DEMAND for agistment is on the rise due to the ongoing drought in large parts of southern Australia and a change in business models for some producers, according to industry stakeholders.

There has been a noticeable rise in agistment activity with southern cattle heading north over the last few weeks. Some of that is vendor-owned, while another portion is cattle bought in the south recently by new owners, hoping to carry out a useful trade after agisting further north. A parade of empty trucks heading south on the New England and Newell Highways this week was testament to that, Elders analyst Richard Koch noted while passing through Tamworth this morning.

RMA Network chief executive and regular Beef Central commentator Chris Howie said the three main demands for agistment were being driven by seasonal duress in the south.

“There are those who are trying to maintain their core breeding herd that they’ve spent a lot of money on over the years, but are in a position where they haven’t got feed or water left so they send their breeders away, with the intention of bringing them home when the season changes,” he said.

“Then there are those who are potentially moving preg-tested cows or heifers north to calve out, with the potential of selling the progeny closer to the feed.

“And then you’ve got those who are trying to get weightgain on light weaners so if they can find feed north they’re heading towards the end-user market, getting them through to 350-400kg and then selling them.”

In 2012, Sarah Birchmore and her husband David launched agistment.net.au, a website to bring producers needing paddocks and producers with available feed together, after struggling to find agistment for their own beef operation north of Winton in western Queensland.

Mrs Birchmore said there had been a surge in demand for agistment, particularly from the south where the stocking rates are higher.

Sarah Birchmore, Founder of Agistment.net.au

She said while most people preferred to keep their cattle close to home to lessen freight and travel costs to check on them, the season was forcing people to travel further away.

“There’s a lot of demand for agistment in northern New South Wales, but the demand is definitely outweighing what’s available.”

Mrs Birchmore said most available paddocks were being filled within seven to ten days, as long as the price was fair.

“We are seeing $5 to $7 per week for weaners is a pretty fair price to be asking, $7 to $8 dollars is taking a little bit longer to fill,” she said.

“For cows and calves the average is $8 to $10 per week, but the price should take into account the weight gain that’s expected for the cattle, the type of country and what responsibilities the landowner is going to take on or what you have to do yourself.

“But if it’s a paddock that has good grass, good waters, fences are intact, is well situated and the landowner is asking a fair price, then it will get snapped up really quickly.”

Agistment a good option for cashflow

Chris Howie, CEO of RMA Network

Both Mrs Birchmore and Mr Howie said there had been an increase in the number of producers who have taken on agistment cattle rather than buying their own stock as a way to bring in some cash flow.

However, Mr Howie warned it was important for the integrity of the feed to be maintained.

“Too often we’ve seen cattle taken on agistment and then when you go to inspect them you find there’s also been a couple of thousand sheep put in with them,” he said.

“So while people are prepared to pay for the feed, they want to know that the feed is going to last because of the expense.”

Agribusiness advisor Ian McLean,  managing director of Bush Agribusiness, said while there were benefits to agistment, there was also risk for both the owner of the cattle and the landowner, so it was important to do the sums before sending cattle away.

He recommended the Trader tool within the HerdXL app as a good resource for trialling different scenarios to see how sensitive the outcome is to different levels of performance.

Mr McLean said often the main cause of underperformance for the owner of the stock was from overestimating productivity and underestimating losses.

Ian McLean, Bush Agribusiness Managing Director

“The costs of an unplanned muster and move to new agistment or forced early sale can wipe out the margins on the agistment,” he said.

“It’s important to be clear up front how long the agistment will be available for, and for the stock owner to have confidence in the landowners pasture budgeting ability.”

He said products such as PastureKey or Australian Feedbase Monitor are useful risk management tools for both parties.

For landowners, having paddocks tied up and not being able to move stock on are the main risks, Mr McLean said.

“Another consideration for the landowner is that having agistment is generally less profitable than running your own stock on the same area,” he said.

“This needs to be weighed against the flexibility and not having capital tied up in those livestock.”

Agistment allows next gen to enter the industry

Mrs Birchmore said agistment also allowed people to enter the cattle industry without requiring land.

She said smaller agistment opportunities were popular, also, with people putting 20 or 30 head on paddocks.

“It allows young people just starting out or people who work in town to have their own herd and grow that alongside their regular day-to-day job,” she said.

“It gives them a foot in the door without the pressure of having to own land.”