Gross margins per hectare over 24 years

Gross margins per hectare over 24 years Despite their good per head performance, the per hectare returns at a similar DSE rating from the BL x M and SAMM were lower than for the CP after accounting for their higher feed intake (due to their larger frame/live weight and higher number of lambs reared) and relative stocking rate. The modelling indicates that dual purpose s with good wool, reproduction and lamb growth are likely to be the most profitable alternative across a range of sheep systems provided wetter, colder climates do not severely affect the health of sheep. The Centre Plus had consistently higher gross margins per hectare over the four locations systems. The BL x M cross ewes were consistently similar to the SAMMs; both had very similar performance in ewe weight and lambing percentages. The s LV had a small consistent advantage over the Dohnes, both breeds had identical lambing percentages, the lambs from Dohnes ewes grew slightly faster but the s LV had higher fleece values. Additional details are shown in Appendix 1. The reasons for the higher gross margins per hectare and per DSE of the Centre Plus ewes were: (i) Higher lambing percentage in relation to ewe body weight. (ii) The higher value of wool production than all other breeds. Despite being 15% lower in CFW than the s LV, the 24-year average price premium for 19 um wool over 21 um wool placed the CP several dollars per ewe in front. (iii) The good growth of their prime lambs, the CP ewes reared lambs 1.1 kg lighter than the lambs from the BL x M and SAMM ewes, but they were 1.8 kg heavier than the lambs from the LV group. Elmore Lucerne and Crop Grazing system Elmore Annual Pasture and Crop Grazing system Rutherglen Annual Pasture system Hamilton Perennial Ryegrass system 19

Gross margins per breeding ewe Some sheep producers are reluctant to increase stocking rates to economic optimum levels because of seasonal and price risk. In these cases the returns per ewe, rather than per hectare become more important. The gross margin per ewe is thus an alternative profitability measure at lower stocking rates where the total number of ewes rather than DSE per hectare is the limiting factor. At the Elmore Lucerne system the gross margin per ewe was highest for the CP, followed by the SAMMs and BL x M in the Elmore Lucerne and crops system over both the 24 year period and each eight year period (see Figure below). The ranking of breeds was similar across the other three location systems. (Appendix 1). The gross margin per breeding ewe for the 5 breed groups when stocked at the same DSE/ha at the Elmore Lucerne and crop system for - the 24 year study period and - divided into three eight year periods. Feed value The feed values (pasture and supplement value), of the five breed types on the Elmore Lucerne System are shown below. In this example the BL x M cross ewes had a net income (wool and stock trading less the expenses of shearing and animal health, sales and purchasing costs) of $356/ha divided by the amount of feed eaten, 2634 kg/ha DM to give the feed value (13.5 c/kg DM). This is a similar concept to the income and costs per kilogram of feed eaten by the New Zealand Farmax software (Farmax 2018). The feed value of pasture and supplement of the five breed types in the Elmore Lucerne System over the 24 year study period. 20

High and low wool prices over the last eight years An analysis of the gross returns from stock trading and wool over the last 8 years, when lamb prices were generally good and the wool price variable; indicated merino wool was the reason for better returns from dual purpose sheep, even during the low wool price years from 2012 to 2015. The CP gross income was $90/ha higher even in the low wool price years of 2012 to 2014; in the higher wool and lamb price years from 2016 to 2018 the difference increased to about $150/ha. The stock trading profit (lamb and CFA ewe sales, less ewe replacements and rams) was consistently higher for the BL x M ewes than the CP ewes due to higher lambing percentages and a higher lamb price per head due to their higher weight and carcase dressing percentage (see below). However the higher wool returns from the CP s compared to the BL x M resulted in higher gross income per hectare from meat and wool in all years. The gross margin differences closely followed the gross incomes. The 8 year gross margins averaged about $70/ha higher for the CP s, the differences were around zero in 2014-15, a time of lower wool prices, but higher at about $120/ha from 2016 to 2018 when the price of both lamb and wool were higher (see below). a a b b The gross wool income and stock trading profit from (a) BL x M ewes and (b) CP ewes in the Rutherglen Annual Pasture system at a stocking rate of 9.5 DSE/ha The gross margin from (a) BL x M ewes and (b) CP ewes in the Rutherglen Annual Pasture system at a stocking rate of 9.5 DSE/ha. 21

