Costs and Returns used for Victorian Case Studies

Enterprise costs and returns

Average long term enterprise Gross Margins from Victorian Livestock Farm Monitor project (2010–11 Report) were used in the case studies as a standard estimate of enterprise net returns. Long term average Gross Margins are a useful figure to use as this takes into account the annual variability. Table 1 shows the average Gross Margins per DSE for wool sheep, prime lambs and cattle from this report for both the South West and North East Victorian regions. The 41 year average is available for the South West as the longest running program. The Farm Monitor Project has only been running for seven years in the North East, so both figures are given to show the regional differences. These have been adjusted for inflation to 2011 dollars. The average Gross Margins for a low year (2006/07) and a high year (2010/11) show the large annual variability. In this case the enterprise Gross Margins per DSE in 2006/07 were at least three times higher than in 2006/07.

Table 1. Average Gross Margins/DSE from the Livestock Farm Monitor Report 2010/11 adjusted for historical inflation to 2011 dollars.

Enterprise South West Victoria North East Victoria
41 year average
7 year average
41 year average
7 year average
41 year average
7 year average

Capital Costs

The actual improvement costs incurred at Supporting Sites were used. If using your own costs, full current contract costs for doing the improvements should be included in the improvement costs. You may be able to get some things done cheaper (or dearer) than shown in the case studies, but if you do your own sowing, spraying etc., then at the very least, include all the costs to do this (e.g. extra diesel, maintenance, labour).

Increasing stock numbers is an often overlooked capital requirement of improving pastures and can make quite a difference on cash flow when stock are expensive (or if relying on breeding to increase). Livestock values from the Livestock Farm Monitor Project 2010/11 report were used, as shown in Table 2.

Table 2. Stock costs as used in the Livestock Monitor Report 2010/11

$/head $/DSE
$110$110 $61$110
Prime lambs
$154$101 $62 – $77/DSE
Cows  $790  $66


Where hay was cut on an opportunistic basis, the dry matter (DM) production was either converted to a stocking rate equivalent (assumed that 1.3 kg of dry matter is needed per DSE per day) or valued as sold. The sale price was valued at $120/tonne (from Livestock Farm Monitor Report 2010-11) less contract cutting and baling costs (costs used shown below). The costs of replacing nutrients should also be an included as an added cost.


  • $85.3/ha mowing
  • $31.65 per bale (large round baled and carted)

Stock costs in establishment years

Costs associated with having to run stock elsewhere while a pasture is being resown, has generally not been included as it is assumed that only a small proportion of the farm will be resown at any time and the rest of the farm will carry the few extra stock. However, when appropriate a cost to run the stock elsewhere (as an agistment or supplementary feed cost) run should be included .


Where fencing costs were part of the pasture improvement and actual costs not supplied, the following were used:

  • $7.5/m for 5 strand fence
  • $9.5/m for 7 strand or ring lock

Finance costs

8% nominal interest rate was included annually to cover payment of interest on overdraft in negative annual net cash flow years and earn interest in the positive net cash flow years.

Individual financial situations (like current debt and the cost of borrowing) will differ for everyone and as improving pastures require an increase in stocking rate, the impact on management, labour, infrastructure, risk and personal stress should also be considered.

Demonstration and Case Studies


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