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Beyond the Bale : March 2017
The latest NSW Department of Primary Industries (DPI) report on sheep enterprise gross margins has delivered good news with gains across the industry. DPI sheep development officer, Geoff Casburn, said all breeding enterprises were performing well with high wool and sheepmeat values and demand for breeding ewes supporting strong performances across the board. “Merino wool enterprises had the greatest growth with gross margins increasing up to nine dollars per dry sheep equivalent (DSE) compared with 2015 figures,” Mr Casburn said. “Of the 10 sheep enterprises analysed, the highest gross margins were $38.45 per DSE for the 20 micron Merino self-replacing enterprise selling trade Merino wether lambs and the enterprise joining 20 micron ewes to maternal rams at $38.17 per DSE. “Wool incomes have steadily increased in the last four years to reach levels close to, or greater than, the highs experienced in 2011 and 2012.” Mr Casburn said this upward trend has increased confidence in the industry and reduced reliance on sales of lambs and surplus ewes. “The value of breeding ewes remained high due to the strong performance of sheep enterprises, which increased demand for sheep,” he said. MERINO ENTERPRISES’ IMPRESSIVE GROWTH IN GROSS MARGINS According to analysis by NSW Department of Primary Industries of the gross margins of 10 wool and sheep meat enterprises, buoyant Merino wool and sheep prices are rewarding sheep producers that have stuck with Merinos. “All of which was good news for enterprises with a focus on breeding ewes for sale, such as those breeding first cross Merino ewes, and enterprises with surplus ewes to sell, yet not so good for those buying replacement ewes. “There was a bittersweet scenario for 20 micron first cross ewe breeding enterprises – they needed to purchase 220 replacements to benefit from selling 429 first cross ewe hoggets." Changes in price and production variables saw each enterprise perform differently and weaning rate variations had the greatest impact. A 10% increase in weaning rate, where there were no extra costs to lift the rate, increased the gross margin by 10% for enterprises which bred their replacements and 14%where replacements were purchased. “Higher wool values are the main reason for the large jump in performance of Merino based enterprises. For the 2016 year, wool made up nearly 80% of income for wether enterprises and 53% and 51% for 18 and 20 micron ewes joined to Merinos. These enterprises have also benefited from higher meat values and lower grain prices, while the self-replacing Merino enterprises also benefited from higher surplus ewe values.” NSW DPI sheep development officer, Geoff Casburn For wool focused enterprises, a 10% increase in wool cut results in an approximate GM increase of 15% for the wether enterprises, and around 5% for Merino ewe based enterprises. All enterprises, except those joined to 100% terminal meat rams, have performed in 2016 well above their average over the long, medium and short term (8, 5 and 3 year periods). “It is great that all sheep enterprises are performing well and it is also great that wool and meat complement each other. They provide a balance over the longer term, as prices fluctuate both across years but also within years. Obviously wool provides more flexibility when it comes to the timing of sales which can also be beneficial.” The aim of the farm enterprise budgets prepared by NSW DPI is to provide producers with an additional planning tool to help evaluate their own budgets and options. The budgets also include sensitivity tables that allow producers to assess the impact that changing prices and production levels will have on the gross margin. MORE INFORMATION www.dpi.nsw.gov.au/agriculture/ farm-business/budgets/livestock Geoff Casburn, NSW DPI Wagga Wagga, (02) 6938 1630, firstname.lastname@example.org $/DSE $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $0.00 2015 2016 $32.06 MERINO WETHERS (18 micron) $28.72 MERINO WETHERS (20 micron) $35.64 MERINO EWES (18 micron) – Merino rams $34.95 MERINO EWES (20 micron) – Merino rams $38.45 MERINO EWES (20 micron) – Merino rams, wether lambs sold as trade lambs $37.23 MERINO EWES (20 micron) – 75% to Merino rams, 25% to terminal meat rams $36.83 MERINO EWES (20 micron) – terminal meat rams $38.17 MERINO EWES (20 micron) – maternal meat rams $34.61 1ST CROSS EWES – terminal meat rams $36.06 DORPER EWES – Dorper rams 2016 AND 2015 SHEEP ENTERPRISE GROSS MARGINS * The analysis was based on average wool and sheep price from 1 March to 30 September for each year. ON FARM 47
In the Shops - March 2017