By Dr Phil Holmes
Many years ago, when it finally dawned on me how potentially important genetics were to the financial strength of a beef business, I sat down to write a checklist of all the essential features that potential seedstock sources must have in order for me to be interested in and attracted to them. Bear in mind, my motive was, and remains, superior business performance and I fully accept that not all producers share that motive. Making a profit and paying the tax on it is anathema to many commercial beef producers, for reasons that escape me.
At that time, the power of genetic advantage was not as apparent as it is today, but it was still there. For what it is worth, here is my checklist, which has not changed over time:
- Must pass the ‘Used Car Test’.
In other words, can you trust them; would you buy a used car from them? The future of your herd is partially dependent on the quality of the genetics that you employ, and if you lack absolute faith in the overall integrity of the source, there is a problem. I am not suggesting that many seedstock producers are crooks, I am only stating that for me, what I am told is the case, has to be the case, and is backed by objective evidence and a long track record of delivery.
- Do not trim feet, nor feed the living daylights out of them, and avoid shows like they are the plague.
All of this activity is errant nonsense and has absolutely nothing to do with highly profitable commercial beef production. This stuff is part of a separate industry which fails almost every test imposed on it to improve the profit of the real industry, and God knows the real industry needs more profit. I have yet to find one of this mob who can, for my enlightenment, quantify what a Champion ribbon at the Snake Gully Show will do for my bottom line.
- Fully embrace science and objective measurement.
Humanity would not be where it is today without science; it drives everything in terms of human progress. As a species, our individual longevity has increased significantly through the miracles of modern medicine and the ability of agricultural advances to feed us all. In the case of beef cattle, Group Breedplan has enabled us to revolutionise our approach to breeding. The humble EBV, the building block of Group Breedplan, now allows us to build a herd genetic profile that can significantly enhance the underlying financial performance of any commercial beef herd, given good management. In what should be a great source of pride for the industry, Breedplan is now being used in many overseas countries.
In doing your homework on potential seedstock suppliers, a visit to the breed’s Breedplan page will allow you to ascertain their genetic profile and how it compares within the breed. There are a number of very useful resources that explain what the Breedplan information is, how it was derived and how to use it. It can seem complex initially, but it is essential for profit focused commercial producers to become fluent in the language.
I continue to be concerned for the school students who turn up at Beef Week and other events in RMW uniform and have been taught that leading a fat, buffed-up steer into the ring, is what the beef industry is all about. It just perpetuates the knowledge void in the next generation. Those same students could go into a competition that awarded a prize for the best overall critique of what needs to be done to resurrect the Australian Beef Industry to respectable profitability. Intellectual development; we humans set ourselves apart by thriving on it. I fail to see the intellectual development in learning how to buff up a steer for the show ring, if one is seeking to prosper in commercial beef production.
- Run their seedstock herd at or above average district stocking rates and cull ruthlessly for non-performance.
I want my bulls to come from a herd that mates for no more than six weeks with 2% bulls. I want the parents of the purchased bulls to jump through the hoops that my herd has to, in order to hit my business targets. I do not want to buy fat, fed bulls that have come from a herd where no profit driven fertility pressure has been applied. All I want is for them to be in good working order, ready to go, after selection.
- Have a clear genetic vision that they can articulate.
I want to know, in precise detail, where their herd genetic profile will be ten years from now, and how it has advanced over the last ten years. I want to be able to compare that to my business objectives in order to eliminate financial outcome conflict. If their office is full of show ribbons and void of meaningful objective data, walk away, as they will not be able to do it. If they cannot articulate it clearly, walk away as well.
- Have a wide range of industry contacts at the leading edge of genetic and technical developments and are at the forefront for objective advice.
Be ‘Movers and shakers’ if you like. I want my seedstock sources to be industry leaders who can keep me informed on research breakthroughs and change for the better, that I am not able to access.
- Are happy to talk about bull supply on a contract basis, provided my scale and integrity meet their minimal requirements.
