Opinion Pieces Archives - Page 2 of 4 - Bush AgriBusiness Pty Ltd

23Oct 2020 by Ian Mclean No Comments

Budgeting beef prices difficult in current market

The stars are aligned for the beef industry at the moment, with beef prices are at or near the 100th percentile of long-term prices and interest rates at historical lows. If the forecasted La Nina eventuates, then we will have the trifecta! Our analysis has found that, for average producers, the majority of long-term profits are made in those periods when the stars are aligned. Top performers also do well during these years, but are less reliant on these years for their long-term performance. A challenge in periods of fluctuating prices, such as we have seen recently, is determining what prices to use in forward budgeting. We could optimistically say that the current prices are the ‘new normal’ and here to stay, as may have been assumed in the late 80’s,…

11Oct 2020 by Ian Mclean No Comments

Powerful profits or lovely landscapes? Do we really have to choose?

Articles & Publications, Opinion Pieces

For some years now, Ian McLean and I have been advocating the need for concurrent financial and environmental sustainability in Australian agriculture.Our focus has been primarily on rangeland pastoralism because that is our main field of expertise, but that is not to diminish the importance of the principles being extended to all areas of broadacre agricultural production, grazing and cropping. With the benefit of hindsight, I don't think we have done a good enough job to explain the thinking and logic that support this position.The literature on sustainability theory describes five areas needing to be addressed in agriculture if overall sustainability is the goal. Financial and environmental are arguably the two most important as they are predominantly under the control of the producer.The main issue here is that both of them have…

27Jul 2020 by Stephen Dummett

The benefits of sharing intellectual capital in the beef industry

Articles & Publications, Opinion Pieces

By Ian McLean and Phil Holmes We believe the management of capital is an issue for the beef industry. The returns on financial capital are insufficient, environmental capital needs preservation and intellectual capital is undervalued. While all aspects are important; we will focus here on intellectual capital as it influences the management of the other two. Within the context of pastoral business management, we have defined intellectual capital as the hard-won knowledge that smart producers have learnt from their peers and predecessors about profitable pastoral production, along with their own experience and knowledge gathering. It is distinct from intellectual property which is more about a breakthrough in understanding due to a completely new way of looking at issues. Managing a modern pastoral business is a multi-disciplinary vocation, requiring skills in…

16Jul 2020 by Stephen Dummett

How does land condition affect property values?

Articles & Publications, Opinion Pieces

By Ian McLean THE answer to this question depends a lot on how you define ‘value’. We are referring primarily to the intrinsic economic value of a property, as opposed to the value placed on it by the market. A previous article on ‘Beef land vs. Gold’ discusses different approaches to valuation. The intrinsic economic value of an asset is essentially its value based on its future earning capacity, which means that land condition has a big effect. There are four categories of land condition recognised in northern Australia: ‘A’ for good condition, ‘B’ for fair, ‘C’ for poor and ‘D’ for very poor. This report-card style classification is determined by the health and functioning of the pasture and soil components of the area being assessed. Land in poor (‘C’) condition…

09Jul 2020 by Stephen Dummett

Benchmarking Evolution

Articles & Publications, Opinion Pieces

By Phil Holmes Farm business benchmarking first appeared in Australia over 40 years ago, starting with the cropping industry. The livestock industry soon followed with the Victorian DPI Monitor Farm Study being, arguably, the first serious attempt in the early 70's. It is still there today. By today's standards those early versions were rather simplistic, but you have to start somewhere. Increased knowledge and experience have made significant contributions to the process over time. I have been very fortunate to have had three great mentors in the early years of my career and I would not have had the career fulfilment that I have enjoyed without them. One of them was a Cooma NSW based entrepreneurial accountant, Mick Boyce who was always looking for ways to add value to client relationships. Mick…

19Jun 2020 by Stephen Dummett

Beef land versus gold: Which is the better investment?

Articles & Publications, Opinion Pieces

By Ian McLean Comparison of price of gold and rural land in Australian dollars (real) It would appear to us that agricultural land has some key characteristics in common with gold. The main ones being; It is a finite resource and is valuable, primarily, as a result of scarcity.Typically, both have very low yields (zero or less in the case of gold). The first of these characteristics, combined with an uncertain global economic outlook, has contributed to an increase in the prices paid for agricultural land in Australia. This has been a double-edged sword; the upside is that it has increased the wealth of those who own land; the downside is that, with no corresponding increase in profits, it reduces the returns on capital. Analysis of historical data indicates that…

15Jun 2020 by Stephen Dummett

Beef productivity gains to go to bottom line

Articles & Publications, Opinion Pieces

A new playing field in the beef game where returns for cattle are matching or beating increases in costs is opening the door for solid profitability boosts where productivity can be improved. Those able to make prudent and ongoing investments in productivity will capitalise most on the new dynamics. This is a major takeaway from one of the cattle industry's key pieces of analysis, The Australian Beef Report: 2020 Vision, due to be released this month. An independent assessment of the financial and production performance of family-owned beef businesses in Australia collated by long-serving consultants Phil Holmes and Ian McLean, the 2020 report follows the first version released three years ago. The initial version touched on the fact that declining terms of trade in agriculture, known as the cost-price squeeze,…

18Mar 2020 by Ian Mclean

Does genetic progress have to slow during the rebuilding phase?

Articles & Publications, Opinion Pieces

Michael Wellington and Karissa de Belle, Bush AgriBusiness Pty Ltd. With the current lack of stock across the country, many herd or flock managers will not have the luxury of culling that they normally would. This raises the question of how genetic progress is affected by, and should be managed in, different seasonal conditions. We have heard from some producers and advisors that genetic progress will slow during commercial herd/flock rebuilds. However, we are not entirely convinced that this is necessarily the case. In the equation for genetic progress (see footnote 1), selection intensity (i) is affected by selection itself (how different are the new sires and breeders coming into the breeding herd from the current herd average?) and culling (how different is the herd average after culling, from the…

18Mar 2020 by Ian Mclean

Considering Goats

Articles & Publications, Opinion Pieces

Karissa de Belle and Ian McLean, Bush AgriBusiness Pty Ltd Low conventional stock numbers, the current price of goats, along with their hardiness and fertility is causing many producers in rangeland areas to give them serious consideration as a potential enterprise. It will be an attractive option for many, however any enterprise choice requires careful consideration. The first consideration with goats is what sort of enterprise they will be. Will they be a managed flock1, wild harvested or somewhere in between, i.e. wild harvest with smaller ones put behind wire to grow out to killable weight. If it is simply an opportunistic harvest and immediate sale of wild roaming goats, then it is pretty straightforward, provided you have some basic infrastructure. If they are there, can be mustered, trucked and…

18Nov 2019 by Ian Mclean

Linking weather data to cattle breed adaptation

Articles & Publications, Opinion Pieces

By Michael Wellington The introduction of Black Angus and Wagyu cattle into extensive northern Australia has been watched with keen interest. As I was required to deliver a project as part of my livestock consulting internship, I spent some time looking at differences in adaptability among breeds due to renewed interest in this space. I found that most heat stress research has focused on the feedlot and dairy industries. This is logical because these industries have some level of control over the environmental conditions cattle experience. Also, feedlot and dairy cattle are more susceptible to heat stress due to higher metabolic heat production. Conversely, beef cattle in extensive environments have greater scope to regulate their heat load through behaviours such as shade and breeze seeking. There are several heat stress…