Review on the Australian Beef Report

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Article reproduced from: RANGELANDS MEMO - MARCH 2018 By Trevor Price, Northern Beef Development, Broome In late 2017 Phil Holmes of Holmes and Company and Ian McLean of Bush Agribusiness published an independent review into the profitability of northern and southern beef production systems called the Australian Beef Report. The primary audience for the Australian Beef Report is commercial beef producers. The report summarises the key business and management components that characterise two groups—the top 25% beef producer and the average beef producer—using the author’s data and data from ABARES, MLA NLRS and ABS sources over 12 financial years to 2016. This is a must-read for those beef enterprises serious about profitability. The methodology, economics and analysis are carefully explained and the data are well presented in both tables and…
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Where do I buy my bulls?

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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. No offence intended, read the Australian Beef Report for more information. At that time, the power of genetic advantage was not as apparent as it is today, but it was still…
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How do I find the right accountant?

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By Scott Patterson Many agricultural business owners struggle with an answer to this question. It seems that we drop off our records at the end of each financial year and then some time down the track we receive a bulky set of financial statements, our tax returns, an estimate of the tax either payable or refundable, and finally an accounting bill that seems high. Many also pass the comment that “we don’t seem to get any proactive business advice unless we ask a specific question”. Finding a solution to this apparent mismatch of expectations should perhaps start with being as clear as we can about what we want from an accountant before we appoint them. To illustrate my point, before buying a new tractor or 4WD or bull, we would…
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An exciting future for agriculture

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By Ian McLean Earlier this year, Phil Holmes and I took a group of large Queensland producers we work with on a tour of southern NSW, to visit professionally managed grazing businesses. These businesses had excellent longer-term profitability, well within the top 25% of their region. This profitability was demonstrated by having good quality benchmarking data, with operating returns in the range of 4-8%, not just the managers claims. The purpose of the tour was to get inside the heads of the managers of the business, and those above the manager, and understand how they approached the management of these businesses, and what made them so profitable. The management model used could  be described as an effective adaptation of the Warren Buffett model to agriculture (see ‘A Good model’ article).…
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Due Diligence on Land Purchases critical for Long Term Returns

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By Ian McLean and Dr. Phil Holmes Historically, more wealth has been created in the beef industry through increases in the value of land than through beef production. There has also been considerable wealth destroyed when price driven optimism has not eventuated. We believe that for long term business returns to be dependent on future capital gains, and the eventual sale of the asset, is a risky proposition. It also has the potential to result in significant cash shortfalls in the meantime. It is possible to have businesses that generate reasonable returns during ownership, rather than only upon sale. Performing comprehensive due diligence on any land purchases is a key factor in achieving this for growing businesses. A critical component of due diligence is determining what the ‘value’ of the…
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