[ASC-media] Media release: profiting from drought recovery

JCA Media jca.media at starclass.com.au
Sun Oct 22 22:57:20 CEST 2006

Sheep CRC Media Release

Monday, October 23, 2006 - for immediate release


A radical plan to take advantage of the drought to boost long term wool industry income by hundreds of millions of dollars a year has been put forward by the Sheep Cooperative Research Centre.

"The top sheep in any flock are three times more profitable than the poorer ones.  If you have to cull due to drought, technology is now available to help you get rid of the least profitable ones," says Sheep CRC CEO Professor James Rowe.

"While drought is a heavy blow to the bank balance in the short term, it is also a rare opportunity to set up the grazing enterprise - and the industry - for much greater profits in future by doubling the returns from individual animals."

The difference between this drought and any other in history is that, for the first time, woolgrowers have technology available to make objective culling decisions - and buy in the most productive animals when re-stocking, he says.
 "With feed the main limiting factor it is time to assess what animals will do the best job during the drought and in post-drought recovery.  In this respect Merino ewes have a stand-out advantage over cattle and sheep meat systems, where weight gain is the only way to generate income.  

"The Merino ewe will continue to produce valuable wool daily - even when she's losing weight.  During drought recovery she also provides the flexibility of producing either prime lambs or more fine wool offspring.  

Producers with mixed sheep and cattle grazing operations are already considering which animals to keep through the drought.  For a faster recovery, there may be value in moving out of cattle and into sheep, Prof Rowe suggests.  "In dry times, a carefully-selected ewe flock may well be the most valuable livestock asset."
The Sheep CRC has developed a new tool to help woolgrowers make the right financial decisions when culling or re-stocking.

 "Drought is grim, but if we look beyond the immediate hardship, it is also a rare chance to lift the productivity of the Australian sheep flock by up to half.

"Getting rid of the poor performers would boost national wool earnings by $200-700 million post-drought. That's $2000-7,000 more profit each year for 5 years or more for the average grower."

Merino sheep vary greatly in fibre diameter, fleece weight and body weight.  The Sheep CRC's software makes it possible to calculate the long term dollar value for each animal - and use it to make sound culling and buying decisions.   

"In all flocks, the top 25 per cent of ewes earn three times more than the bottom 25 per cent. If the average value of the flock is $40/head then the bottom sheep are each worth around $20 whereas the top ewes are worth $60.  This variation simply does not exist in cattle.  This is a very rare opportunity to retain, or purchase, high quality ewes - but careful selection is essential.

Prof. Rowe says the most important measurement affecting value of Merinos is fibre diameter - particularly if the flock average is 20 microns or less. Fleece weight is the next most valuable. Body weight and condition are also important as they affect the sale price for meat and the animal's ability to withstand the drought. 

"Using our technology - which is free to the industry - this basic information can easily be turned into a drafting decision to maximize the return from immediate sale of sheep for meat and the long-term benefits of retaining the right animals for wool production. 

An investment of $1.10-$1.50 per animal in measuring fibre diameter and live weight in order to cull 30% of the least valuable ewes can yield a return on investment of around 50% in the first year alone.  These benefits multiply as the flock rebuilds.  

"Making smarter decisions when reducing flock numbers or buying in ewes and getting rid of cattle is one of the surest ways to minimise the cost of drought.   

"Making a decision on drought stocking strategy is urgent.  It's a case of select sooner, select smarter - and reap the rewards."  

James Rowe, CEO, Australian Sheep Industry Cooperative Research Centre, ph 02 6776 1465 or 0418 810 130; james.rowe at csiro.au 
Kevin Atkins, Principal Research Scientist, Department of Primary Industries, NSW.  02 63913816  kevin.atkins at dpi.nsw.gov.au

Where to get the new sheep profit assessment tools:

More information about the ASC-media mailing list