Wirruna Poll Hereford Stud

Moving towards a more sustainable beef production system

Ian Locke

Wirruna Poll Hereford Stud

“Spring Valley” Holbrook, NSW 2644

AUSTRALIA

Introduction

There is a common theme of beef producers all over the world, to produce beef profitably with high market acceptance and at low cost. Often this needs to be done against a backdrop of declining ‘terms of trade’, which requires continual improvements to the production system in order to remain competitive and sustainable in a world market.

In this paper, I aim to present the major factors that should be considered in designing and maintaining a low cost beef production system and then focus on the value of genetic improvement to make continual gains. I believe that low cost production systems win at the end of the day. After all, the major comparative advantage of the beef cow (and other ruminants) is that she eats ‘grass’ and turns it into protein. Generally, there is lots of grass with very little use to other industry or mankind, making it a low cost input.

To begin with, I wish to give you some background on the Beef Industry in Australia, our production system at Wirruna and some of the foundations of my thinking. Hopefully this information is both relevant and useful for your beef businesses in South Africa.

In Australia, we have close to 30 million head of cattle (2.5% of the world’s cattle population). Over 65% of the beef we produced is exported and there is also a significant live cattle trade of approximately seven hundred thousand head per year. Our heavy reliance on this very competitive world export beef market has heightened the need for beef producers to meet product quality standards of different markets and to produce beef at low cost when compared to our competitors.

Location & Climate

Our property “Spring Valley” is located at Holbrook in southern NSW.

When compared to the latitude of South Africa, our location is below the Cape of Good Hope at about the 35 S parallel while Durban is on the 30 S parallel. Nevertheless, we do sell many bulls up to the Tropic of Capricorn which lies to the North of South Africa.

We have a temperate climate with winter dominant rainfall averaging around 708 mm/annum. Springs are very reliable (10% of Springs fail) and Autumns not so reliable (60% of Autumns’ fail). We grow 80% of our pasture in Spring and therefore our livestock systems are designed around calving and lambing and growing out animals in Spring when the pasture is available.

The Property-“Spring Valley”

The property is 1,520 Ha with around 1,400 Ha usable for grazing livestock. The soils and landscape on the property are highly variable and include alluvial and heavy clay flats to granite based slopes and rocky hills. The soils are naturally acidic (pH = 4.0 – 4.5 in CaCl2) and inherently infertile (7 – 9 mg/kg Olsen P). Nevertheless the country is very responsive to inputs of lime and super phosphate.

The property is largely improved to mostly highly productive phalaris and sub clover pastures and some ‘feed gap’ pastures such as lucerne, ryegrass and forage rape. We view good pastures as the powerhouse of the business - well fertilised and a grazing system allowing paddocks to be rested ensuring them to, not just survive, but THRIVE.

Table 1

The Enterprises

Both seedstock beef and sheep for prime lamb enterprises are run and driven as hard as we can with a focus on per hectare performance rather than production per head. A flexible backgrounding enterprise is run from June to December, if the season permits utilising surplus spring feed.

Table 2

* DSE stands for Dry Sheep Equivalents which is the energy required to maintain a non-lactating sheep

Benchmarking

Over the last 20 years we have compared our business to other similar businesses through a Benchmarking service offered by an agricultural consulting firm called Holmes Sackett & Associates. This has been an important foundation to my thinking about running a profitable beef enterprise.

Benchmarking is an excellent tool to highlight the strengths and weaknesses in your business and identify the key drivers that effect profit. Continuous Benchmarking over time allows you to set targets (Benchmarks) and monitor your performance over time to ensure that you remain focussed on these key profit drivers; these are:

• How many kilograms of product you produce per hectare per year (kg/Ha)
• The cost of production of the product ($/kg)
• Price received ($/kg)

Profit = Product x (Price Received - Cost of production)

$/Ha=kg/Ha x ($/kg-COP$/kg )

When we first started Benchmarking, we found that our efforts to restrict expenditure were not helping our profitability. When compared to other farmers we saw that those who ran more stock and spent more on pastures and labour saving infrastructure were more profitable. We recognised that the most profitable beef producers had production systems designed to increase productivity and decrease production costs per kilogram of beef produced. Increasing the number of kilograms of beef produced in the herd can better absorb the fixed costs. And thereby reduce the cost to produce a kg of beef.

Typically, as most beef producers are price takers, there is very little difference in the price received/kg between the top and average commercial beef herds. The differences in Cost of Production (COP) and productivity/Ha, on the other hand, are vast. Luckily, these factors are largely within our control, and that is where we should focus our efforts!

