on-property sheep sale since 2010 to sell crossbred lambs, ewe hoggets, surplus older ewes and wethers. This is usually in December with numbers ranging from 2800-3200, depending on the season. All sheep are sold off-shears.
Crossbred lambs are sold at 35-36 kilograms liveweight and average $75-$80/head. Dave says this is “easy money for four months work” and enables him to maximise the price he receives for lamb and mutton while capitalising on selling sheep with potential fleece value.
In the past few years Merino wether lambs have been kept on, pasture fed and sold in winter at nine to 10 months, with most recent results averaging 42.5kglw, dressing out at 40 percent, averaging 17.4kgdw at $5/kg carcaseweight, plus skin.
“The wether lambs were also shorn at about seven months and cut about $30 worth of wool,” Dave said. “This equates to about $120 per head revenue within 12 months of age for the wether lamb portion which is pretty handy money.”
Dave says there remains a perception in Tasmania that Merinos are not as hardy as crossbred ewes, but he dismisses this, saying it comes down to improved farm management. Their weaning percentage is about 100 percent.
“The crossbred lamb from a composite ewe has become an increasingly popular enterprise in recent years in Tasmania but I beg to differ. If you look closely at the margins, I believe the self-replacing Merino actually performs much better.
“There’s the addition of the wool cheque which is a significant component of overall returns. Over the past three years, the net profit/DSE from an average wool flock has outperformed an average prime lamb flock by about $2.30/DSE – an 18 percent higher return. The net profit/DSE over an average beef herd is even greater at about $2.90/DSE – or a 22pc higher return,” he said.
The Taylor’s flock has an average micron of 17.4 and is split with 3250 ewes mated back to Merinos, and 1500 mated to White Suffolks.
“In my opinion wool has consistently outperformed all other livestock enterprises,” Dave said. “Merinos are the focus here because they are profitable, and they also suit our land. We have varying soil types ranging from bush, open run country, rocky outcrops, and ground under centre pivot irrigation.”
Dave describes his flock as “all-purpose sheep”, with productive wools on a larger framed animal providing ease of lambing and flexibility with their mating options. Ewes generally average 63-65kg liveweight, larger than most flocks in the Tasmanian environment.
Ewes lamb from August 1 and all sheep are shorn in November, meaning they go into the summer bare shorn and have zero fly problems.
“The other benefit is without pre-lamb shearing in early winter we don’t drive the ewes to consume another 20pc more feed off shears, when typically, we don’t have this extra feed available,” Dave said. “The potential downside was that we were lambing in half wool, risking a potential break in the wool. However, we have found in the past five years this has actually not been a problem at all.
“With an average rainfall of 475 millimetres we can have quite a short spring, and an early summer, so it’s important we utilise the surplus spring feed, you don’t make a profit if you have plenty of grass and fat sheep, you need to maximise productivity.”
The Taylors aim to cut as much wool as possible, and target clean fleeceweights (as opposed to greasy) per hectare per 100mm rainfall basis. They average 4.6kg clean fleeceweight per adult shorn.
“While this can get a little complicated when excluding cropping areas and non-productive areas of the farm it does allow a comparison across districts and rainfall patterns,” Dave said. “We continue to focus on wool productivity, and while our micron has been dropping it is not our primary selection criteria.”
“The current levels of the Australian wool market are very strong. As long as we keep a critical mass of the Merino wool to drive the wool production I think the wool industry has a positive future.”
It is with great sadness that I write to inform our members of the passing of Marion Gibbins, our immediate past CEO of the AASMB, on 6 October 2016.
This is a great loss for the AASMB and the entire Wool Industry. Marion made a huge contribution to the restructure of the AASMB in her 3 years as CEO, her knowledge, Business skills and work ethic were second to none.
The Merino Industry was Marion’s life from an early age, growing up on her family’s Gringegalgona Merino Stud and Wool growing property in the Balmoral District, Victoria. Marion was also involved and made huge contributions to the Victorian Stud Merino Breeders Association, The Balmoral Sire Evaluation Group, The Australian Woolgrowers Association, The Australian Sheep & Wool Show at Bendigo, Horsham Agricultural Show and Wool Market Linkages Ltd just to name a few!
