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.”
17 October 2016
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.”