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Beyond the Bale : June August 2009
6 reducing costs Astute spending can lower costs A Victorian woolgrower has taken a two-pronged approach to reducing his COP – investing to lift stocking rates and productivity, and focusing on costs, which can easily escalate By Kellie Penfold production (coP) by $2.46 a kilogram in two years, and much of that reduction was achieved by spending money. in 2006-07 the coP on the farm at J edenhope, in the western Wimmera region of Victoria, was $14.69/kg and last year it came in at $12.23/kg – below the average Victorian coP of $13.27/kg established by agricultural consultant graham Lean. to help growers reduce their coP, AWi is working with agricultural consultants around Australia, including graham, to benchmark and monitor coP in varied sheep production enterprises. Jim, who manages Yiddinga Pastoral co. with his cousin, company principal Andrew Farran, runs a primarily wool enterprise, with 24,000 Merinos shorn annually. this comprises 8500 ewes, 5500 hoggets, 4000 wethers and 6000 lambs. the only cropping is usually oats sown for feed or as part of a pasture establishment program. Jim attributes the lowering of the coP to using pasture improvement, which increased stocking rates up to 15 dry sheep equivalent (dse) a hectare – therefore spreading the fixed costs – plus efficiency gains through better sheep-handling facilities. However, he adds, it is important to focus on a number of areas where costs can quickly get away – the main one being supplementary feeding during drought. during the 2006-07 drought Jim created a droughtlot on the farm for more effective supplementary feeding. using drought feed calculators and guides published by AWi, such as the Managing Sheep in Droughtlots booklet (available at www.wool.com), the Farrans were able to establish a feeding strategy to maintain production in the Merino-ewe-based flock. At the same time, pasture renovation using drought-tolerant species, often favouring phalaris, was undertaken and varieties that benefit from summer rainfall were sown to lessen the need for supplementary feed. Pasture productivity was lifted by doubling the fertiliser rate, with 220kg/ha of superphosphate topdressed on all pastures in 2006-07. Fertiliser rates have since been dropped back to 150kg/ha and future applications will be planned with soil analysis. Holdfast phalaris showed persistence im Farran, manager of Yiddinga Pastoral company, decreased his wool cost-of- Benchmarking results from graham lean and associates for 2007-08 toP 10 WooL sHeeP $GM/dse $GM/Ha/100mm Wool cut kg/dse clean Wool cut kg/ha clean Lambing % Total COP c/kg clean AVerAge $14 $42 2.3 37 76 1327 Per cent $19 $74 3 50 94 1034 $8 $19 2 19 52 1610 BottoM 10 Per cent grahamlean’s cop calculations were made using the data collected from his Victorian woolgrowers for 2007-08. he says the figures are higher than other cop established by similar reports prepared for aWi and previously reported in Beyond the Bale because of tougher climatic conditions in the past two years, which affected wool production, and feed and agistment costs. June – August 2009 Beyond the Bale key points l Jim Farran has lowered his cost of production (COP) through a multi-faceted approach to his management, including pasture and handling facility improvements l It is important to keep control of the costs associated with supplementary feeding during drought l Jim has also taken on board the practices of the Lifetime Wool program drought feedlots can be used during drought to help keep feed and labour costs down. through the tough seasons, earning it a valued place in the improvement program because of its ability to produce high levels of winter feed. graham Lean says that in the case of most clients, high stocking rates mean more animals with which to support production costs, therefore reducing the overall unit cost for that enterprise. Working through the regional client data for 2007-08, which had a higher coP than for other years, graham found the two key factors impacting on the figures were decreased wool cut, meaning fewer kilograms of wool to spread costs over, and increased costs related to dry conditions, such as supplementary feed and agistment. He says that when facing such conditions, the easiest way to lower costs is through making large reductions in areas such as fixed overheads. Jim Farran, whose lower coP was contrary to the regional trend, also concentrated on lowering his labour costs through improved infrastructure, such as laneways, a covered set of sheep yards and the inclusion of a double race. “covered yards and laneways have had a positive effect on the quality and speed at which tasks can be carried out, including shearing,” Jim says. “efficiency has also been increased by employing contract labour for some tasks.” With the introduction of the national Livestock identification system (nLis) tags, Jim has been able to reduce labour costs further by investing in an automatic weighing and drafting system, which he says reduces errors in tag reading to less than one per cent. the sheep are all fleece-tested in the shed and the data is recorded, making drafting and culling decisions much simpler. Jim has also taken on board the practices of the Lifetime Wool program after participating in the pilot program, with the aim of increasing weaning rates, lifting lamb weaning weight and improving the progeny’s lifetime productivity. “Lifetime Wool is about overall management of your ewes and the benefits are many. the most important gain was in our stocking rate through better pasture management,” he says, adding that improved lambing percentages are also a reward. More information: Graham Lean and Associates, 03 5517 2170, graham@ grahamleanandassociates.com.au
April May 2009
September November 2009