To produce more beef at lower cost, the major factors are:

Locke Paper for Aldam Stockmans School 20122 June 2019

Page 1

• The Production System
• An Efficient Cow Herd
• Genetics
• Cost Control
• Animal Health
• Risk Management

Locke Paper for Aldam Stockmans School 20122 June 2019

Page 1

Through Benchmarking we have developed a deeper understanding of the beef business, and the key drivers that affect beef herd profitability. Using our seedstock beef enterprise as an example, I wish to discuss the importance of designing the production system and developing an efficient cow herd that is screened and selected with-in your particular production environment, for a more sustainable beef business.

Seedstock Beef Enterprise

I am the 3rd generation of the Locke family to manage the Wirruna Poll Hereford herd, which was established by my Grandfather in 1949. Now over 60 years old, the herd benefits from a long history of selection and is among the best performance recorded herds in Australia, having been part of the validation of Breedplan® with a total of some 9,000 animals performance recorded including over 7,000 birthweight records and over 4,400 animals with carcase scan records.

The seedstock beef enterprise differs from most studs in that we place a large emphasis on raising cattle under commercial stress conditions, believing that the genetic outcomes are more applicable to our commercial client. One of my criticisms of the traditional stud industry is that they change their environment to suit their genetics. Meanwhile, the commercial beef producer must have the genetics that suit their environment.

The Production System

Clearly it is important to plan your production system so that you can competitively produce and supply cattle within the demands of the market specifications. Important factors are stocking rate, calving time and steer turn-off time. These need to be considered in the context of your operating environment.

Stocking Rate

Economic modelling of beef herds show that stocking rate has a significant influence on income.

In our environment, carrying the optimum amount of stock that can utilise our Spring flush of feed, yet not be too costly to carry through the ‘winter bottleneck’ of low feed availability, is the key to maximising profitability in a grass fed livestock system.

Stocking rate is a key profit driver and having animals that can cope with high stock rates is crucial to our business. The following graph shows the annual and mid-winter stocking rate per hectare of Wirruna Poll Herefords. We assess stocking rate in units called Dry Sheep Equivalents (DSE).

Graph 1

In this graph we can see that we have been able to drive stocking rates up from around 10-11 DSE/Ha (13,500 DSE) in 1995 to the current 15 DSE/Ha (20,000 DSE) on the same area of land. This is around 50% more highly stocked than the district average. The recent drought which affected much of Australia saw a decline in stocking rates but we have since returned to the pre-drought levels.

The important aspect about Graph 1 is the widening gap between the annual average stocking rate and the mid-winter stocking rate. Total livestock production has grown, but without adding extra pressure to our most difficult feed months in mid-winter. This has resulted from changes in calving and lambing time, timing of stock sales and using trade stock in good years to utilise feed surpluses. These changes to our production system have added greatly to our overall production and resilience in the difficult years. A key factor is that the Spring grown pasture is being better utilised.

Calving Time

In a beef grazing business, grass is one of our major inputs. In designing the production system you want to understand the seasonal fluctuation of both pasture quantity and quality. The following graph 2 shows the pasture production curve for our environment and then the energy requirements of an August calving cow is overlayed on top. As the energy requirement nearly triples during lactation when compared to a dry cow, it is best to calve “into the grass” to minimise supplementary feeding and have only dry cows when there is high likelihood of low feed reserves.

Nature is too expensive to fight, so you must design a system to work with it!

Graph 2

Steer Turn-off time

Again, consideration of ideal steer turnoff time depends on your production environment. Nevertheless, optimising the ratio of steers to cows run can make more efficient use out of your quality feed resources.

Graph 3

A kilogram of quality grass being eaten by a steer for growth can be more efficient than a cow eating the same kilogram for maintenance. So selling calves as weaners, when you have quality grass available is often inefficient. Likewise, bullocks that have reached maturity are eating grass for little or no gain in value.

Many Wirruna clients aim to grow-out and sell steers at around 14-20 months of age for either feedlots to finish (14 to 16 months) or as grass finished animals directly to the abattoir (18 to 20 months). This enables them to capture a further efficiency of utilizing compensatory weight gain with cheaper quality feed resources during a steers second Spring. Sluggish yearling winter weight gains can be efficiently improved over the following Spring flush to result in little final weight difference, but at low feed cost.

