Breeding for profitability in Northen Australia
Breeding for profitability was the topic of discussion at the Angus Australia Angus for Every System – Breeding for Profitability in Northern Australia seminar, which took place in May at Beef Australia 2024.
The session hosted presentations from Ian McLean, Managing Director of Bush AgriBusiness, Ben Noller of Palgrove Pastoral and Troy Setter from Consolidated Pastoral Company (CPC).
The seminar first overviewed the work Bush AgriBusiness has done in a research project investigating the utilization of Angus genetics in commercial herds and their impact on the profitability of beef herds.
Firstly, Ian highlighted research conducted by Bush AgriBusiness regarding their clients, how they identify the top performing herds within these clients and go on to analyze what separates the top performing businesses they work with in the northern pastoral locations to their counterparts.
“We’re pretty fortunate to work with a lot of beef businesses across Northern Australia and do a lot of benchmarking,” said Ian. “What we do is we line all the businesses up. Once we’ve analysed them based on profitability, we identify the ones that are performing well. We spend a fair bit of time looking at these businesses to try to understand what it is that they’re doing, what separates them from the rest, what we can learn from them, and what the industry can learn from them.
“Whether it’s for family businesses or pasture company businesses, the same things keep rising in those endpoints that separate them and put them up the top of the field. These are:
- herd productivity (which is that they’re more efficient at turning grass in the beef)
- better targeted herd expenditure
- better labour efficiency
- lower overhead cost for a unit
Those three points can be achieved independent of scale.”
“Scale does come in as generally the better performing businesses have more operating scale,” he continued.
“These top performing businesses have operating efficiency right as well. All that combines to a lower cost of production.
“There’s also a fair bit that we can’t quantify. All the top performers want to know how they are performing and how they can improve, they are hungry for information and knowledge, they think critically and can smell bullshit from a distance, they match stocking rate to carrying capacity, they manage for stability versus volatility, they use genetics to leverage good management and they manage risk.”
Furthermore, Ian looked into the age-old adage of what is more important – management or genetics, summarising this by saying, “By management, we’re talking about how well they run the business. This is how well they sell the goods, if their systems are good, do they match stock rate, carrying capacity, target herd expenditure, demand efficiency, et cetera.”
He continued, “I’m going to quote Phil Holmes from the 2017 Australian Beef Report, ‘Management is a paramount; Genetics alone can save poor performing beef businesses. Genetics is a power lever, which can significantly enhance good management at very low cost. It would be a travesty if you left this powerful level unused’.”
When looking into the Profiting using Angus genetics in Commercial Herds report conducted by Dr Michael Wellington, Ian identified the key findings; productivity benefits outweigh price premiums and that price premium provides the icing on the cake, a significant proportion of productivity benefit is due to heterosis, as achieving ongoing heterosis will be important for management, the results are very sensitive to changes in additional expenses meaning producers should consider the potential for increased bull costs and increased bull turnover, the rate of genetic change of seedstock sources has a big impact on long term returns with the recommendation to ‘hitch on to a bull supplier who is going in the right direction and travel in their wake’.
“In summary, herd productivity drives income, income drives profit,” said Ian.
“The top performers have more productive herds, target their expenditure better, have better labour efficiency, and more scale. Management is more important than genetics, but genetics is really leveraged on management.
“Introducing Angus genetics provides financial benefits to commercial herds across the board, and as we saw, not just the price premium, but the productivity, the heterosis, and the genetic change over time.
“The productivity benefits outlay the price premium. Heterosis is important, but like everything you can’t spend too much on it and make sure you get the right seedstock source results.”
Following Ian, the seminar shifted gears to a presentation from Ben Noller, General Manager of Palgrove Pastoral.
Operating properties in Southern Queensland and northern New South Wales, Palgrove’s mission aims to ‘provide superior, well researched, high performance genetics, backed by science and data, that consistently improve performance/profitability’.
Ben highlighted the main purpose of their operation is to breed adaptable, functional cattle with increased fertility that achieve higher compliance rates for their clients.