I hate bull auctions with a passion. You can do all the homework you like from the catalogue, but the chances of you coming home with a bull team meeting your genetic and financial specifications are slim, in my experience. The best seedstock sources embrace the principle of contract supply as they understand the dual advantages. The rest just dismiss it. By all means go to a bull sale for the social contact if you will, and possibly get your photo into a rural publication. No problems or judgement here, just don’t let it confuse you. Superior financial performance goes beyond that and is measured by the Australian Tax Office, who do not generally feature in rural press publications attending bull sales. Paying truckloads of tax is oh, so, so good despite it never making the headlines.
- Provide an ‘Industry Best’ guarantee.
As part of the contract above, or in any event, the seedstock producers agree to me conducting an annual independent pre-mating Bull Breeding Soundness Evaluation on their bulls. The bulls go through this hoop annually and detailed records are kept. The objective is to minimise the bull cost per calf born figure. The concept is simple. You pay A for a bull, he lasts for B years before he is no longer fit to mate, he sires C calves and is sold for D. It is then possible to calculate the price tag on the head of every calf from that bull and its supplier. It must fall below the agreed contract figure, and if it doesn’t the price of the bulls in the contract is re-negotiated.
Fantasy? Fortunately no, as it is out there happening now and has been for many years in some herds. It is important as a metric, as bull cost per calf born can vary from less than $30 to more than $100, depending on breed and supplier. Equating this to business performance, and assuming that the average weaner is 200kg, the difference in the cost of producing a weaner through the bull alone ranges from $0.15 to $0.50 per kilogram and makes a mockery of so-called breed premiums in many cases. This disturbs me greatly. Almost no commercial producers conduct an annual Bull Breeding Soundness Evaluation pre-mating. It is sad, because the evidence has been there for over 30 years that up to 20% of commercial bulls in herds around the country are just passengers, adding nothing to herd reproductive performance, in fact, often impeding it.
Many seedstock producers defend their position by stating that their bull guarantee is ‘Industry Best’. ‘If anything goes wrong with a bull, we will replace it at no cost’, they say. A re-assuring gesture for some producers, but falling well short of what I am looking for.
- Have a large commercial herd underpinning the seedstock operation.
My experience has been that everything mentioned above works best if the seedstock operation is not the sole or dominant enterprise. In fact, it works best of all if the seedstock operation exists primarily to supply superior bulls to the larger commercial herd in the business, and external bull sales are a secondary consideration. Seedstock producers in this situation just seem to have their feet planted more firmly on the ground and have a better understanding of the ramifications in commercial herds of what they do at the seedstock level. Like me, you may find it almost impossible to have all the above boxes ticked if your preferred seedstock source(s) are selling 30-40 bulls a year and that herd is the sole or dominant enterprise.
- Benchmark the performance of their commercial herd and can demonstrate at least Top 25% performance.
This is the Gold Standard; satisfy this criteria and the issue is bullet-proof, as all the elements line up and all the evidence is there.
The above is probably way out there for most, but it is how I think and how all seedstock and commercial producers with whom I work, have operated for years. If it has any appeal at either the seedstock or producer level, please give it serious thought as the industry desperately needs it. If you are a seedstock producer and are searching for an effective way to stand out from the pack, meeting the above criteria will do it for you.
In the meantime, please read The Australian Beef Report and you may begin to understand why I have the confidence to state the above. Included in the report is a chapter dedicated to the role of genetics in profitable beef production, from one of Australia’s leading minds in the commercial application of genetics, Dr Rob Banks.
Phil is the principal of Holmes & Company, a NSW based firm providing professional advice to family and corporate owned farm businesses in all states of Australia. He started his career in sheep, but over time, has become more involved with beef and now has a good understanding of how sustainable beef production works nationally. Phil’s special interests are commercial beef, sheep and wool production, agricultural sustainability, finance and sensible wealth creation through investing. He is a hard line disciple of the ‘evidence-based’ school of thinking and strives to have that approach dominate debate on Australian agricultural issues.
Phil was one of the pioneers of agricultural benchmarking within Australia and has contributed significantly to the understanding of profitable pastoral production across Australia. Whilst the majority of his professional experience is in southern Australia, his PhD examined the sustainability of beef production in the arid rangelands. The fundamental research question was ‘Is it possible to concurrently achieve financial and environmental sustainability in the arid rangelands as a beef producer’?