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| VOLUME 54
(2006), ISSUE 3,
Papers |
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Economic models of the Northern Tablelands livestock grazing system for assessing sheep industry technologies in a whole-farm context
Andrew R. Alford, NSW Department of Primary Industries, Armidale, Australia
Oscar J. Cacho, University of New England, Armidale, Australia
B. Lloyd Davies, NSW Department of Primary Industries, Tocal, Australia
Garry R. Griffith, NSW Department of Primary Industries, Armidale, Australia
SUGGESTED CITATION:
Andrew R. Alford, Oscar J. Cacho, B. Lloyd Davies, and Garry R. Griffith
(2006)
"Economic models of the Northern Tablelands livestock grazing system for assessing sheep industry technologies in a whole-farm context",
International Journal of Sheep and Wool Science:
Vol. 54:
No. 3,
Paper 3, pp. 27-54.
http://sheepjournal.une.edu.au/sheepjournal/vol54/iss3/paper3
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The Northern Tablelands region of New South Wales is mostly used to produce wool, and sheep and
cattle for slaughter. Major issues for Northern Tablelands farmers relate to the economic and
environmental sustainability of the beef and sheep grazing system. Economic models of this system
are a useful first step in understanding the nature of the biological and economic constraints facing
farmers in their decision-making. A representative whole-farm economic model of the Northern
Tablelands livestock grazing system was developed from ABS and ABARE survey data, from
published literature, and from discussions with local farmers and extension officers. A whole-farm
perspective was taken because of the nature of the enterprises commonly run on mixed farms in the
region.
This representative farm comprises 920ha of which about half is native pasture and about half is introduced
pasture. The farm runs a flock of 1,108 first-cross ewes, a flock of 1,732 Merino wethers, and
a herd of 127 cows producing 18 month old steers suitable for the heavy feeder steer market. The
annual whole-farm operating budget, based on long-run average prices and costs, shows a total gross
margin of $86,191 and total overhead costs of $24,720. This results in a farm cash income of $61,471
and a farm operating surplus of $37,471 after depreciation and interest costs. Total assets of the farm
are $1,498,060 and liabilities are $100,000 which equates to an equity level of 93.3%. The farm
operating surplus achieved on this model farm as a percentage of the owner’s equity is 2.7%.
The expected impact of a proposed new pasture variety that costs more but gives improved growth in
winter was examined with the model. It is shown that a 10% increase in winter pasture growth on the
introduced pasture area of 450ha would result in a 5.0% increase in farm total gross margin and a 6.9%
increase in farm cash income. These improvements in profitability are achieved by increasing the
investment in prime lamb and cow activities and decreasing the investment in the Merino wether
activity. This indicates that under the current assumptions of the model, the prime lamb and young
cattle activities better utilize the new pasture resource than other activities.
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