“Aside from our bull depot and selling facility, all of our other properties are breeding properties,” he said. “We run a 50/50 stud and commercial herd on those properties, running 6,500 registered Charolais, Angus, Ultrablack and Brangus breeders.
“Palgrove has been operating for 55 years and has predominantly been a Charolais business throughout that time,” said Ben. “Since 2009, we’ve been operating the UltraBlack program.
“Just to put a few numbers into perspective to highlight some of the growth for the program, in 2015, Charolais were making up 60 to 70% of our business at that time and we were selling about 180 Ultrablack, Angus and Brangus Bulls.
“2018 marked a significant point within the growth phase of the Ultrablack program, where there was a long-term strategy for us to really bolster that program. We purchased new assets and a number of Angus females to really bolster our program.”
He continued, “If we look back at my previous numbers, Charolais made up 60 to 70% of our business. They now make up 35% of business with the Ultrablack, Angus and Brangus bulls making up 65% of our total bull sales. That’s not that the Charloais had a huge reduction so much as the increase in numbers that we’re seeing in that Ultrablack, Angus and Brangus space.”
When it comes to why Palgrove have invested so heavily into their Ultrablack program, Ben said, “There are a few reasons around why around the Ultrablack program. There was probably a limit around how many Charolais bulls we could distribute, the skillset in the business and that we were wanting to sell more, so there was a need for another breed.
“The other reason was basically through client demand. A lot of our clients were using Charolais over heavy high bos indicus content cattle and were looking for a third breed to put over and into that cross.
“Also is during that time, there was a lot of market demand for increased carcase quality traits, and we thought the Ultrablacks could certainly add to that, but there was also a big push from the industry in northern Australia for fertility traits.”
Covering the past, present and future for the business, Ben highlighted some of the challenges that Palgrove has faced and has refined the Ultrablack program and product they produce.
“Some of the challenges along the way – our aim was basically to have enough bos indicus content within those animals that they would provide that heat tolerance or thermo regulation within those tough environments with tropical adaption, yet we still wanted to produce cattle that would grow, grade, and yield.
“Our client base was sending cattle into a number of different markets, with the majority going into the southern feedlots, but we had a number of grass producers and clients at scale in Western Queensland in the organic space as well, which was really important.”
He continued, “We knew what we wanted to develop with the 80% Angus, 20% Brahman content. We knew that was doable because we had these animals already in our program at reasonable scale and they were performing well for us.
“The next step was basically doing this at scale with more producers across more of Australia to verify that they could do it in those tough environments.”
Looking to the present analysis of their business and the key drivers of growth in their program, Ben identified the marketability of the genetics for their clients, “Our present is why are people buying these Ultrablack bulls? I guess for me, it’s been that the balance between the maternal production and the terminal performance that people are receiving from these Ultrablack and Angus-influenced genetics in these tougher environments.”
Ben also touched on the development of UltraSELECT, the recently launched genetic evaluation for Ultrablack and Brangus animals, providing the opportunity for improved selection decisions and increased international trade of genetics. The collaborative genetic evaluation with International Brangus Breeders Association (IBBA) is available to animals registered in the Angus Australia Multibreed Register (MBR) with a breed composition of Brahman and Angus. The evaluation produces estimated breeding values (EBVs) for a specific list of traits.
“The key thing with that for us was we just didn’t really have that robust genetic analysis to really push us forward,” said Ben of the launch of UltraSELECT. “Angus Australia had a real progressive approach to help us out in this quest to find a genetic analysis that allows us a bit more robust to make some breeding decisions and also some better breeding decisions for our clients.”
“It’s a really exciting step forward for not only Palgrove and us to make genetic decisions on our clients, but also for anyone else out there that wants to come on the journey and improve profitability and use more Angus genetics in all of Australia.”
Rounding out the presentations was Troy Setter, Chief Executive Officer of Consolidated Pastoral Company (CPC).
