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Beyond the Bale : June 2019
ON FARM 35 *Gross Margin calculations based on average wool and sheep prices from 1 March to 30 September for 2016 and 1 April to 1 September for 2017 and 2018. $/DSE $5 $10 $15 $20 $25 $30 $35 $40 $45 $0 2016 2017 2018 $59 $54 $52 $50 $63 MERINO WETHERS (18 micron) $52 $38 $34 $49 MERINO WETHERS (20 micron) $47 MERINO EWES (18 micron) – Merino rams MERINO EWES (20 micron) – Merino rams MERINO EWES (20 micron) – Merino rams, wether lambs sold as trade lambs MERINO EWES (20 micron) – 75% to Merino rams, 25% to terminal meat rams MERINO EWES (20 micron) – terminal meat rams MERINO EWES (20 micron) – maternal meat rams 1ST CROSS EWES – terminal meat rams DORPER EWES – Dorper rams $50 $55 $60 $65 NSW sheep enterprise gross margins for 2016, 2017 and 2018* NSW sheep enterprise gross margins for 2016, 2017 and 2018* According to analysis by NSW Department of Primary Industries, 2018 gross margins were all very positive for wool-based enterprises and positive for most sheep meat enterprise, even while accounting for supplementary feeding. SHEEP ENTERPRISES KEEP GETTING STRONGER The impact of the drought has been very challenging for sheep producers during the past 18 months, but the strong underlying profitability of sheep enterprises has cushioned the impact. NSW Department of Primary Industries (DPI) analysis of standard sheep enterprise gross margins for 2018 shows that the underlying gross margins for nearly all the enterprises in 2018 were positive, even while accounting for a supplementary feed price of $320/tonne landed on-farm. NSW DPI sheep development officer, Geoff Casburn, says the 2018 average gross margin of all sheep enterprises in the state rose by $5.50/DSE to around $50/DSE or $500/ha at a stocking rate of 10 DSE/ha, while wool focussed enterprises rose even more, up on average by $9.50/DSE. “The analysis shows the 18 micron self- replacing Merino enterprise achieved the highest gross margin of $63/DSE, smashing the $600 per hectare barrier at 10 DSE/ha. While this result is primarily due to increased wool income, the enterprise has also seen a 21% increase in the sale value of four- month-old wether lambs due to the increased demand from wether enterprises,” he said. “The 20 micron wether enterprise saw the largest gain, with gross margin up $13.07 to $49/DSE, or to put it another way, $130/ha at a stocking rate of 10 DSE/ha. “Even despite having to pay more for wether lamb replacements, wether enterprises performed exceptionally well, with the 18 micron wethers achieving $59/DSE.” ANALYSIS WITH FULL DROUGHT FEEDING The same analysis for 2018, but with the addition of an 8-month period of full drought feeding, shows the majority of sheep enterprises had weathered the initial onslaught of the drought, especially the enterprises with low fodder costs. Despite these extra feeding costs, all Merino based enterprises had a positive gross margin, except for the 20 micron enterprise joined 100% to terminals with -$3/DSE which had one of the highest estimated fodder costs at $62/DSE. The 18 micron wether enterprise performed the best with a gross margin of approximately $24/DSE, followed by the 18 micron ewe enterprise with $21/DSE and 20 micron wethers with $15/DSE. These three enterprises also had the lowest fodder costs. The first-cross ewe joined to a meat ram and the self-replacing Dorper enterprise had negative results of -$9/DSE and -$20/DSE, respectively. While these enterprises had some of the highest feeding costs, they already had significantly lower returns per DSE before the additional feeding costs were included. “Over the past 10 years, sheep enterprise performance has been steadily improving. Notably, there has been a large improvement in wool focussed enterprises over the past five years.” Geoff Casburn, NSW DPI 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. Producers are advised to develop their own gross margins using actual costs and income. MORE INFORMATION To access the full gross margin outputs, visit www.dpi.nsw.gov.au/ agriculture/budgets/livestock Geoff Casburn, NSW DPI Wagga Wagga, (02) 6938 1630, email@example.com