Which Ewe Enterprise?

Which ewe enterprise?

- [Kieran Ransom] Lisa Warn who was in the previous session, she's done a lot of this type of background work on profitability estimation, and same as John WebbWare with a vast experience in other parts of the state that I lack. The three of us have been analysing the Elmore's data. And so the Ewes for the Future, Lambs, Wool, and Profit, this is our first trial. We're now into our second trial at Elmore. And in my retirement, I'm a volunteer with the Elmore running this trial like everyone else. So that's the Elmore Lamb Group that do a lot of the work in the trial, and certainly the Elmore Field Day staff keep an eye on the sheep during lambing on an everyday basis. And so it's The Campaspe Lamb Producers Group. So the first part of it is overview of the ewe trial results. Then how we did the economic analysis. Then the financial results, and we're forgetting about that part today because there's basically no time. So the ewe trial, 210 ewes, five breeds, 42 ewes per breed. And each breed came from three properties, and 14 ewes per property. So this was to make it statistically valid for people to log these sorts of things. So they were crossbreeding ewes from SuperBorder rams, a subgroup within the Border Leicester breed society. Merinos, Peppin type from local studs, local merinos, and three dual purpose types: Centre Plus merinos, Dohnes, and SAMMs. Centre Plus, we got pretty good breeding. ASBVs for all these dual purpose characters. And Dohne and SAMMs, there's certainly a lot of interest in those, especially when we started. And they're all in the district as well. So the key measurements that we were looking at were lambing percentage, lamb growth, wool weight and fibre diameter, and the mature weights of the ewes. So the main interest, I suppose, is in the lambing percentage of the different types of sheep. So over the five adult years, we had 132% out of the first cross ewes and the SAMMS. The local merinos, the Loddon Valleys, and the Dohnes were virtually identical. And the Centre Plus merinos, the dual purpose type merinos were about dead in the middle. So we look at the lamb returns including the skins. This takes into account the lambing percentage, the weights of the lambs from the different breed groups, and their dressing percentages. So certainly, the first cross ewes and the SAMMS had the heaviest lambs. The dual purpose merinos were about 0.7 of a kilo behind, and exactly the same as the Dohnes. And then Loddon Valley merinos were a bit further behind again. But they were about 3.3 or 3.4 kilos in live weigh, in lamb weight behind it, the cross-breds. And they're also down by about, I think, 0.9 of 1% in dressing percentage. So the wool returns. OK, there's a lot more measurements in other documents about diameters and weights, all that sort of stuff. But the first cross ewes and the SAMMs, reasonably similar in fleece weight. The two merinos, the Centre Plus were reasonably similar. These certainly cut a lot more wool, but these were two microns finer. This is the prices of the actual times of when we went through them at the time the trial was running. And later on, we'll get to historical prices and look at that. And the Dohnes were a bit behind again in wool value. When we add up the lamb and wool returns, certainly we will make returns, wool returns, make returns, wool returns, that sort of thing. But these are returns per ewe and haven't got the DSC rating based on the ewe body weight and the lambing percentage built into it. And also, the lamb growth rate. So this would have a higher DSE rating because the lambs grow heavier, and so they've got a higher DSC rating than those. So this is a slide that skipped, and this is the ewe weights over the five years of the trial. So they were born in their home farms here, they arrived at Elmore when they were of age, they were joined as ewe lambs here.

We haven't included the ewe lambs results. They were joined for their first adult lambing there. They were joined for their second adult lambing there. And then we had three adult lambings over there. Though at what we'd call normal industry waits through that first two joinings. Then we had a wet summer, 20 inches of rain, abundant weeds. We had 12 months green feed and so the ewes went up in weight. And then next summer we had 14 inches of rain, we can all remember those. Especially in Northern Victoria, we had all those grass summer weeds, that sort of thing right through. Right. Now, John (WebbWare) will take over part two.

