To restock or not: making good decisions when livestock prices are high

Guest Author, 02/08/2021

After years of drought depleting livestock numbers and with continued high prices in the saleyard and online auctions many producers are faced with some difficult decisions about restocking.

John Francis from Agrista addreessed hundreds of producers, advisors, researchers and students at the Graham Centre Livestock Forum.

Keynote speaker at the Graham Centre for Agricultural Innovation’s annual Livestock Forum on Friday, consultant John Francis from Agrista said improved knowledge can contribute to better decision making.

“Understanding of livestock feed demands and the impact they have on the feed-base can help producers in identifying a feed surplus or deficit,” Mr Francis said.

“That can then inform decisions about the best way to make use of any surplus feed.

“For some producers, breeding up is a desirable pathway as it doesn’t require a large capital outlay for livestock purchases.

“But breeding up does reduce cash income when regular livestock sales are withheld and there’s the opportunity cost of not capturing the production while numbers increase.”

Mr Francis said while high livestock prices can make purchasing decisions difficult it can also drive higher incomes.

 “While restocking female prices are high relative to 2019, they are currently aligned with the value generated by the progeny sold,” Mr Francis said.

“The Eastern Young Cattle indicator (EYCI) price for 2019 was about 500 cents per kilo carcase weight and broke the 1000 cents per kilo carcase weight in July 2021.

“Profits will increase by a greater proportion than the increase in price if cost structures are maintained.”

But Mr Francis emphasised that the decision to restock is not simple and will depend on producers individual business goals.

“A producer motivated primarily by aspirations of high profit will look to get to optimum stocking rates as quickly as possible to prevent the value of the loss of foregone production,” he said.

“This contrasts with a producer whose priority is pasture regeneration and improving groundcover, and a loss in production may be acceptable provided it comes with increased pasture cover.”

The Graham Centre, an alliance between Charles Sturt University and the NSW Department of Primary Industries has hosted the Livestock Forums for more than a decade and hundreds of people logged on for the online event in 2021.

The Forum was sponsored by Riverina LLS, Meat & Livestock Australia, Nutrien Ag Solutions, Animal Health Australia, ProWay Livestock Equipment, Sheep Connect NSW and Teys Australia.

Agrista provides consulting services to corporate and family farms, the rural finance sector, government and industry bodies and the agricultural services sector.

Source: Graham Centre for Agricultural Innovation


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