Efficient Cow Herd

Management

An efficient cow herd is a key element of profitable beef production systems. Management is the key. A disciplined herd screening process should be implemented so as to only replicate the animals that are in fact ‘doing the job’ in their environment. Any animal that fails to raise a live unassisted calf every year should be culled with no exception and no favourites!

At Wirruna we call this the ‘Hurdle System’. The hurdles for a female to stay in the Wirruna herd are as follows:

1. A heifer must concieve in a 6 week mating period at 14-15 months to calve at 2 years (Cull on empty Preg Test)
2. A heifer must deliver a live unassisted calf
3. Every heifer must bring a calf of acceptable quality through to weaning age
4. Each cow must rebreed in a 6 week mating period
5. Each cow must continue to bring a live unassisted calf of acceptable quality through to weaning age every year.

All that fail the above are removed from the breeding herd.

By setting up this disciplined approach to breeding over the medium term, I believe that you are setting up a highly fertile, efficient and low cost breeding herd well adapted to their environment. The herd becomes easy care, screened for fertility, labour consuming tasks such as dystocia and is simple to manage.

Herd Structure

The Cow herd should be young in age. This is done by retaining at least 90% of heifers for mating, and with plenty of young replacements, cows over 8.5 years are sold (in steady state).

This further benefits the herd by speeding up the rate of genetic gain, increases the average production efficiency of the herd with a higher proportion of younger stock (refer graph 3) and reduces wastage through age related problems such as poor milk, loss of teeth and eye cancer. Also, young herds maximise your inventory value and can better handle the inevitable drought years.

Herd Fertility

I see the best measure of fertility as more calves weaned/cow joined. This means that a fertile cow herd encapsulates reproductive rate, calving ease and calf survival. As the saying goes … “Dead calves have distressingly low growth rates.’ There must be a zero tolerance for fertility failures.

To have a fertile cow herd, obviously you need fertile bulls too. Bulls have extra importance because of their heavy influence over the genetic makeup of the herd, often for 15 years or more.

Genetics

There is no doubt that genetics is important. The wrong genetics in the environment can be disastrous. In the Wirruna production system, we see strains of genetics and particular trait extremes that are often screened out of the cow herd, simply because they are unable to get back in calf every year under our stocking rate pressure. Typically large framed cows, with low genetic fat and cows with high milk can be tested empty at pregnancy testing time.

We believe that our disciplined approach to cow herd management results in a more feed efficient genotype, that is able to cope with high stocking rate conditions. The less feed efficient cows are screened out over time, especially obvious in the tough years.

The Wirruna cow is typically a moderate framed cow with above average genetic fat. These cows tend to be able to ride ‘the condition score roller coaster’ throughout the year. They are easy ‘doing’, put on the weight when the feed is available, and then live off those reserves over the leaner months.

Breedplan

BREEDPLAN® is the world’s leading genetic evaluation system for beef cattle. It producers Estimate Breeding Values (EBVs) or Estimated Progeny Difference (EPDs) for a range of traits. Like Benchmarking, BREEDPLAN® has been an excellent tool for seedstock herds, not only to measure individual traits, but also to benchmark the genetic progress of the herd for those traits.

Table 4

Wirruna Poll Herefords has performance recorded since the early 1970’s when it became a foundation member of what is now known as BREEDPLAN®.

Genetic Gain

The following diagram is a good illustration of the feeling of lift in your herd’s ability to meet its breeding objectives and market targets. Like a water skier, with not enough power in the boat, poor genetic gains can be dragging down your beef business!

Genetic improvement can be made for an individual trait or across a range of traits. In beef cattle breeding, the rate of genetic improvement is often ‘inherently’ slow. But the best thing about genetic gain is that it is both cumulative & permanent. This emphasises the sustainability aspect of genetic gain – it may take time but the genetic gains are permanent improvements to beef production system and the associated economic consequences. The key is to make gains in the economically relevant traits.

$ Index

Selection Indexes are available to allow the comparison of animals on the basis of how much profit they will generate, per cow joined, in a commercial herd. This is derived from the mix of economic traits measured by BREEDPLAN®.

Graph 4

The $Index is a perfect extension of BREEDPLAN® EBVs and offers an important tool to better focus on the most profitable mix of traits. The Grain-fed $Index, which was introduced for Australian Herefords in 2002, is shown in Graph 4, in this case the Wirruna herd is increasing at over the double the average rate for the Hereford breed. The on-going quest to improve $Index values is the foundation for a sustainable beef business, both to my clients and our own seedstock enterprise.