Production and economics results from Hamilton EverGraze Proof Site

For full details and to put the results into context, see:

Gross Margins and production

Table 1 shows the lamb liveweight production per hectare and estimated Gross Margins achieved for the Ryegrass and Triple (lucerne, perennial ryegrass and tall fescue) systems for a spring lambing Merino enterprise. Gross margins were increased by up to 50% above the top 20% of producers in the South West Farm Monitor (SWFM) benchmarking program for all years except 2008/09, and were up to 1.5 to 2 times larger than the average benchmarked farm. However, care needs to be taken with these figures as they are based on productivity of the experimental scale systems, are steady state estimates and do not include extra labour, management complexity, risk or impacts on cash flow over time.

Table 1. Gross Margin ($/ha) and lamb liveweight produced per ha from September or August lambing Merino prime lamb system at the Hamilton Proof Site compared to the participants of Farm Monitor benchmarking project

2006/07^

2007/08^

2008/09^

2009/10^

Lamb kg/ha

Kg lamb/ha

Gross Margin/ha

Kg lamb/ha

Gross Margin/ha

Kg lamb/ha

Gross Margin/ha

Kg lamb/ha

Gross Margin/ha

Ryegrass

604

257

774

534

466

345

596

1120

Triple

490

547

717

624

421

332

554

967

SWFM Average

191*

139*

241*

259*

229*

271*

247*

459*

SWFM
Top 20%

215*

334*

300*

517*

224*

380*

374*

706*

^Note: Lamb per hectare figures for 2006/07 and 2007/08 are for scanned twin Merino bearing flocks while results in 2008/09 and 2009/10 are whole Merino flock single and twin values with dry ewes removed at scanning. Gross Margins are estimates accounting for levels of dry ewes and include all variable costs (Stott and Farquharson, 2011).

*Average & Top 20% prime lamb production enterprises in the South West Farm Monitor Project

Weaning percentages and gross margins of Coopworth vs Merino x Terminal system

Gross Margins between Merino and Coopworth systems were similar.  In the Merino system, wool production made up for lower weaning percentages (Figures 1 and 2).

Figure 1. Gross margins for Coopworth composite system compared to Merino terminal from 2008-2010. Figures in brackets are weaning percentages.
Figure 1. Gross Margins for Coopworth composite system compared to Merino terminal from 2008-2010. Figures in brackets are weaning percentages.
Figure 2. The proportion of income generated by wool and livestock sales in Merino x terminal and Coopworth prime lamb enterprises on the EverGraze project.
Figure 2. The proportion of income generated by wool and livestock sales in Merino x terminal and Coopworth prime lamb enterprises on the EverGraze project.

Profit

Post-experimental modelling (Young et al. 2011) examined the increase in production and profit (Table 2) relative to a “Base Case” average wool-producing farm scenario modelled using GrassGro pasture outputs. This modelling showed substantially increased profits from the Ryegrass and Triple systems when compared to a Base Case.

Table 2. The farm plans identified as optimal for the Merino x Terminal enterprise for the base case, Perennial Ryegrass and Triple pasture systems based on the GrassGro modelling for the Base Case and EverGraze trial assumptions for Ryegrass and Triple (Young et al. 2011).

Base Case

Ryegrass

Triple

Profit ($/ha)

12

510

499

Stocking rate (DSE/WG ha)

10.0

20.3

19.7

                      (Ewes/ha)

5.9

14.3

13.9

Supp feed (kg/DSE)

110.2

36.4

33.2

Flock Structure (% ewes)

84%

100%

100%

Lambing (%)

85%

89%

89%

Area perennial ryegrass (% of farm)

100%

100%

60%

Area lucerne (% of farm)

0%

0%

20%

Area fescue (% of farm)

0%

0%

20%

Pasture Growth (t/ha)

7.4

11.6

11.3

Pasture utilisation (%)

40%

54%

54%

Wool income ($/ha)

288

523

506

Sale sheep income ($/ha)

202

444

430

Leakage of water below the root zone (mm)

130

121

99

Return on investment

To examine how profitable the Ryegrass and Triple pasture systems were relative to their persistence and risk of failure, the investment was modelled over a 12 year period, sown as 10% (100ha) of a 1000ha representative farm with an initial ‘average stocking rate’ of 16.2 DSE/ha.

The internal rate of return from establishing either the Triple or Ryegrass system on 10% of a typical livestock farm was about 10-27%*, and the pay back period varied from 5-7 years when establishment was successful, under all stocking rates tested (from 16.2 DSE/ha to 36DSE/ha) (Figure 3).  This analysis accounted only for stocking rate increases, with further returns expected from flushing ewes, increases in lamb survival and higher finishing weights of lambs sold.

Key drivers for profitability of these systems included persistent pastures with improved production; reduced supplementary feeding costs in poor years; and increased product per hectare. It was also shown that provided establishment was successful, at the lowest stocking rate (16.2DSE/ha) the same as the base case the improved pasture systems could be less risky than the base case pasture due to reduced need for supplementary feeding.

* Internal Rate of Return = if all the money was borrowed for the investment the IRR would represent the maximum interest rate the investor could afford to pay on the loan without losing money.

Figure 3. Internal rate of return (%) results of the two EverGraze pasture systems adapted to 10% of a representative farm.
Figure 3. Internal rate of return (%) results of the two EverGraze pasture systems adapted to 10% of a representative farm. Results calculated for 100 hectares over a 12 year period at four stocking rates with establishment success and with establishment failure. Medium term prices and costs assumed.
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