Breeding profitable sheep that are fit for purpose
MLA & AWI July 19, 2024
Breeding and management that ensures the expression of desirable genetics drives profitability in a breeding enterprise. What defines desirable genetics will depend upon the environment (or farm) and the markets being supplied. The challenge is to breed an animal that fits both the environment and the target markets. Such animals are considered ‘fit for purpose’ and are most likely to improve profitability.
Fit for purpose
It is important to ensure livestock are fit for purpose, or more specifically fit for both the farm and fit for the market. This means livestock perform well in a given operating environment, under existing management and produce what the market wants. This should be consistent with the overall business objectives.
Source: MLA BredWell FedWell
Matching the right kind of animals to the environment and to the style of management will go a long way to optimising the production of kilograms of high-quality saleable product per hectare and, in turn, generating profit.
Avoid trying to fit a square peg in a round hole. For example, avoid producing a highly specific product in a marginal and unreliable environment with limited capabilities and resources.
Producers understand their property and their target market best, encourage them to be confident in their knowledge and call on this in their decision making. Always appraise generic gross margins or the likes in the context of the operating environment and local knowledge.
When the parameters of what ‘fit for purpose’ means for a given enterprise have been determined, profit can be generated by optimising the use of breeding and management in response to the profit drivers. Producers will be better able to manage their enterprise to optimise profit and may even identify other business models, structures or markets that may be better suited to their circumstances.
What makes sheep fit for farm?
Fit for farm requires an understanding of the operating environment (MMFS Module 5 Protect Your Farm’s Natural Assets and MMFS Module 8 Turn Pasture into Product) as well as the business structure (MMFS Module 1 Plan for Success and MMFS Module 4 Capable and Confident People) to ensure the animals are well suited.
Asking a range of questions can help determine whether particular livestock are a good fit for a given farm:
- Can they handle the climate?
- Do they need to be robust and able to walk long distances or up and down hills to access feed and water?
- Do they have any obvious or unusual health and welfare concerns?
- Can they be managed productively and efficiently?
- Do they need to cope with certain conditions, such as parasite burdens?
- Is the environment prone to large volumes of dust or vegetable matter?
- Are there inherent characteristics of the pastures, climate or infrastructure that will influence enterprise selection?
- Does the farm have a shearing shed?
- What micron wool is best suited to the region?
- What’s more, are they suited to the mindset and capabilities of the management team?
Consider whether the fit can be influenced by management. For example, if a farm is prone to grass seed, can this be managed through paddock selection or pasture and livestock management, or does this limit the kind of livestock that fit the farm?
On an enterprise level, some farms or areas of farms may be better suited to wool, wethers or store lamb production rather than finishing.
Also consider the broader business operation:
- How does the enterprise fit in with other activities?
- Are there complementary opportunities such as may exist in a mixed farming operation, for example, or does a first-cross operation complement the wool production enterprise or will it compete for scarce resources?
- Are areas of the farm cut off for extended periods (e.g. during floods)?
- What is access to essential labour (such as shearers) like at the farm?
- Is labour available when needed? Does the enterprise impact risk management or offer increased flexibility and the opportunity to leverage other enterprises?
- What are the risks and consequences involved in not meeting specifications in some years?
If a farm is a good fit for a particular enterprise but there is a lack of experience or dedication within the business to conduct that enterprise successfully, bringing in technical expertise may be an option. People tend to do better at what they like doing. Encouraging producers to focus on their interests will provide a better fit than an enterprise that does not engage them. While an alternative enterprise may potentially be more profitable on paper, if a business owner or operator really doesn’t want to do it, chances are they will not do it well and this may mean it’s not a good fit at the end of the day. For example, if a producer is passionate about Merino sheep, cattle production may not be the right option.
What makes sheep fit for market?
When thinking about a target market, consider the current market as well as the likely future for that market. How far away might that be (e.g. within five years or 10 years)? Do changes need to start now to the type of animal being produced to meet present or future requirements? For example, how does the type of lamb being produced now perform against emerging cut size and eating quality specifications? What about fibre diameter demands, animal welfare requirements, availability of future parasite control chemicals, and future methane and carbon market requirements?
A few future-proofing questions to ask include:
- What might the markets do in the future, and when?
- Who will be leading the change — other producers (restocker market), product consumers, customers along the supply chain, brands or retailers, domestic or international governments?
- Where is the emphasis needed to continue improving management efficiency in a production system? What opportunities exist to reduce wastage and improve outputs?
- What is still going to be relevant and what will become obsolete?
- Can changing consumer preferences or requirements be identified?
- Are there market forces which may cause legislation to change and will this affect the suitability of the livestock for a particular market?
- Are there market access requirements which may affect the suitability of livestock for particular markets? For example, quality assurance schemes, or carbon or emission requirements?
- How much demand is there for the livestock in an enterprise and is this likely to change?
- Does the business have the scale to efficiently service existing contracts, or access larger contracts and direct marketing opportunities?
- Does the business wish to join a product quality assurance scheme? What are the pros and cons of doing so?
- Does the business have the size or capability to supply markets and is value adding an option? For example, selling scanned-in-lamb ewes?
Think also about market proximity. Livestock may fit the farm and theoretically fit a market, but that market fit also needs to consider the practicality of delivery. If livestock can’t be delivered to market as required by that market, it may be an issue. When the market that best fits an enterprise and vice versa has been identified, optimising the number of animals that meet this target market becomes the goal.
Agents, wool brokers, trusted advisors, industry commentators and other growers can help producers better understand possible future markets. Organisations such as Australian Wool Innovation (AWI), Australian Wool Exchange (AWEX) and Meat & Livestock Australia (MLA) are also a source of market information.