CPC’s history goes back to 1879 and was first consolidated as a company in 1983. CPC owns and operates a portfolio of nine station aggregations in Australia and two feedlots in Indonesia. Across more than 3.2m hectares of land, the CPC team can care for more than 300,000 head of cattle and produce a diverse range of crops.
Sharing an insight into the CPC operations and the use of genetics to consistently increase their efficiency and profitability across their business, Troy shared how their company has adapted their management over time to drive profit.
“It was 10 years ago when I started at CPC. We had a terminal Charolais program, and we had quite a terminal Angus program in central Queensland as well.
“We thought we were running a maternal program, but we weren’t buying a bull under 1,000 or 1,200 kilograms. If we sat back and look at Northern Australia, where our markets are, we put a 300 to 400kg feeder steer on a ship and those cattle are taken out to near 500kgs in Southeast Asia. If we’re supplying feedlots in Australia, those grainfed animals are taken out to 500 to 60kgs live weight.”
Over the last decade, building from a Brahman base in their commercial herd CPC have integrated Buran, Angus and Waygu genetics into their operation. The company has established a genetics program to supply the CPC commercial herd with the best possible genetics, specifically designed for CPC, at a lower cost than commercially procuring in the open market.
“When we look Northern Australia when we started this program, it was predominantly uncontrolled joining, and a lot lactational estrus. We had to wean just about all our cows to get them to cycle again and which meant that they were out of season, and we were doing a lot of pregnancy testing synchronisation. We had really low branding rates. Genetic gain was lower than CPA and disease was a big issue,” said Troy.
“We looked at the Beef Situation Analysis which said that the average herd in Northern Australia had a profit of about six dollars per animal equivalent, and the top performers were at about 60 something.
“We wanted to be in that top performing group, and we needed to be within about 12 months, in order to make payroll.”
When talking about the influence of Angus genetics in their genetics program, Troy identified the predictability and performance of the Angus product.
Of the purpose driven animal they are now producing and how they are finding the animal not only adapts to the environment, but also is better placed for market suitability, Troy said, “I really wanted to match to our country and markets as well. When cattle prices are difficult and demand from feedlots is lighter on, like it is at the moment, some straight bos indicus breeds are really hard to sell.
“You don’t have a restocker market competing. The two big domestic supermarket chains don’t buy them a lot.”
He continued, “Getting that Angus genetics into them really helped us with more competitive market on our cull heifers when the price gets difficult, while improving carcase and hybrid vigour.
“Through our genetics program, we run EBVs and a single step test for the genomics that we run with ourselves and a couple of other people and share and benchmark all of that data together like any stud would, doing a lot of performance reporting.
“We’ve got some cattle in green feeders this year. We’ve put a couple of hundred bulls in net feed conversion efficiency and emissions reduction is also something that we’re looking in for. We’re trying to get every animal on the right-hand side of the curve.”
CPC utilised industry research to come to conclusions for the breeding objectives for their operation. “We used a bit of data from the NT Department of Primary Industries, which summed up that the heavier the heifer is in Northern Australia, the higher the pregnancy weight,” said Troy.
“We looked at that and went, we’ve been chasing that. We’ve been breeding big heavier, later maturing heifers, rather than trying to find the heifers that actually breed at a lighter, younger, earlier weight, so we moved to that.
“The bull does our first selection and pretty much anything over about 240kgs in November gets a bull put with it on most of the stations.”
Highlighting the challenges for animals in the north, Troy outlined, “We’re challenged by some really big strong wet and dry cycles.
“We get pretty much all of our rain over two and a half to three months on a lot of the stations, and then it’s dry for the rest of the year. Then you can get a fire. We have really low-quality soils for nitrogen and phosphorus, and that’s a big challenge.
“We’ve learned if your animals aren’t cycling and getting in calf until they’re about 400kgs, on a heifer, you’re lucky to be getting a calf by the time they’re three years of age in Northern Australia.”
He continued, “I talk to a lot of Angus breeders who say, my heifers getting in calf as a 12-month-old. But if that weight is into the 400kgs, they’re not going to be suited for Northern Australia. They’re going to be suited for Southern Australia.
