Succession planning. Apologies for no April article. My day job as CEO for RMA Network is coming to an end and my replacement Jason Woolhouse has been my main focus. Now I know how the old dog feels when the boss brings home a pup. I am certain after three weeks in the car with me Jason has wondered what he has done. However, two months in the succession is really taking shape and provides some exciting opportunities for our RMA Network agency members and Network Partners across 120 location in Australia.

As I have run through this process it has highlighted the absolute importance of succession planning and governance within family operations or agency businesses. Whilst we are in winter and a bit quieter, I strongly suggest taking the time to gain some advice and set your businesses up for the future. The government tax changes have scared many however having a family trust is not a succession plan. My experience so far is the change over with all parties invested in the future success of the company has provided a really positive outcome. Letting go of the reins is hard but doing it well is so rewarding.

Inflated store pricing. Grass fever has always been the main factor however consolidating numbers to shore up supply is now becoming part of most larger processor buying orders. As we saw with the introduction of the light bag lamb for the Middle East, processing orders started competing directly with store buyers and back grounders. It was also a major part of the dairy heifer live export industry. The devil is in the detail as lighter stock are purchased to maintain numbers. The risk moves from the producer to the processor with additional working capital tied up which aligns to more cost.

It also starts to drive the store market higher as the lighter stock are being priced using different end result drivers. All in all, this is a good result for the breeder as they are normally targeted into a defined sale window each year. However, for the wider industry it starts to create an artificial price floor that is fine until we have a check in the market. Whether a demand check is driven by increased supply or the end user access/requirements change.  Recent examples are the immediate fall in price on the light bag lambs as soon as the middle east shut off, the collapse of the dairy heifer market when China reached saturation point. Both times the market impact was significant and left many exposed to an inflated purchase price.

My point is as soon as numbers arrive in the spring processors will not need to buy lighter stock. This will also allow them to remove the working capital requirements to buy these additional numbers. In short, the normal spring price correction could potentially be magnified because the current processor demand for light stock also disappears.

‘All are friends until the price decided to jump’

Sign bloody contracts. I’ve said this before, yet we continue to see buyer and vendor exposed to a market shift because “we were too busy to fill out a contract”. One example recently is a large number of lambs booked at the mid $10 range, which at the time was excellent money. All are friends until the price decided to jump to $12. With a contract the supply arrangement is binding and it is a game person who tries to avoid delivery. However, “booked in on the phone” has created some very difficult, potentially relationship ending conversations between vendor, agent and buyer. In short – whether you are the vendor, the agent or the buyer pushing for a contract on a B Double load of stock worth over $200,000 should be a given every time. Who is at risk just depends on what part of the season we are in.

Kill sheets and weight dockets. When selling livestock over the hooks or with a liveweight delivery these two documents unlock the ability to improve productivity. Too often once the truck leaves, we stop thinking about that consignment. When really, we should now be sitting down and analysing the results and what we can do differently. Some examples – better prep to lift MSA grading, looking at the fat scores and dentition aligned to feed and age, improved average daily weight gain on grass to hit feedlot entry weights earlier, IMF aligned to genetics, how to reduce the tail in your sale lines with better animal health.  Every one of these indicators can help you adjust to create more kilos. These documents always belong to the vendor and should be asked for in every instance to help improve your operation.

How fast it changes. Over the past two months in NSW a massive number of cattle and sheep poured into the system which all found a home. Water availability was an underlying issue because we can feed stock but carting water is beyond thankless. The sheep job softening for about 17 seconds then powered on and the wool market continues providing a great return with increasing demand. The season turnaround has been significant with confidence rebounding extremely quickly in NSW. Not only driven by price but also opportunity to cash in over the next 3 – 4 months.

Many livestock have been trucked to agistment. Speaking to the newly appointed Elders Broken Hill agent, Peter Wardle the feed situation is very good with many properties now well stocked with agistment and rain continuing. Mick Corcoran, Corcoran Pastoral from the Upper Horton was inspecting some cattle at Cordillo Downs and said the feed through the Birdsville and Strzelecki tracks is exceptional.

Cattle

Prices definitely fluctuated over the past twor months with only one 10 day “bottoming” of the cow price most received a good return. In April, Scott Hamilton, HMA Narrabri commented “we are selling steers at $4.60 which is ok considering the same time last year we were selling the same animals for $4.00.” Those that stepped in when the cow and heifer market slipped have really kicked a goal.