Marion will be greatly missed by all that knew her and had personal involvement with the many associations and groups she was involved in - Her knowledge of our Industry was immense.
We send our deepest sympathy to her Family and close friends.
By Catherine Miller, The Stock Journal 30 Sep 2016
THE history books were re-written at many SA’s Merino and Poll Merino on-property sales this season as top prices and averages soared.
More than 70 ram sales have been held across the state in the past two months, with 16 of these enjoying averages of $2000 or more.
Commercial breeders are brimming with confidence with bales of fleece wool worth $1800-plus, lamb prices trading above $6/kg, and a golden era for surplus breeding ewe prices.
Both Elders and Landmark stud stock managers Tony Wetherall and Gordon Wood say the season’s results have far exceeded their expectations, after good lifts in average in 2014 and 2015.
The number of Merino rams still for sale is also far less than previous years.
Mr Wetherall estimates at least half of the sales have seen averages lifted.
“In the 1980s, wool was driving the market,” he said.
“But this time, the confidence within the Merino industry is for both meat and wool.
“It is sky high and will continue to be.
“The returns with Merinos are right up there with cropping and some top operators are even in front.”
It was evident buyers were looking for dual-purpose animals with quick early growth, good carcase and structure, but particularly wool cut.
“They are really looking to put more wool back on their sheep,” Mr Wetherall said.
“The heavy cutting studs benefited from increased competition in Adelaide.”
Mr Wood said it was the “most exciting” year he had seen in his decade in stud stock.
“All the stars have aligned – lambs are good, mutton is good, wool is good and the season is good so the future is looking very bright for the Merino industry in Australia,” he said.
Many breeders had also made the decision to increase their self-replacing flocks and mate more older ewes to Merinos rather than prime lamb sires.
“There is a large lamb industry in Australia with the second-cross ewe, but you need a first-cross mother first,” he said.
Stud breeders had also “lifted their sights” in 2016 to secure top notch genetics.
SA Merino and Poll Merino on-property sales highlights:
Highest 2016 SA Merino and Poll Merino on-property sales averages
1. Glenville: $3,024
2. Moorundie: $2,912
3. Leahcim: $2,733
4. Old Ashrose: $2,578
5. Greenfields: $2,481
6. Glenlea Park: $2,467
7. White River: $2,391
8. Kiandra: $2,360
9. Minta: $2,287
10. Nyowee: $2,192
Top 2016 SA Merino and Poll Merino on-property sales prices
1. Glenlea Park: $33,000
2. Collinsville: $32,000
3. Glenville: $23,000
4. Moorundie: $18,000
5. Minta: $16,500
The Australian Association of Stud Merino Breeders is tonight launching a new campaign highlighting the profitability of Merinos as the ultimate dual‐purpose breed and encouraging producers to increase Merino breeding ewe numbers in their enterprise mix.
The campaign – titled Breed More Merino Ewes – acknowledges the Merino ewe as the backbone of the Australian sheep industry and that there are many industry businesses and organisations which have a common interest in the breed’s continued success.
A SIX-year trial run by the Elmore Field Days in northern Victoria proved that dual-purpose Merinos remain one of the most profitable livestock enterprises in a medium-rainfall region, averaging total returns of $70 to $69 per dry sheep equivalent, $8-$9/DSE above its closest competitor.
The trial, which began in 2009 and concluded in 2014, investigated five breed types – Border Leicester-Merino, Loddon Valley Merino, Centre Plus Merino, Dohne and SAMM. Ewes were crossed to terminal rams, either White Suffolks or Poll Dorsets. Consultant Kieran Ransom, formerly with Department of Economic Development, Jobs, Transport and Resources Bendigo, Victoria, wrote a paper on the trial, titled A Commercial Comparison of Ewe breeds for Reproduction, Wool and Lamb Growth, with co-authors Forbes Brien and Wayne Pitchford.
Congratulations to the Hogg family of Navanvale stud in West Australia whose magnificent Merino Pair entrants took out the National Australian Merino Pairs Championship title at the 2016 Australian Sheep & Wool Show in Bendigo.