Sheep Farming for Meat and Wool

Jane Court, Sue Hides, John Webb-Ware, Jane Court, Sue Hides, John Webb-Ware, John Webb-Ware

• Publisher: CSIRO PUBLISHING
• Year: 2010
• Print ISBN: 9780643092945
• eBook ISBN: 9780643102064
• Topic: Technology & Engineering
• Subtopic: Agribusiness
• Index: Technology & Engineering

Sheep Farming for Meat and Wool contains practical, up-to-date information on sheep production and management for producers throughout temperate Australia. It is based on research and extension projects conducted over many years by the Department of Primary Industries and its predecessors and the University of Melbourne.

The book covers business management, pasture growth and management, nutrition and feed management, drought management, reproductive management, disease management, genetic improvement, animal welfare and working dog health. It also gives seasonal reminders for a spring lambing wool-producing flock, for autumn lambing Merino ewes joined to Border Leicester rams, and for winter lambing crossbred ewes joined to terminal sires. It will guide new and established farmers, students of agriculture and service providers with detailed information on the why and how of sheep production, and will assist farmer groups to initiate activities aimed at increasing their efficiency in specific areas of sheep production.

CHAPTER 1

Business management

This chapter describes the approach for the development and implementation of a farm business plan to optimise profitability while ensuring sound environmental management, good sheep health and welfare, and meeting personal goals.

Managing a sheep enterprise

There are many facets of a farm business to be considered if the enterprise is to be financially successful, environmentally sustainable and socially acceptable. Managing a sheep flock is demanding and complex. The manager requires a broad set of skills including agronomy, livestock husbandry and financial and personnel management. The manager has to be able to manage the risks of variable climate and volatile commodity prices while ensuring that natural resources are maintained and improved, sheep welfare requirements are met and that the family has an acceptable lifestyle.

Successful farm managers understand and monitor the financial performance of their business, understand the key profit drivers and focus on the key aspects of management to ensure success. They understand pasture production and feed requirements, can manipulate feed supply and feed demand to optimise productivity and profitability. The successful manager is aware of the financial, environmental, animal health and welfare and personal risks that can have an impact on the business, and how to manage them.

Business planning

All producers have different visions and objectives. A key to realising objectives is to develop and constantly update a business plan. The plan must encompass all aspects of the farm business. In a complex system involving physical resources, variable climate and numerous options for pasture and livestock management, having objectives and a vision of what the future will look like is essential to maximise profitability and manage risk. In a constantly changing physical and financial environment, the manager must be motivated to manage change and must have a clear plan.

Plans can be long and short term, strategic or tactical. Long-term strategic plans set direction of the business for the next 5 to 10 years and include specific markets to be targeted. Plans should also be made for immediate or shorter term issues.

Developing a business plan

The first step in developing a business plan is to describe the mission, vision, goals and objectives of the farm business.

The second step is to describe and review all aspects of the current farm business including:

• physical resources

• financial performance

• enterprise mix

• productivity

• environmental management

• human resources

• overall business structures.

The third step is to identify the strengths and weaknesses of the farm business and the opportunities for, and threats to, the farm business.

The key issues that must be considered when developing a business plan should include:

• future financial plans

• future enterprise mix

• future production plans

• future pasture development plans

• future marketing plans

• future natural resource management plans

• future human resources.

The plan must contain an implementation schedule and monitoring strategies.

Strategies can then be developed to achieve goals and objectives. Finally, these strategies can be implemented to achieve success. All aspects of the plan should be monitored and reviewed as business conditions and/or personal goals and objectives change.

When developing a farm business plan, the resources and expertise of all people involved in the business should be used to ensure the plans is comprehensive, realistic and achievable.

Setting mission, vision, goals and objectives

An overall mission statement defines the fundamental purpose of the enterprise: describing why it exists and usually the level of performance. The vision defines the desired or intended future state of an enterprise, or what the enterprise wants to be in terms of its objectives: it concentrates on the future and is a source of inspiration.

