Sheep/wool and crop integration Information Sheet

Benefit of Sheep/Wool in a mixed farming system - Information Sheet 1 (of 3) Connecting people in the business of sheep

The ‘Benefit of Sheep/Wool in a mixed farming Introduction system’ series of Information Sheets provide an The mixed cropping and sheep farming system is overview of three core areas including: common across southern Australia and the majority of South Australia. It has a stronger fit in 1. Sheep/wool and crop integration some regions of SA than others, depending on 2. Managing risk soil type and the amount of unarable land being 3. Managing livestock feed sources farmed.

There are a number of reasons why farmers Challenges with multi-enterprise systems chose to operate both cropping and sheep, these These production systems need to contend with: include: 1. Internal dilution of scale 2. Duplication of capital • Risk mitigation (cropping and livestock 3. Potential enterprise conflict that can income is not directly correlated), quietly erode margins in one or more • Exploiting spatial variability (land enterprises capability variation), 4. Diversion of focus and management • Efficient resource allocation (labour, land, attention machinery, capital), 5. Reduced simplicity. • Management focus (where skills and expertise lie), Primary Farm business profit drivers • Management agility (ability to make A national MLA project has found that the tactical changes in season between enterprises), superior profitability achieved by the Top 20% producers is a function of four primary profit • Production complementarities (reduced input costs or increased efficiencies) and drivers. • Resource maintenance (soil fertility and These are: stability etc.). Source: Bell and Moore (2012) 1. Gross margin optimisation 2. Developing a low cost business model 3. People and management Whatever the reasons, the most profitable mixed 4. Risk management farming businesses seek synergy, not conflict

between their livestock and cropping enterprises. It is the interaction of these that results in very This involves implementing the key profit drivers different profit outcomes and if one of these is for both livestock and cropping enterprises, and overlooked it will compromise long term profit eliminating enterprise conflict. The ability to integrate multiple enterprises and create potential at some point. synergies between them ultimately drives profit in a mixed farming business. Within each enterprise there are a number of key profit drivers.

CONTACT Jodie Reseigh M: 0428 103 886 • E: [email protected]

These include: Integrating livestock and cropping Key cropping enterprise profit drivers 1. Operational timeliness Effective integration requires a high level of • Across the full calendar year for all implementation skill, taking into consideration operations the cross over between enterprises. The risk of • This will leverage 10% to 15% more enterprise conflict eroding profit margins in one yield or more enterprises also needs to be managed. 2. Agronomy The business also needs to have the available skill • Robust crop rotation and crop sets to get the best out of both enterprises? management This can occur when: • A disciplined approach to variable 1. A livestock enterprise offers the most costs (less than 40% of turnover) profitable break crop available to the 3. Machinery utilisation crop rotation. • 0.7 : 1 Machinery Investment : a. Legume based pastures can add Income ratio or lower $30 to $100 worth of soil 4. Labour utilisation nitrogen per ha. • Greater than $600,000 turnover per b. Lambs can be finished on pulse full time equivalent (FTE) stubbles and can add $50 to $100 Key sheep (dual purpose) enterprise profit per hectare to faba bean gross drivers margins. 1. Labour productivity 2. Lambs can be turned-off at heavier 2. Stocking rate weights at a time when there is a limited supply of these lambs available, ensuring • In areas with more than 350mm rainfall the use of improved pasture good prices. species and fertilisation 3. The availability of legume stubbles increases the ability to spring lamb in 3. Fertility and lamb survival dryland production systems as there is 4. Adult fleece value (target more than $60 per ewe per annum long term) greater confidense that lambs will grow to target market weights. • Reduce fleece contamination and 4. Lucerne and livestock are integrated vegetable matter (VM) 5. Turn-off weight (target greater than 48kg live a) Livestock are grazed on lucerne over weight (LWT) lambs in a Decile 5 season) winter and spring and then lucerne is locked-up for seed production in summer

Table 1: Summary of MLA project national results

Item National Top 20% Average of the producers by Return Remaining 80% of on Equity National producers

Return on Equity (ROE) 7.8% 1.4%

Return on Assets Managed 7.8% 3.9% (ROAM)

Profit as % Income 28% 5%

Gross margin per Ha (cropping) $664 $431

Gross margin per Ha (livestock) $392 $241

the competitiveness of crops and allow b) Lucerne is cut for hay in spring and more rapid build-up of ryegrass numbers. then livestock graze over summer 8. Grazing stock on paddocks to be windrow and autumn. burnt to reduce weed seed levels as they c) Lucerne utilises summer rainfall or will scatter stubble residues and reduce shallow water tables to provide out the intensity of the fire in the windrow. of season pasture feed. 5. Wheat/Medic or Cereal/Medic systems Both cropping and livestock enterprises suffer with low cost, productive self- when: regenerating pastures. 1. Sowing feed or fodder crops in late April, 6. Livestock are grazed on permanent May, or June pastures in frost or waterlogged prone • Late April is the optimum time for areas. sowing canola and other break crops 7. Breeding stock are utilised to manage • May is the optimum time for most crop stubbles and eat spilt grain to crops reduce mice numbers. • May or June sown pasture feed or 8. Livestock are utilised for canopy fodder crops are compromising the management in early sown cereal crops, ability of these pastures to providing the crops have low ryegrass productively accumulate dry matter levels. before reduced day light hours, 9. Dry sowing of pasture feed paddocks can colder temperatures (soil and air) and be used to test seeding equipment and frost all slow leaf emergence rate, train operators. reducing pasture growth rates in kg of dry matter per hectare per day. Cropping margins can be eroded at the expense 2. The farming system is unnecessarily of the livestock enterprise when: complex. 1. Livestock are grazed on volunteer cereals 3. There is not sufficient opportunity to or summer weeds have time-off and recharge either • The summer growth will utilise weekly, monthly, quarterly or yearly. moisture and nutrients and build-up disease and pests Keep the farming system as simple as • It is preferable not to graze at all but never past mid-March. possible as this enables greater focus, 2. Shearing in April • April is a “Golden” month for increased labour productivity, better cropping businesses, for preparation mind set and wellbeing, and less and early sowing • February and March should also be enterprise conflict. used for cropping preparation • Being late with 10% of your seeding program can reduce total farm profit Integrated livestock and cropping systems can by 20% be simplified by: 3. Grass freeing of medic, clover, or vetch • Limiting the number of crop types and pastures is delayed as this will allow root varieties sown. diseases to build-up and carryover to the • Limiting the number of livestock following cereal crop. enterprises. 4. Paddock size reduces cropping efficiency • Restricting shearing and lambing to once 5. Cropping activities are delayed, due to a year. other enterprises • Reducing livestock labour requirements, 6. Cereal crops are sown into cereal or during critical cropping periods, grassy based pastures 7. Grazing cereal crops with moderate to particularly seeding. high ryegrass levels as grazing will reduce

Profitable integration indicators • >6% return on equity • 30% turnover retained as net profit • >$600,000 turnover/FTE • >6% return on assets managed (ROAM) • >80% equity (long-term) • Finance coverage ratio of >4:1 (Source: L.MXF.0001 MLA Final report, 2018)

(Source: J. Reseigh)

References Prepared by Michael Wurst & Ian McFarland, Primary Industries and Regions SA: Rural Bell L, Moore A (2012). Integrated crop- Solutions SA (2020). livestock systems in Australian agriculture: Trends, drivers and implications. Agricultural Systems 111, 1-12.

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