Take a risk when opportunity knocks

27 Jul, 2005 08:45 PM
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LEADING consultant Bob Hall delivered a strong message when he said effectively managed high stocking rates were the key to optimum profitability.

Mr Hall told a group of producers, researchers and industry members that regardless of the scale and type of farming enterprise, farmers needed to set out a clear strategic plan and take more risks with a positive frame of mind.

"Downside risk is frequently addressed, but upside risk isn't taken into consideration enough," Mr Hall said.

"As a consequence, farmers tend not to take sufficient advantage of opportunities as they present themselves."

Mr Hall said stocking rate was an important factor that needed better management and understanding across the board.

"It is well known and has been extended to the sheep industry ad nauseum that stocking rate is the key performance indicator, yet stocking rates on farms are typically well below any economic potential," he said.

"The apparent paradox of less per head being more profitable continues to confuse and is the single greatest constraint to profit in the industry."

Mr Hall said a planned high stocking rate was ideal, but farmers were often conservative about this because they had suffered stock losses in poor seasons.

With farmers then regularly stocking far below capacity to ensure minimal stock loss in poor seasons, this was to the detriment of their profitability in good, high rainfall seasons.

Mr Hall outlined management strategies for dealing with poor seasons with high stock numbers as a means of keeping numbers sustainable.

He said by determining stocking rates in relation to the time of the season break, farmers would have more control over the profitability of the coming season.

"It is clear that it is the time of the break, rather than the total rainfall, that dictates the utility of the grazing season.

"Strategies are therefore required to deal with late breaks and can involve pregnancy testing and selling drys, alternative feed supplies, agistment and putting nitrogen on grass; the more reactive depending on the time of break.

"They all cost money, but the cost in a bad season will be more than defrayed by the extra profits obtained in the good seasons that are the majority."

Mr Hall said the true profit drivers were the farmers and it was up to them to apply flexibility and tactical decision making to their business enterprise.

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