Objectives are continued statements of intended future outcomes. The objectives set for the business should provide a general direction for all aspects of the business. If numerous objectives are set, it is important to prioritise them.

In contrast, goals are specific, time-bound statements of intended future results. For example, an objective may be to increase pasture productivity and a goal may be to renovate pastures and apply additional fertiliser on a specific area of land within a certain time frame.

Sometimes the terms goal and objective are used interchangeably.

A good goal is clear and specific and can be measured; it is also achievable and realistic and can be completed in a certain time period.

Review of all aspects of the current farm business

There are many aspects of the farm business that should be evaluated. For many producers, analysis of the farm’s performance ends with the taxation accounts. For those with financial commitments, more detailed financial reports are required. Some producers are just interested in looking at physical performance such as wool cut per head or lambing percentages. Alone, these offer little insight into enterprise profitability and efficiency. Detailed financial and physical reports offer so much more and, apart from been part of a business plan, provide the foundation for critical analysis of the existing enterprise to identify opportunities for improvement.

The records needed to analyse the farm business are listed below.

• A balance sheet with separate and combined statements of farm and off-farm assets and liabilities (using realistic valuations for all assets). Apart from providing a statement of the farms’ financial position, the balance sheet is useful to monitor changes over time.

• A cash flow budget to outline the inflow of cash and outflow of expenses from the business. Cash flow budgets can use actual accounts or budget future cash flow. They are usually conducted on a monthly basis, but can be budgeted long into the future, particularly when major investment decisions are made. Understanding cash flow is critical in a farm business because cash flow budgets allow proper planning for future development and allocation of expenses. There are numerous accounting programs available to assist in development of cash flow budgets.

• A profit and loss statement, which, from a management perspective, is different to taxation profit. The profit and loss statement should take into account the livestock inventory, crop inventory, owner operator wages and depreciation. The profit and loss statement is crucial for benchmarking analysis.

• A stock schedule and crop schedule are essential for an enterprise analysis. An enterprise analysis cannot rely on the numbers sold or value sold alone. The stock schedule should be broken down to each class of livestock and include opening numbers, closing numbers, number sold and numbers purchased. For the crop schedule, all supplementary feeds fed to livestock should be documented, whether produced on farm or purchased.

• Physical performance data including wool (greasy and clean) and meat production (live weight and carcase weight), fertiliser type and amount and land use by area.

• Details of labour use, including family and employed labour and contractors.

• Taxation accounts are a useful starting point for an enterprise analysis. In many cases, taxation accounts are the only information readily available to start an enterprise analysis.

Farm analysis and benchmarking

Farm analyses are undertaken for many reasons and at different levels of the business. To gain a full understanding of a business, a full financial analysis should be conducted. Analyses can be conducted to compare the performance of enterprises in an individual farm between years (withinfarm analysis) or to compare performance of different farms in the same year (between-farm analyses). Both strategies are very useful and important.

Within-farm analysis

Within-farm analysis can provide information on performance and a useful comparison of individual enterprises on a farm, especially when conducted over successive seasons. It is important to understand the impact that one enterprise may have on another by comparing them. A livestock enterprise can benefit by periodic grazing of winter wheats or grazing crop stubbles – enabling higher stocking rates compared with a livestock only enterprise – however, for the first few years post cropping, pastures may not be as productive...

Table of contents

• Cover
• Title
• Copyright
• Foreword
• Contents
• Acknowledgements
• Dedication
• Introduction
• Chapter 1 Business management
• Chapter 2 Pasture growth and management
• Chapter 3 Nutrition and feed management
• Chapter 4 Drought management
• Chapter 5 Reproductive management
• Chapter 6 Disease management
• Chapter 7 Genetic improvement
• Chapter 8 Animal welfare
• Chapter 9 Working dog health
• Appendix 1 – Monthly management reminders
• Appendix 2 – Recording sheet for estimating average pasture height
• Appendix 3 – Cutting and drying pasture quadrants for estimating pasture availability
• Appendix 4 – Cost per weaner for different ram prices, joining rates and weaning percentages
• References and further reading
• Index