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Beyond the Bale : December 2010
December 2010 BEYOND THE BALE 16 ON-FARM per cent crop for income, profits decline. The higher costs of growing a crop compound the loss in a bad year. In fact two or three strikes and you are out. So sheep are a risk management strategy." The true economic value of the Merino has also been shown in EverGraze trials at Hamilton, Victoria where the Merino system joined to a terminal sire consistently produced higher gross margins than the specialist Coopworth prime lamb system. Has the profitable and versatile nature of the Merino ever been more obvious? While many producers have enjoyed good seasonal production in 2010, Western Australia has suffered one of the worst seasons for many years. While this is a typical scenario in a land of droughts and flooding rains, the Merino (another typical Australian) has also been a common feature of 2010. The strong market for Merinos has resulted in over 600,000 Merinos making the trip across the Nullabor in September-October. Merinos are in hot demand because they remain the true dual purpose producer, an insurance policy offering options and a reliable source of income. The Sheep's Back consultant in WA, Bob Hall says other than when crop prices are extreme, sheep returns have outstripped cropping across the sheep belt of WA, where the average rainfall is 400-600mm, not only because of a greater reliability of production but cost. "You have to take into account the extra fuel and repairs, casual labour, extra plant depreciation and also the fact that the sheep will graze all of a paddock whereas crop only gets seeded, at best, in 90% of it," Bob says. "All the work I have seen has shown that once a farming operation relies on about 70 Across a range of pasture systems and years the Merino system delivered a gross margin $100 per hectare more than the Coopworth due to the additional wool income and lower feed costs of the Merino. In 2008/09 the Merino system delivered a gross margin of $699/ha compared to $535/ha under Coopworths using a ryegrass based pasture, and $626/ha compared to $464/ha using triple pasture. FAST FACTS l Merinos are producing up to $1000 gross margin per hectare in high rainfall areas in eastern states. l Merinos offer production options in dry years. l Understand hidden costs when joining the flock for 2011. Merinos deliver from west to EVERGRAZE GROSS MARGIN ANALYSIS HAMILTON, VICTORIA GROSS MARGIN ($/ha) 2006/07 2007/08 2008/09 2008/09 Sheep enterprise MERINO MERINO MERINO COOPWORTH Ryegrass pasture (%*) 597 (329%) 917 (254%) 699 (135%) 535 (80%) Triple pasture (%*) 651 (368%) 923 (256%) 626 (111%) 464 (56%) COMPARABLE REGIONAL PRIME LAMB ENTERPRISES Average 139 259 297 297 Top 20% 334 517 488 488 *PREMIUM OVER AVERAGE OF SW FARM MONITOR PROJECT $/ha $1,000 $750 $500 $250 $0 TRIPLE RYE AVERAGE Consultant Bob Hall from WA: "Sheep are a risk management strategy." MERINO COOPWORTH