Livestock recovery following drought or destocking event (Utilising vacant DSE)
Tablelands Telegraph - February 2021
Brett Littler - Senior Land Services Officer, Livestock. - Central Tablelands
Matthew Lieschke - Senior Land Services Officer, Livestock. - South East
Greg Meaker - Former Livestock Officer NSW DPI
Phil Graham - Former Livestock Officer NSW DPI
Key point - Recovering from a drought or a destocking event (such as fire or flood), places you in a unique position to review your operation/situation and markets. To make changes to your direction and mix of enterprises that make up your farm business.
In the event of a major destocking event, any decisions made to destock are felt hardest in the first three years of the recovery period. Generally, there is reduced cash flow along with depleted breeding herd/flock at the start of the recovery period. Overall, there is a reduction in potential income per hectare.
A recovery occurs only when it has rained, you have been able to stop feeding stock and pasture growth is outstripping demand. This excess of feed, or vacant DSE (dry sheep equivalent) capacity, can be exploited to generate income and enable you to recover financially.
How you choose to utilise the vacant DSE capacity on your property will depend upon your attitude to risk, your cash flow needs and your goals. All these decisions will have an influence on the speed of your recovery financially.
There are a number of options for utilising the vacant DSE capacity. Some of these include:
- maintaining the status quo to regenerate country
- breeding back to original herd or flock
- buying in replacement breeders
- trading livestock
- backgrounding (growing out) livestock
- agistment
- cropping
- fodder conservation
- a combination of the above.
Options to boost recovery
Herd and flock rebuilding
Being understocked reduces your potential income. Rebuilding your herd or flock is one strategy for utilising the vacant DSE capacity during the recovery period and enhancing income generation per hectare. Rebuilding can be achieved by breeding back and buying in replacement breeders.
Before adopting any rebuilding option, it's important to carefully consider the following questions:
- Am I better off breeding my own replacements or should I buy in replacement stock as well?
- What is the maximum price I should pay for replacement stock?
- Should I buy young or older replacement stock?
- Should I increase my maximum age at joining?
Breeding back
Breeding back numbers from the retained breeding nucleus is slow and reduces cash flow. Any breeding back strategy employed after drought/destocking event must achieve high levels of fertility. Careful management of the reproductive cycle and breeder condition is required to maximise the number of animals produced. With sheep enterprises, maximising lamb survival is also important in breeding numbers back up and generating cash flow.
Coming out of drought presents an opportunity to reassess your breeding program and the future direction of your herd or flock. This could involve some 'fine-tuning' to what you've done previously, or you might decide to change direction completely (e.g. moving from a wool-based merino enterprise to prime lambs). In any case, it's important to spend some time thinking about your future direction and developing a clearly defined breeding plan for your business. This process involves several key steps including:
- defining your breeding goals
- identifying your target market requirements
- prioritising economically important traits to determine selection criteria
- determine your current and future performance levels and production targets
- select an appropriate breeding system (e.g. straightbreeding, crossbreeding).
Just breeding back without buying in replacement breeders has shown in our evaluations to extend recovery periods. Although it is the easiest option for some it has the biggest financial impact. Generally, even after livestock numbers return to normal it is a further 1-3 years before finances return to normal.
If you are going to breed back it is important to consider how many replacements you should keep. Generally, the more replacements you keep to build up your herd or flock, the faster your recovery to pre-drought production levels. The downside to this strategy is it reduces livestock sales while rebuilding and also reduces the level of selection pressure on replacement females.
If your breeding numbers have declined significantly, you may need to buy in replacement breeders (in addition to breeding your own replacements) in order to improve the rate at which your herd or flock returns to pre-drought production.
Buying in Stock
Buying in stock to restore numbers requires careful thought and access to finance. It allows a faster return to normal cash flow, but, for many people, it will only be possible by increasing their debt levels. This may also be the case when buying stock for short-term fattening or trading. Consider the full range of options available (e.g. mature stock versus growing stock) and have a particular end market in mind.
It is important that you do your sums on a range of stock and not get caught up in the rush of restocking and forget your budget.
When purchasing stock, always ask for vendor declarations and animal health statements. Only buy, background or accept on agistment stock with equal or higher health status to your own stock. Bovine Johne's disease and Akabane disease are of most concern to cattle producers, while sheep producers need to consider ovine Johne's disease, as well as conditions such as footrot, lice and drench resistant worms. Also look at your biosecurity plan and re-evaluate if it meets your current situation and follow this plan to minimise your risk from the introduction of unwanted issues.
If buying in replacement females it is important to have a maximum price set for these replacement stock. The maximum amount payable for replacement stock will largely be determined by the sale price of progeny and, to a lesser extent, the value of cull stock.
There are value points at which the price for replacement stock is too expensive, and the better recovery option is to breed back or explore other options or opportunities.
Should I buy young or older replacement stock? When the price of all ages is the same, it is usually better to buy in younger replacements. When older stock can be sourced at a cheaper price, then it is usually better to buy in older replacements. It is still important to evaluate the value of the stock as culls and the value of their progeny.
Another option to increase your stock numbers is to retain breeders and increase your maximum joining age. Evaluating if you should increase the maximum joining age will largely depend on your flock or herd structure and the destocking strategies used during the drought. In general, the impact of increasing maximum age at joining for the longer term is one of the smallest. In general, where beef herds have culled 7 to 10-year-old cows (i.e. the oldest cows remaining in the herd are 6 years old) it will be 5 years before this becomes effective. For a sheep flock that culled down to 3 to 4-year old ewes it will be 2 years. Overall, it takes several years of recovery before the oldest breeder becomes old enough to be affected by any increase made to the maximum age at joining.
Agistment
Taking livestock agistment can sometimes be an option and provides the producer with income and increase returns per hectare.
Agistment also gives you the option to utilise excess feed for short periods where there is a limited recovery or a short growing season before winter/dry season without the expense of purchasing livestock. Agistment is a good option if you believe the restocked or livestock trading market is 'over valued' or if you believe there is a high level of risk in market. Generally, the inclusion of agistment in a recovery strategy helped utilise vacant DSE and gave some much needed cash flow.
If you choose to accept stock on agistment, it is in your interest, as well as that of the other party, to have a written agistment agreement and to seek legal advice. Disputes can arise between agistment parties regarding issues such as fees, payment method and frequency, responsibility for stock welfare, time period, stock numbers, and inspection access. A written agreement can overcome most of these issues.
