20 November 2016
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.
03 November 2016
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.”