Technical information - General

Stocking rates, productivity and profitability

by Bill Schulke DPI&F Bundaberg

BRAHMAN NEWS JUNE 2008 Issue #159

We often hear the saying, ‘more cattle means more money’. But is this always the case? At Grazing Land Management and Nutrition EDGE workshops many producers have described how they have improved profitability by using conservative stocking rates.

This article uses three sets of data which explores this balance of stocking rates, productivity and profit. The first set of data from Galloway Plains shows the relationship between stocking rate and production. The next two data sets, from the coastal and inland Burnett add the finances to this relationship and show greater profit with less stock compared with heavy stocking.

Impact of stocking rate on beef production

Figure 1, from the long running Galloways Plains grazing trial, demonstrates the relationship between stocking rate and animal production. Animal production can be measured in terms of individual animal production (kilograms per head) and production per unit area (kilograms per hectare).

From the graph we can see that at the ridiculously high stocking rate (for this type of country) of a beast to one hectare, the individual animal production is very low at 59 kg/hd/yr but the production per hectare is high (59 kg/ha/yr).

Figure 1 : Impact of stocking rate on annual liveweight gain

Table 1 : Gross margin for first draft of steers

1st Draft : Dec 1998 – Dec 2000 Couch Speargrass Speargrass premium
Paddock area (ha) 65.5 69.5 69.5
Start no. (head) 30 15 15
End no. (head) 23 13 13
Mean SR (ha/hd) * 2.5 5.0 5.0
Start weight (av.) 317.5 327.3 327.3
Finished weight (av.) 537.1 599.5 599.5
Accumulated gain (kg/ha) ** 87.3 58.8 58.8
Value of gain/ha (at $1.30/kg or $1.45/kg #) $113.5 $76.4 $85.3
Total purchase cost per ha (at $1.30/kg) $167.0 $85.7 $85.7
Interest on purchase cost per ha (at 10%/yr) $33.3 $17.1 $17.1
Variable costs per ha (at $25/hd) *** $14.2 $7.1 $7.1
Gross Margin $/ha $66.1 $52.3 $61.1

Table 2 : Gross margin for second draft of steers

2nd Draft : Dec 1998 – Dec 2000 Couch Speargrass Speargrass premium
Paddock area (ha) 65.5 69.5 69.5
Start no. (head) 30 20 20
End no. (head) 13 15 15
Mean SR (ha/hd) * 3.0 4.0 4.0
Start weight (av.) 246.0 244.7 244.7
Finished weight (av.) 476.3 551.7 551.7
Accumulated gain (kg/ha) ** 81.2 78.5 78.5
Value of gain/ha (at $1.30/kg or $1.45/kg #) $105.6 $102.1 $113.8
Total purchase cost per ha (at $1.30/kg) $105.0 $80.1 $80.1
Interest on purchase cost per ha (at 10%/yr) $17.1 $13.0 $13.0
Variable costs per ha (at $25/hd) *** $11.5 $8.8 $13.0
Gross Margin $/ha $77.0 $80.2 $92.0

If we halve the stocking rate (ie from a beast to one hectare to a beast to two hectares), individual weight gain increases by 49 kg/hd/yr (59 kg/jd/yr to 108 kg/hd/yr). At the same time, gross production has dropped only 5 kg/hd/yr (from 59 kg/hd/yr to 54 kg/hd/yr).

If you reduce the stocking rate by half again (from 2 ha per beast to 4 ha per beast), your individual animal performance increases a further 25 kg/hd/yr from 108 to 133 kg/hd/yr while the production per hectare reduces by 21 kg/ha/yr from 54 to 33 kg/ha/yr.

Notice though that halving the stocking rate hasn’t halved production. There are fewer animals but they are growing faster. This effect is more pronounced when you reduce from a very high stocking rate.

Generally speaking, you produce more beef at heavier relative stocking rates. But does this mean you are making more money? What effect is a heavy stocking rate having on the long term health of your pasture?

