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.”

On-farm diversification

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.”