“We want fast puberty and young growth. We ran the economics on this a few years ago. If the heifer calves as a three-year-old, we’d lose about $205. If the heifer calves as a two-year-old, there’s about $30 profit. So, getting heifers that are calving young is good for us. We want lots of fertility, but we want a fast growth and moderate cow size in our business.”
When looking at the bull portion of their operation there are some important considerations taken into account when selecting or breeding bulls, based on their ability to do in the harsher northern conditions.
“The growth pattern in the bulls is really important. Fast young growth, early puberty, early maturity,” said Troy. “Age is also important for bulls going north. We’ve tried young yearling bulls, taking them up north and letting them go so that they can have a year under their belt.
“We’ve had some real issues with them growing out and not getting enough body condition on them. They want to work hard, and the next year, they’re really skinny. We take them up north, they’re going to work for 52 weeks of the year.
“Body condition and positive fat is really important. Sheaths are important, and so is prepuce.”
Considering the different environmental pressures of the country in northern pastoral areas and how that influences the selection and culling methods within their business, Troy said, “Feet could be a big challenge, but it’s not as big a challenge as hair, bad structure and bad temperament for us. CPC’s water points are pretty close together, only three kilometres apart. But other people have them a lot further apart and further to get to yards, with some having 30- and 40-kilometre walks.
“We do use more portable panels and portable yards now we put more of the Angus cattle in,” he said.
“Foraging ability is something that’s important for the bull in order for them not only to be able to walk and work its way out, but also get out to forage. In the Northern Territory, the cattle really need to push out the first one or two kilometres from troughs or watering points to find decent feed, particularly when it’s really hot and the grass is really short.”
After making changes to their genetics, CPC now sit at a 92% weaning rate for their first calf controlled joined Angus x Brahman composites. Furthermore, the first calf heifer rebreeds of their cross bred cattle are at an 80% weaning rate.
Within their feedlot performance in Indonesia, across 135,000 head the CPC Angus and Angus cross cattle have a 18% higher average daily gain than all other breed combinations, 10% more total weight gain than all other combinations and 8% less days on feed then all other breed combinations.
Troy identifies that while the influence of Angus genetics in their operation has assisted in a growth of profitability and efficiency, there are still some opportunities for growth within their company and their clientele regarding understanding the use of the Angus breed in the Australia’s northern beef and export industries.
“If you look at Indonesia and the Middle East for live cattle, they’re used to getting red or grey Brahman cattle and a lot of Charbray cattle,” said Troy. “They’re not sure about black cattle.”
“There are perceptions about lack of yield in the boning room or that they’re too fat. It’s an education piece up there that I think is certainly opportunity for us as a company.
“I think there are also some producers scratching their head in Australia, not really understanding the crossbreeding or they’ve been in other breed production for so long where it’s been more terminal,” he continued. “However now I put an Angus bull over my adapted commercial cattle in the north, and instead of putting it out as a terminal, it’s actually understanding that we are keeping the females and the rollover of those females into the herd.
“It’s about markets we’re heading to. That was a continual education process because they had 20 plus years of thinking about another breed as a terminal or other colours were spade out.”
Overall, this change and adaption for the cattle within the CPC herd has meant that there has been a reduced age of turn off from 4.2 years to 2 years including cull cows, their kilograms produced per hectare has improved to 74%, their branding rate has gone from 51% to 82%, the mortality rate is down from 5.7% to 4.6% and the composite cattle produced by CPC make $36 per head on average more than pure bos indicus counterparts.
– Cheyne Twist, Senior Marketing and Communications Officer
Northern Protocols
Angus Australia have developed the northern Australia protocols, for producers to use as a guideline for using Angus bulls in northern Western Australia, Queensland and the Northern Territory. These have been developed in response to the increased interest in the utilisation of Angus bulls and Angus genetics in the northern areas of Australia.
These guides have been developed to assist breeders in their decision-making process and to maximise the productivity and longevity of Angus bulls in breeding herds, and assist in the full process of purchasing, delivering and the ongoing management of Angus bulls in northern Australia.
