Profit is key, not production

27 Mar, 2013 01:00 AM
Comments
5
 
Balanced business is profitable business - it starts with understanding the dynamics of your herd

MANY northern pastoral businesses are operating in "survivability" mode, not profitability mode, says vet and beef industry consultant Dr Ian Braithwaite.

Dr Braithwaite spoke at the Northern Territory Cattlemen’s Association (NTCA) Conference, asking producers, "are you production or profit orientated?"

In his presentation to the NTCA Dr Braithwaite asked producers to consider what should constitute a profitable business and highlighted the "bleak reality of a production-driven business that was out of balance".

“It’s not enough to focus on production; you must identify and understand the key profit drivers to be successful in the northern pastoral game,” he said.

He also said many northern pastoral businesses were operating in "survivability" not profitability mode, due to production-focused habits and behaviours.

“Often we as an industry keep doing the same things day in and day out hoping that someday we’ll meet that goal of higher live weight gains or weaning percentages; we don’t take the time to reflect on the structure of our business and really understand what’s working for us and against us” he said.

“A balanced business is a profitable business and it starts with understanding the dynamics of your cow herd, business make-up and overall production system."

He said northern beef production systems should be designed around the financial and climatic constraints of a business.

“I work with pastoralists from Townsville to Broome. Those who operate with an understanding for their natural environment and economic realities are those that perform at best,” Dr Braithwaite said.

Dr Braithwaite said northern producers have a lot to consider when developing a balanced business.

“Every region and environment is different.

"The business, herd and production dynamics in Katherine will differ to that of Alice Springs; and it’s these differences and how they are accounted for that will make the difference,” he said.

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READER COMMENTS

bullfrog
27/03/2013 5:58:14 AM, on The Land

Great to hear as MLA and others just keep pushing production. Productivity is important as well but it is a business and profits must be achieved to sustain ongoing operations and investment. Can we please have more of this as far too many livestock producers are just living hand to mouth. Efficiency is pretty good but the industry is burdened with costs and too many bureaucrats with their hands in producers' pockets.
simmog7
27/03/2013 8:41:41 AM, on Stock & Land

Profit is certainly what sustains a business but the easiest way to increase profit is to reduce costs and then improve the price. As cattle men you will already know what to do to increase production efficiency. I can show you how to make 5+5+5 = 30
The Serf
28/03/2013 1:56:22 PM, on Queensland Country Life

A breath of fresh air, profit is king, however the AMLI Act has a built in "industry" production demand at s66 with Regulation 5 calculating Federal R&D funding based solely on increased Production. Within the nationalized cattle production sector there is no mention of "Production for Profit"; there is direct financial advantage in Production for production sake or "Production for Use". In the north we must have free trade reestablished; ESCAS removed, a low tax zone established, and the right to employ Asian workers on our terms; then profit may return...
droughtproof
3/04/2013 5:28:55 PM, on North Queensland Register

I agree with Ian's comments, in general over the past 20/30 years we have lost the capacity to take a long term view, maximise profits & cashflow in good years and diversify for the future. Many short term decisions taken to avoid tax have long term liquidity ramifications, particularly as core debt grows out of control and overdrafts become hardcore
Bill
18/05/2013 6:48:40 PM, on Stock & Land

Our business is turning grass into beef. The more cost effectively we do this, the more profitable will be the business. In economic terms "Productivity" is measured by "Unit of cost per unit of production" By this measurement,productive output obiviously plays a large part in profitability.

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