Less cattle is more profitable – coastal Burnett

From 1999 to 2002, a grazing trial was conducted on a commercial property in the coastal Burnett. The aim of this trial was to investigate the impact stocking rate has on the density of desirable native grasses in paddocks that have become dominated by blue couch. In this trial we split a commercial paddock (dominated by blue couch) into two paddocks of roughly equal size. One paddock (called the couch paddock) was managed at a stocking rate typical for the area. In the other (called the speargrass paddock) we reduced the stocking rate by up to half. We weighed the steers four times per year.

In Table 1, we can see that with the first draft, there was a better return per hectare for the heavier stocked paddock. However, as all the steers in the speargrass paddock graded Jap Ox, you could expect a 15 cents/kg premium for these steers. When this is taken into account, there wasn’t a great deal of difference in the returns per hectare (about $5.00 per ha or $330.00 for the paddock).

However, by the time the second draft of steers went through, the heavily stocked paddock was starting to loose condition. This required numbers to be reduced in the heavily stocked paddock. Even without a price premium, it is obvious that the lighter stocked paddock resulted in a better gross margin.

Fewer breeders – better pastures for the same money

A grazing trial during the mid to late 1990s investigated the impact of burning and spelling on pasture composition (increasing the palatable speargrass while decreasing wiregrass). To achieve this change, the stocking rate was reduced by a third in the demonstration paddock.

As you can see from the comparison below, you obviously produce less weaners when you cut your breeder numbers. But the reduction is not as great as you might expect. The weaning rate improved by 10% and the average weaning weight increased by 10kg. When variable costs for the breeders and weaners are taken into account, there is not a large difference in the gross margin.

When you take into account the money you have invested in your cattle and account for the interest on money tied up in these animals, then the gross margin is higher for the lighter stocked paddock.

In summary, heavier stocking rates can maximise returned in the short term. However, the net return may not be so high when the capital tied up in livestock and variable costs are taken into account.

The ultimate risk of pushing the stocking rate is that the country is exposed to degradation. Country that looses condition has a reduced carrying capacity. The result of this is a direct loss of production, higher maintenance costs (supplementation, weeds etc), rehabilitation costs (improving land condition costs money) or a combination of all three.

The quote from a grazier ‘I look after my pastures, the pastures look after my cattle and my cattle look after me’ seems to hold true for grazing enterprises.

Table 3 : Gross margins for a breeder

Parameters Heavier SR Lighter SR
Paddock area (ha) 400 400
Production parameters
Number of breeders 100 66
Weaning rate (%) 65 75
No. of weaners 65 50
Weaning weight (av.) (kg/hd) 190 200
Weaning weight (total) (kg) 12,350 9,900
Weaning value (total) ($/kg) at $1.80/ kg $22,230 $17,820
Weaner variable costs
5-in-1 vaccination ($/hd) at $0.60 $39.00 $29.70
Tick fever vaccination ($/hd) at $2.93 $190.45 $145.04
Weaning costs ($/hd) at $20 $1,300.00 $990.00
Husbandry ($/paddock) $300.00 $300.00
Breeder variable costs
Health ($/hd) at $12 $1,200 $792
Supplements ($/hd) at $20 $2,000 $1,320
Husbandry ($/paddock) $300 $300
$3,500 $2,412
Cow value ($/hd) at $750 $75,000 $49,500
Interest on cows ($/paddock) at 10% $7,500 $4,950
Bull costs
No. of bulls 3 2
Bull purchase value ($) at $3,000 $9,000 $6,000
Bull residual value ($) at $1,000 $3,000 $2,000
No. of years used 4 4
Annual bull costs $1,500 $1,000
Interest on bulls ($) $150 $100
GM before interest $15,400.55 $12,943.27
GM after interest $7,750.55 $7,893.27
GM per breeder $77.51 $119.59
GM per ha $19.38 $19.73