- [John WebbWare] Thank you very much for the opportunity. And look, I must say, Kieran's done a fantastic job with this trial over a long period of time, and a lot of you are familiar with a lot of the outputs which have come out of it, and continuing it with the new group of ewes. Quite different, but really valuable information which will come out of it no doubt. What I'm going to talk about is specifically looking at the financial analysis of this whole system with the different ewe breeds, looking at long term profitability of the different systems. And I'll just explain a bit of background. But I mean, in reality if you look at the Southwest Victorian Farm monitor data comparing wool sheep and prime lamb enterprises. And the prime lamb enterprises comprise both specials, prime lamb flocks, and dual purpose flocks. But there's a huge variation in profitability over the long term if you look at it. But drilling that down further, within the wool and within the prime lamb enterprises, there's a huge difference in the profitability of individual enterprises based on how they manage it, the genetics, and so on. But you can see, commodity prices insistent. And seasons make a huge variation over the long haul. So with that in the background, we thought to determine long term profitability of the enterprises requires quite a sophisticated analysis. So we wanted to look at long term climatic conditions so we modelled it over about 20-odd years, but you could have done it over 100 years, it just takes longer for the computer to generate the outputs if you do it over 100 years of actual climatic data. And we've used actual commodity prices of wool, lamb, grain prices as well over the long haul. And we've had fantastic seasons in there and hideous droughts as well, so that's been a pretty important point. And also, I mean when you look at the per head stuff, to look at overall per hectare profitability, you gotta consider the ewe size as well because obviously bigger ewes might have better per head performance, but what about their per hectare performance? So we've taken into account relative body weight of the different systems as well. So we thought we better trial it over different areas as well, analyse over different areas. So we've done a Southwest Victorian Hamilton perennial rye grass type pasture, 15 DSEs per hectare. And then looked at Elmore with two systems. A lucerne crop system where the lambs are finished and sold by March.

And also with an annual pasture system and crop where lambs are sold by November. Also we've gone up to Northeast Victoria as well, have looked at Rutherglen running 10 DSE per hectare. Slightly
different lambing date based on when would be most profitable for the different areas. So for a ewe lamb enterprise and lambs are sold by November. So we've looked at different areas, the outputs in terms of profitability with the core data that Kieran's generated out of Elmore. So if we look at just from a seasonal variation, you can see at Elmore, Rutherglen, and Hamilton quite different. I mean,
obviously higher rainfall down at Hamilton, that's a black median rainfall. The average rainfall is the black line. But you can see the variation there. And the medley shows is the very wet years at Rutherglen are as wet as the wet years at Hamilton, but the dry years, the drought years are a lot worse down at Rutherglen compared to Hamilton. And that similar large variation is also at Elmore as well. Tighter seasonal less variation at Hamilton, no surprise there perhaps to a lot of people. If we specifically look at what's happened with long term land prices, it goes up and down over time, but there's been a trend and obviously you'd have to have been locked up in somewhere without any communication to understand that land prices have been at the higher end more recently. But some of those years, even more recently, if we adjust the earlier prices with inflation, there's no massive difference between them, but it's certainly been trending up. And in the first half of the year, the land price tends to be a little bit less than in the second half of the year. A couple of exceptions if you quickly scan across there. I think 2005-6, spring and early summer was better than autumn, and same with 2012-13, and same thing. And if you look at wool prices from our system which ran from about there, there hasn't been huge premiums in contrast to beforehand. But we still factored in, for the different types of sheep, the premiums and discounts for what they actually physically produced out of the trial. Then we look at grain prices, long term, again, adjusted for inflation, so all talking in current dollars. And you can see there's been these spikes usually associated with drought. ordinary year drought in some areas, full on drought, major drought, and following year major drought. Although that 2007-8 year were a world spike in grain prices as well. That happened as well in world supplies. But interestingly, the 2015 year which was pretty much a severe drought in a lot of areas, because world grain prices were so low. I mean, that was a very unusual drought. Cheap grain, so it was pretty easy to justify feeding them for short. So we factored in those long term commodity prices as well. If we look specifically at outputs, and there's a massive
number of outputs. We'll just take a few snapshots here. You can see this is up at Rutherglen with the annual pasture system with first cross ewes. And this is the actual gross margin per hectare for the first cross ewes with those commodity prices and local seasonal conditions in farm system. And quite a big variation, but this is a period of moderate or lower land prices. Really got hit hard with very poor seasonal conditions over those 2000s. And then more recently, a pretty good year. Seasonal conditions and excellent land prices. So you can see there's quite a big variation over time. So that's one set of data. If we look down to Hamilton with the perennial ryegrass system with the first cross ewes, what's really striking is that they largely missed out on the really tough seasonal conditions, although 06-07 and 07-08 were still pretty serious droughts down that part of the world. But compared to other areas of the state, the impact wasn't nearly as apparent which was quite interesting. And for people looking down to Hamilton say, "Yeah, well that's right." And for the locals, they might debate that, but that's the reality of it. And certainly based on all the information I've seen from producers across Victoria, it's giving pretty consistent and realistic outputs. If we drill down to the different enterprises, and this is a summation for Rutherglen, but a similar picture across the board. The blue is from 95 to 2001-2. The red is from 2002 to 2008-9. And the green is 2009-10 to 2015-16. But what's relevant with this? I mean whilst there's differences with different seasons in those seven year blocks, you can see the relative ranking between the different ewe breeds really didn't change across the board. So in the blue, in the 95 to 2001-2, the first cross ewes in this first column, their ranking was similar to the Lodden Valley merinos, and the Centre Plus merinos, and Dohnes, and SAMMS, and so on. So that relative ranking really didn't change across the board for the different ewe breeds and the different sets of commodity prices and seasonal conditions. I mean look, what I see in reality, that's exactly the case. People all say, "Oh, but we're different down this area." Well, that's not quite true. There is local circumstances which do tweak things and all that sort of stuff, but that sort of output was pretty predictable from my perspective in reality. If you just drill down to look at the last seven years, which a lot of people actually got better recollections of, you can see that this is on a gross margin per DSC level so taking into account those body weight differences, we're taking into account depreciation differences depending on

