Beef Industry Strategic Plan – Grass-fed Sector
Discussion Paper, Pillar 4
PRODUCTIVITY AND PROFITABILITY
Background:
The fourth Meat Industry Strategic Plan (MISP 2020) was launched on 9 September 2015. The Plan, co-ordinated and compiled by Red Meat Advisory Council Ltd, covers all segments of the beef, sheep and goat sectors and sets out the strategic priorities for the industry as a whole for the coming five years.
Each of these sectors is developing its own strategic plan as a way of adding further detail to the five ‘Pillars’ of MISP 2020, these being: Consumer and Community Support; Market Growth and Diversification; Supply Chain Efficiency and Integrity; Productivity and Profitability; and, Leadership and Collaboration. (MISP 2020 can be downloaded from www.rmac.com.au and should be read as background to this paper.)
This Discussion Paper is the fourth of five (one per Pillar) being used as ‘thought provokers’ for Cattle Council of Australia’s development of the Beef Industry Strategic Plan (BISP 2020) that will sit under MISP 2020.
Considerable work and resources have gone into the formation of MISP 2020. Because of this, BISP 2020 will be designed around the same headings and structure.
Under Pillar 4, there are three Priorities and four Imperatives:
· Production efficiency in farms and feedlots [only the “farms” component is relevant to BISP 2020]
o Decision support to improve the farming business
o Increasing livestock productivity through new research
· Processing productivity [not relevant to BISP 2020]
o Increasing access to, and the efficiency of, labour
· Live export productivity [some relevance to BISP 2020]
o Improving livestock performance in export operations
The economists who analysed the numbers behind BISP 2020 have provided specific evidence as to what can be achieved if certain activities are followed and what might be lost if not. Comparison of activities is expressed as benefit/cost ratios.
The benefit/cost for this Pillar is a little over 3:1 for the next five years and around 8.5:1 for the 15 years to 2030 if current investment levels are maintained in nominal terms.
Trends, developments and issues:
As mentioned in the dot points above, the “farms” component of the first Priority (Production efficiency in farms and feedlots) is relevant to the grass-fed sector as is a small portion of the third Priority (Live export productivity). The economists suggest that, for the five-year life of BISP 2020, grass-fed-cattle expenditure on the these Priorities should remain unchanged from the current level of a little under $8.5m pa for on-farm productivity and $0.141m pa for live export productivity.
Through MLA, considerable R&D has been and will continue to be done on productivity in our sector. There was a general feeling among MISP and BISP workshop attendees that the balance of this research is about right, hence the recommendation to keep current spending levels as they are in nominal terms over the life of the Plan.
A great deal of research in the area of productivity revolves around genetics, feed conversion, pastures and supplements, animal health, pest and weed control and management practices.
While many excellent research publications can be sourced from the websites of relevant research organisations and MLA, a large problem exists in terms of producers’ willingness to access these and apply, or experiment with applying, the findings; MLA is implementing mitigation strategies but it will remain a problem.
Key points regarding ‘productivity’ that were raised at recent workshops include:
· productivity improvements are worth pursuing but not at the expense of other things
· feedback on product attributes, including problems, needs improvement to assist producers in raising productivity
· business skills can be improved, with farms treated as businesses
· technology use needs enhancing to simplify adoption and increase access to and uptake of R&D results
· a yield- and value-based system needs strong support, with utilisation of objectivity and technology a key
· “productivity” needs to be defined to include profitability, efficiency gain and meeting consumer wants
· must seek improvements to producers’ access to on-farm production technology.
One issue that crosses over with Pillar 1 (Consumer and community support) relates to the extent to which consumer and community behaviour will potentially influence on-farm management practices such as dehorning, spaying and castration, which themselves affect productivity.
Implications for the Industry:
‘Greater productivity!’ is often the catch-cry of industry. There continues to be debate over what this actually means, but in essence it’s at the core of industry’s capacity to remain viable over the long term.
To some extent the producing sector is fortunate in its capacity to ride through periods of financial adversity; it is well accustomed to such fluctuations. Maintaining vigilance around the business end of farming helps to protect individual producers against downturns and enables them to make the most of upswings.
Prices for cattle are currently high and are forecast to increase further as our markets expand and supply shrinks once herd rebuilding begins after the protracted drought affecting crucial parts of Northern Australia. For those with cattle to sell, there is a reason to relax, to enjoy the good times; however, it is also the time to investigate and apply new methods of farming that will improve productive capacity and benefit each producer and the industry as a whole.
Strategic issues to explore:
The following strategic issues can be discussed in an online forum at (insert URL)
A. In terms of productivity, what are the most important short-, medium- and long-term issues facing industry and how should they be approached?
B. What technology is most needed in rural and remote regions to advance productivity for producers and the industry as a whole?
C. How best can collective action and funding improve the business skills of individual producers for the benefit of all levy payers?
D. What additional feedback from buyers/processors would assist producers in meeting market specifications and/or raising their productivity levels?
E. In the absence of increased productivity, what elements can and should be improved to maximise profitability while maintaining long-term sustainability?
Feel free to submit ideas around these questions or additional questions that come to mind.
When considering your comments, think long: imagine yourself at least 15 years out with the industry in an ideal place... How did we get there!
Conclusion:
In presenting this series of papers for industry discussion, Cattle Council is intending to develop a set of Key Activities for each Pillar under BISP 2020. This will then allow discussions with the Industry’s service providers (MLA, AHA and NRS) to determine meaningful programs and performance indicators for the sector to achieve its objectives. Regular monitoring and reporting against these performance indicators will be a critical part of BISP 2020.
Feedback is requested by Friday, 2 October 2015.
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