Same as every year the discussion is about the supply of feeder cattle available and what are they worth. Most feedlot buyers are pricing mob by mob and we are seeing some delivery flexibility appearing. The gap between steers and heifers is nearly closed now so the next step is for the overall price to lift. With the increase in feedlot space still surging we may see a bit of sexy appear over the next 3 months.

Michael Spencer, Adcock Partners said the NT has got back into stride now with plenty of cattle moving. He said the quality and weight out of Western Queensland is very good with quite a few just waiting for next financial year to hit the market.

Thought it’s time to speak to Steve Gaff, Red Centre Rural in Alice Springs. Asked whether he was down watching the Finke race and Steve said “I have a really nice house in town with heating and watching on YouTube. Way better than being under a black oak at minus 1.” Steve has made a great business for himself in Alice Springs by remaining stationed in the town and understanding how important relationships are when dealing with remote properties. The Alice Springs show sale is on the 2^nd of July. A good season will provide a great line up of 4500 cattle, pending drafts, from repeat vendors including organics. Cattle will present in very fresh condition with large runs of milk and 2 teeth. This sale is worth attending with the season and the current prices being a god send for many pastoral operations all over Australia.

Northern Live export. We are just starting to see live ex pricing fall behind processor offerings. With high quality Brahman steers ranging in the high $3 supply has been good, however, the southern pricing is starting to apply some pressure. The same applies to the heavy Vietnam slaughter cattle supply. Nothing new but worth making a call before just copping the price. This is where your agent can really make your business a quid well in advance of the marketing fee, which is tax deductable just quietly.

Sheep

Several domestic lamb contracts hit the market at above $12 per kilo for July and were quickly filled. SIL ewes purchased in March with a start in the jacket are seriously good value now the lamb is on the ground and rain has started. The big winners have been the merino skin prices and the continued strength of the wool clip for those still invested in the good old merino.

Speaking to Ron Rutledge, Livestock Key Account for Nutrien, he said lamb scanners in the Western Districts of Victoria are reporting 20% less ewes being scanned than last year. Considering a large proportion of 1st cross ewes the impact on available lambs could be significant

Wild dogs – Speaking to Jock Maddern, Westech Kyle Ag, Kaniva and DMD Nhill, Brock Quick the dog legislation in Victoria has now seen dogs get out of hand. Producers around the Ngarkat National Park are being pushed to swap sheep for cattle due to losses. Trapping and baiting has been stopped and the impact is spiralling out of control. The same stories are being reported in the high country.

Going back over time I had a chat with Will Abel Smith, S Kidman & Co when the group had Quinyambie station for sale north of Broken Hill. 3 million acres outside the dog fence where the Kidman company allowed a dingo study to be run. One area not controlled and the other area still running a dog program. The inner-city academics said the control programs were breaking down the structure of packs causing them to hunt cattle instead of kangaroos. At the end of the program Will described the result of the untouched area as a train wreck.  All of the “academic, non practical hypothesis” went out the window.  More dogs equalled more losses and apparently the packs missed the memo about only kangaroos on the menu.

Whether the powers to be want to argue the difference between a dog or a dingo the result is still the same – maimed and dead calves and sheep. Having personally seen the cruelty of a dingo / dog attack on sheep I hope those making the decisions find some empathy for the farmer who has to clean up the result. I can tell you the financial loss is not the first concern, it is the emotional anguish of putting the impacted animals out of their misery when it could have been avoided.

The power of networking really comes to the front when season failure and numbers combine. Activating potential buyers use to be a phone call operation running deep into the night trying to find orders. Emails are a waste of time and texts can be hit and miss depending on who the text comes from. Social media well placed however is a real winner when used sparingly. When the New England and Central NSW Weaner sales were running and the cow price was sagging some desperate calls were made to find orders. The south had feed yet we quickly found there was a limited awareness of the opportunities available. One targeted social media post saw 11,000 views in 24 hours and an activation of calls about “where should we go and how many are available?” A great result for those areas focused on penning big numbers.

Observation. I sat back and watched the budget and wondered when those that have paid tax their entire life and helped progress our country became the enemy of the government. Penalized because we made a success of our lives.  It seems our society blames the 50+ white male for everything that is wrong these days.

Opportunities

• Store prices are very high, do a really good job on what you have.
• Cattle weight, lambs quality.
• Upskill staff – quiet winter in south
• Take time to think about your business and the future.
• Sit down and work out your animal health program
• Analyse your slaughter / delivery weight information.
• Agency and Supply Chain training registrations are open for 2^nd

Chris Howie is a regular Beef Central and Sheep Central market columnist.