The importance of Science in Agriculture

The importance of Science in Agriculture

Articles & Publications, Opinion Pieces
Science is vital to the future of agriculture and producers need to play a role! This was a clear message that came from Professor Dennis Poppi at the very first combined producer business group meeting Bush Agribusiness held in October. The meeting was one of the highlights of 2020 for Bush AgriBusiness and brought together like-minded producers from across Queensland for two days of learning, discussion and networking. Starting the two day conference, Professor Poppi detailed what the scientific process is, how it has evolved, and how agriculture has played a large role in its development (see Rothamsted). Whilst the scientific process is imperfect and can take a long time, robust research and the scientific process play an important role in providing the solutions to key problems facing the industry.…
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Determining long-term carrying capacity

Determining long-term carrying capacity

Articles & Publications, Opinion Pieces
KNOWING the long-term carrying capacity (LTCC) is essential information for managers of extensive grazing businesses. As highlighted in a previous Beef Central article, it is a controversial issue, however there is an established, evidence-based process for estimating long term carrying capacity. Let’s start by defining what carrying capacity is. The long term carrying capacity is the number of animals that a property (or paddock) can support over a planning horizon (10+ years) with no decline in land condition. The figure is typically expressed in Animal Equivalents (AE). Current carrying capacity is based on current land condition and watered area, whereas potential LTCC is based on best land condition state and assumes the area is fully watered (source: Australian Beef Report: 2020 Vision). In order to calculate the carrying capacity for an…
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Budgeting beef prices difficult in current market

Budgeting beef prices difficult in current market

Articles & Publications, Opinion Pieces
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,…
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Powerful profits or lovely landscapes? Do we really have to choose?

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…
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The benefits of sharing intellectual capital in the beef industry

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…
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How does land condition affect property values?

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…
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Benchmarking Evolution

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…
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Beef land versus gold: Which is the better investment?

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…
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Beef productivity gains to go to bottom line

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,…
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Does genetic progress have to slow during the rebuilding phase?

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…
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