OUT by at least $5.7 million: that’s the riposte delivered by the Sheep CRC to last week’s Australian Wool Innovation (AWI) report which found key investments in genetic technologies had under-delivered.
“It is hardly surprising that if you do a cost/benefit analysis that only includes the costs and ignores the benefits then the answer will show a negative return on investment,” said Sheep CRC Genomics Program leader, Professor Julius van der Werf.
Prof. van der Werf, regarded as a world leader in livestock genetic evaluation, picked apart the report commissioned by AWI from the BDA Group and found it “grossly underestimated” the value of genetic programs to the industry.
Underestimated by tenfold
The BDA Group reported that between 2010-13, MerinoSelect delivered genetic gain to the value of just $700,000 to the Merino industry. AWI’s $3.3 million investments in all genetic technologies through this period only returned 0.45 cents in the dollar to woolgrowers, the report concluded.
But the report misjudged the value of genetic gain by at least tenfold, Prof. van der Werf said.
Notably, the report contained estimates of benefit to the period under review, 2010-13, when genetic gain is a process that accumulates over time.
“A simple calculation taking into account the cumulative effect of genetic gain and using the same assumptions as those in the report, shows that the value of a three-year investment in genetic gain delivers an additional benefit to the industry with a net present value of about $6.4m rather than $0.7m as estimated by BDA," he said.
“Our calculated benefit of $6.4m is still a conservative estimate because the genetic gain will slowly spread over a larger proportion of the ewe flock – much larger than the four million ewes assumed to be directly linked to the 40,000 rams sold out of MerinoSelect studs.
“The net present value of an ongoing breeding program with a modest rate of genetic improvement can easily add up to $500m over a 25-year period.
“Even a small increase in the rate of genetic improvement is very valuable to the wider industry, even though the ram breeders capture only a small part of these benefits.”
Prof. van der Werf also questioned some of the report’s assumptions about how much breeders can achieve without the genetic evaluation tools of MerinoSelect, and the claim that there had been “low adoption” of the MerinoSelect platform.
From 2010-11 to 2013-14 the number of new animals entering MerinoSelect grew from 75,000 to around 150,000, a doubling of participation.
“If the AWI report had taken into account the genetic benefits delivered by its investment in the Information Nucleus Program and the doubling in numbers of new sheep registered in the MerinoSelect program, the returns on investment would have been further increased,” Prof. van der Werf said.
Sheep CRC chief executive James Rowe said the “world class” Information Nucleus program had vaulted the sheep industry ahead of the beef industry in genomics, despite beef’s lead on the technology when the Sheep CRC was formed in 2007.
In the absence of AWI interest, the Information Nucleus Flock (INF) is being funded by Meat and Livestock Australia, and the ongoing INF wool measuring program is being supported by the Australian Wool Testing Authority (AWTA).
The Information Nucleus will continue to demand funds, because of the need to constantly check phenotypes against evolving genotypes. But Prof. Rowe is hopeful that the INF can also lead the sheep industry into an era when all the information needed for its genetic programs is collected in the supply chain.
That is already starting, as new scanning technologies allow data like lean meat yield and intramuscular fat to be automatically collected by processors, supplying a cost-effective feed of information to help with the development of breeding tools for these traits.
Ultimately, Prof. Rowe thinks, automated data collection installed through the supply chain might eliminate the need for an INF - but the INF is an essential step towards that point.
While AWI is less impressed by the INF’s potential, Prof. Rowe said the Sheep CRC is getting “huge support” from processors and breeders to maintain the program.
Genetic gains for Qld breeders
Queensland Merino breeders the Murphy family knew they were onto something by breeding for fat and muscle, because their lamb survival was way above the odds.
What they didn’t know, until they hooked into the Sheep Genetics database, was that the sires that delivered survival traits were also trait leaders in eating quality.
It’s this sort of invisible information, not apparent in the sale ring, that makes Mark Murphy an advocate for MerinoSelect.
Mr Murphy sits on the Sheep Genetics advisory committee. The stud he runs with wife Vicki and son Luke, Karbullah Merinos near Goondiwindi, discovered an association between the genetic predisposition to carry fat and lamb survival by observation, but genetic tools enabled them to better understand what was going on and confidently mix genetic families without compromising other traits.
In an industry where lamb losses between scanning and weaning average around a third, some of Karbullah’s sires are associated with 4-6 per cent losses.
That’s better than the 6-8 per cent losses in the European Union with shedded sheep, Mr Murphy points out, and the rangelands of southern Queensland are an unforgiving environment.
Mr Murphy is a big supporter of genetic tools like the Australian Sheep Breeding Value (ASBV), and of the MerinoSelect platform.
He thinks the reason that MerinoSelect has relatively low uptake among Merino studs is that those on the fence about the service don’t have a clear enough idea of what it can do for them.
That’s partly a matter of communication, and partly reluctance by breeders to explore. Mr Murphy thinks Karbullah might only be getting 55 per cent value from Sheep Genetics, but not because much more value is to be had. It’s a matter of taking the time to sit down and extracting it.
On the other hand, Karbullah has landed a large semen contract with the Falkland Islands via Sheep Genetics, so value comes via different paths.
Goondiwindi’s environment bears no resemblance to that of the Falklands, but genes for lamb survival and worm resistance work everywhere.
Thanks to the Sheep Genetics database, breeders in the Falklands where able to discover that a Queensland stud had just what they were looking for.
What value the INF?
What has the INF delivered to the wool industry? Prof. van der Werf drew up a list of new breeding tools and technologies that drew on the INF program in their development: New ASBV for breech wrinkle available from 2009 to help breed sheep resistant to flystrike. New ASBVs and biological information for difficult to measure traits from Information Nucleus data and analyses (including meat eating quality, reproduction) from 2010. New DNA parentage test combined with poll gene test from 2012. 50,000 commercial ram breeder parentage and poll tests have been sold since 2012. The tests provide increased pedigree accuracy which improves genetic gain. Poll rams are more valuable than horned rams, with additional benefits in automated sheep handling systems and occupational safety.
DNA genomic tests commercially available from 2011 when the first 500 young industry rams were tested. Since 2011 a further 6000 commercial rams have been tested, allowing breeders to:
Increase the rate of genetic gain through improved accuracy of ASBVs Select and breed from younger rams (decreased generation interval) Select for important hard to measure traits such as worm egg count (WEC), reproduction and meat eating quality.