Extracted from the Farm Tender weekly Newsletter - Sign up and get the email every Wednesday morning before 6 am. www.farmtender.com.au
By Dwain Duxson.
I see a problem.
And it's only a hunch of mine (no real facts involved), but when I heard from a couple of good sources say that the Flock (Sheep) and Herd (Cattle) post-drought rebuild isn't nearly as positive as what they are saying, my ears pricked.
If it's true, then we have a problem. I think.
Now I just want to point out that I might be completely wrong here. But I have had this theory for a while, so please hear me out and form your own opinion.
Part of the problem is that breeding numbers were decimated during the drought, and if we haven't made any gains since then, what will happen when the next drought comes along.
Drought is something we have to factor in, and everyone knows that. It's just a matter of how severe the next drought is or whether it's a dry period that may or may not lead to a drought.
However, I see another Elephant in the room that threatens our breeding numbers, and this activity happens in the good times.
It's trading or over-trading when prices are good.
There are three types of Livestock Farmers. There are traders, there are breeders, and there are the ones that do both.
To clarify, I consider trading to be where a Farmer buys an animal off another Farmer who later onsells that animal into the market. I consider a Breeder someone who goes to the effort of breeding an Animal that they either keep as a future breeder or onsells into the market (perhaps to traders). Of course, there are other variables here, but to keep it simple, we will just call them traders or breeders.
Trading has become a trend in the Cattle and Sheep industries over the last decade. Prices have determined this because there is good money to be made from trading, but even more so, trading gives you flexibility, which, in turn, helps you control feed intake and costs.
But tell me this. What's going to happen when you have fewer breeding stock and greater appetites to trade? It will mean fewer opportunities to trade, but also, breeders will be selling Stock they would normally breed from. Now, it takes patients to be a breeder, and cashflow is a requirement of all Farms, so nobody can begrudge a breeder cashing in when the money is right.
In a nutshell, we potentially have fewer Farmers breeding and less breeding stock.
Can you see the potential for an imbalance here?
I've been worried about this scenario for a while now, and it's fair to say that the effect hasn't been realised yet. If we can't get breeding numbers up in the good times, how will we go when the next drought hits?
Trading can't operate if there is nothing to breed from.
And all this is happening while demand is increasing for Lamb, Mutton and Beef.
So there is an opportunity here to breed more. But I think it's one that won't be taken up. The pendulum might have swung too far.
And that's the problem I see.
End of message