To be successful we must be able to adapt to market fluctuations and take a hold of new opportunities as they arise. More than ever before I think that producers need to make alliances with other producers in buying, backgrounding ,feed lotting and processing to ensure growth and profitability within the marketplace.
Farming operations must grow in their diversity and endeavours. Growing and trying to incorporate as much of the supply chain as they possibly can.
Relationship management and forward contracting with suppliers, clients and processors assures a source of income for primary producers. This creates organised and coordinated systems of producers, taking control of the supply chain and supporting their industries.
In a perfect world – it would be ideal to have a forward price and buy livestock to fulfil the contract. But, it doesn't always happen this way.
Much of the time you are buying livestock with only your experience and knowledge of the industry to support whether your livestock will make a profit.
First you have to assess:
- the animals breed,
- their condition,
- their age,
- the price,
- muscle and fat scores
- and at all possible knowledge of their breeding background.
Then make a decision on how much they are worth and how much you could potentially make from them in the long run.
There are also seasonal conditions that influence the purchase – as in plenty of rain in a good season, or drought, which make cattle prices fluctuate.
Cattle produces also have to consider the market on the worlds stage. Just to put Australia’s market into perspective, one of our international competitors Brazil has an estimated 211 million head of cattle. That makes Australia’s 28 million head seem like a drop in the ocean.
These are just some things that can have an impact on the market, there are much more. So when you've got cattle that you are looking to buy, you have to consider your target market and search for the appropriate stock to suit that market.
One of the major overheads in the livestock industry is freight. Here at Princess Royal, we have our own freight division.This allows us to take control of freight overheads from transporting livestock and other commodities.
It also diversifies our business, adding an additional element to Princess Royal’s portfolio which is a strategic advantage for us.
By undertaking freight operations internally, we can reduce costs and it gives us more control of our operations.
One of the major costs within the livestock industry is feed.
We produce about 35% of our livestock’s annual feed requirements internally.
The remainder of the feed requirements are purchased from local producers – assisting the local economy. We have also installed two grain testing facilities so that we can test the grains that we produce as well as buy. This ensures the quality of the feed that we provide to our animals.
In The End:
Agricultural businesses are expanding and diversifying to include a portfolio of products and services. making agricultural business more sustainable by focusing on a number of different areas that will assure the quality and demand for their products.
At the end of the day, it is all about developing your business and ensuring the quality that you produce so that you can hopefully get a premium price and a good margin.