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The profitable integration of cropping and livestock

Monday, February 26, 2018

The ability to integrate two enterprises (sheep and cropping) in a synergistic manner ultimately drives profitability in a mixed farming business. The concept of cropping and livestock enterprises being synergistic often sounds straightforward from a theoretical perspective. The practical implementation around consistently achieving this goal is often much more difficult.

This was the basis for a national MLA project* looking at three years of benchmarking data from 100 mixed enterprise businesses from Western Australia, South Australia, Tasmania, Victoria and New South Wales.

Simon Vogt, Agribusiness Consultant from Rural Directions Pty Ltd explains “our national project partners and contributing producers have been gathering and analyzing numbers for the last six months and we are now ready to hit the road and present our findings to the industry”. Within each state the project is based on agro-ecological zones, and each zone has a Management Guideline specifically developed to reflect localised issues and opportunities.

“There are a large number of profit drivers in both a cropping and a livestock enterprise, but the national analysis found the superior profitability achieved by Top 20% producers is a function of four primary profit drivers. These are gross margin optimisation, developing a low cost business model, people and management and risk management” said Simon.

A summary of the national results are as follows:

Item  National Top 20% producers by Return on Equity Average of the Remaining 80% of National producers
Return on Equity (ROE) 7.8% 1.4%
Return on Assets Managed (ROAM) 7.8% 3.9%
Profit as % Income 28% 5%
Gross margin per Ha (cropping) $664 $431
Gross margin per Ha (livestock) $392 $241
So what are the top producers doing differently to achieve such success? This will be the theme for the workshops set to roll-out nationally from February to April 2018. Producers are invited to attend a local workshop to learn more.

 

The half day workshops will explore the results from the top producers, present practical information and enable local producers to better understand the profit drivers within their own business. The workshops will be tailored for each agro-ecological zone to ensure relevance.

Workshop deliverer, Simon, explained the workshops will “not only enhance producers’ insight, but provide producers with the ability to identify opportunities for profitable integration within their own business”.

South Australia

Loxton, Wednesday 7 March

Bordertown, Wednesday 14 March

It is essential to register for the upcoming workshops.

To register or for more information please contact Rural Directions, phone 08 8841 4500, email admin@ruraldirections.com or visit www.ruraldirections.com/events

*These workshops are an output of the MLA Project ‘The profitable integration of cropping and livestock in Southern Australia’ (L.MXF.0001). Thanks to the MLA investment, these workshops are free to attend.