longevity and also the actual long term values of sheep and so on. But you can see that there is quite different differences between breeds, and I'll let you make your own assessment of that data. But it's quite compelling differences in different ewe breeds, which is really important to realise. If you look at combining all the different systems together over the 21 years, you can see that relative ranking across the different farm systems doesn't change with different ewe breeds. It's largely the same. There's a bit of tweaking between the systems, but it really doesn't change your overall picture to what that previous slide was showing in terms of the relative ranking and performance of the different ewe breeds in this trial. And I think that's an important message to understand. We'll just finish up and if there's any questions to finish up, that would be terrific. But look, the reality is there's large differences in profitability based on ewe breed in this data. And when we used actual data from the trial and combined that into a whole production system to give our outputs. I mean, key factors include the fleece values of the different breeds, reproductive performance, lamb values, ewe depreciation, ewe body weight taking into account that stocking rate part of the equation. So in essence, do your sums carefully when you're looking at the different systems if you're looking at changing because it's not just a simple answer of looking, "Aw, this one's got a high lambing percentage." What about the reproductive performance? What about the lambs they're producing? What about the fleece value? So at the moment, 2016-17, obviously a large increase in the value of merino wool and finer wool, and so that's gonna put more it just at the current time it's going to look better for those, the merinos in the system. So anyway, we'll leave it at that. If there's any questions, fire away. And so we've got a few minutes I think before we have to move on. So any questions? And look, one thing I will say, there will be a more comprehensive report will come out of this, so you'll have the opportunity to look at it in more detail. This is a snapshot of where we're at, but it's certainly been an incredibly powerful bit of analysis using that data that Kieran and Elmore group have generated over a number of years. OK. We set the lambing time for the different systems. What we considered was the biological optimum for the different areas. So I don't think it would make a big difference, but it does tweak say for example, I mean more so cross-bred ewes earlier you go. All of them are going to be subject to a lot more feeding, but there's going to be a penalty for reproductive performance going earlier, particularly with the cross-breds compared to the merinos. But we set the lambing time based on what we considered was pretty much the optimal time for those specific areas based on a lot of grass grow modelling. So I don't think in essence it would change the fundamentals of those results.