Capital investment in ewes The purchase price of ewe replacements is a significant cost and included in the stock trading account. The interest on the ewe capital investment has not been considered in the gross margin calculations; however the interest cost would be similar per hectare as the capital investment per hectare was similar across the breeds. The interest on livestock capital would be most important when considering changes in stocking rate. The capital invested in ewe for the Elmore Lucerne and crop system when run at the same stocking rate. Simulation study 2. Flock age structure effects Altering the age structure of a prime lamb ewe flock has small but significant effects on gross margins. Buying BL x M ewe lambs instead of 1.5 year old ewes increased the Elmore Lucerne system gross margin by $22/ha from the base flock gross margin of $334/ha (see below) over our study period of the last 8 years. This was due to a reduction in ewe replacement costs due to the lower price of ewe lambs (set 10% per ewe lower) and a reduction in the number of ewes required each year because they had an extra year of breeding life. However prime lamb sales were reduced as there was an overall lambing percentage reduction of 3% due to the lighter weight younger ewe lambs. If ewes, purchased as 1.5 year olds, were kept for an extra year and sold at 8.5 years then the gross margin increased by $19/ha, however if the older ewe death rate increased from 5% to 10%, then there was only a $13/ha increase in gross margin. Overall it seems that gross margins could increase by about 10 to 12% due buying ewe lambs and selling CFA ewes one year older. At the end of the Elmore trial 10% of ewes were judged as broken mouth at 6½ years of age. There were no significant differences between breeds and despite some ewes being broken mouth, all were judged to be healthy, in good condition and suitable for another joining. Buying ewe lambs suitable for joining at 8 months of age is an option in only some breeds where there is a steady market supply. In the Elmore trial the BL x M, Dohnes and SAMMs were all grown to a suitable joining weight on their home farms before delivery to Elmore. It has also been suggested that the BL x M may have a longer productive life due to their hybrid vigour compared to some merino types. However, the authors are not aware of any objective information on this topic. Gross margin increases due to joining BL x M ewes as ewe lambs rather than 1½ year old ewes or keeping them to an older age. 22

Simulation study 3. Stocking rate effects The effect of stocking rate was tested at the Elmore Lucerne system for the BL x M, LV and CP teams. Commercial farm stocking rates on lucerne based pastures in this area are currently up to 9 DSE/ha and several producers have indicated they are considering further increases. Before the extended dry spell that started in 2002 stocking rates on some higher stocking rate farms were over 10 DSE/ha, while neighbours with similar pastures were about 6 to 7 DSE/ha. The GrassGro simulated stocking rate experiment indicated the CP gross margin advantage over the LV and BL x M rose as stocking rate increased up to a projected 13 DSE/ha or about 30% higher than that achieved on the higher stocked commercial farms in the area (see Figure below). Further simulations (not shown) indicated that the optimal stocking rate was higher in the CP s than in other breeds. Gross margins per hectare for the BL x M and LV reached the point of diminishing returns beyond 12 DSE/ha at Elmore, while the CP gross margins were still increasing (see Figure below). The effect of stocking rate on the capital invested in ewes per hectare is also shown. Simulated stocking rate experiment over 24 years for three breed groups in the Elmore Raywood Lucerne farming system As stocking rate was increased, the variation in gross margin between individual years increased, highlighting the increased upside as well as the downside risk (see Figure below). The highest gross margin was in 2010-11 when a good season, combined with high prices gave excellent returns at the higher stocking rates. But poor seasons such as 2007-08 gave light weight, low priced lambs and high drought feed costs. Simulated stocking rate experiment for the CP showing annual and 24-year average gross margins for the Elmore-lucerne farming system. 23

Simulation study 4. Self-replacing merino flock vs merinos to terminal sires This analysis looked at the profitability of a common farm scenario where two sheep enterprises are run; the first, a selfreplacing flock of a, Dohne and SAMM ewes which produce ewe replacements for the second flock joined to a terminal sire for prime lamb production. These analyses found the 24 year gross margins per ewe were $78.23 for the ewes joined to White Suffolk rams and $85.33 for those joined to rams. However, the ewes joined to rams had a higher DSE rating per ewe joined than those joined to White Suffolks (3.0 vs 2.4 DSE per ewe) because replacement ewes were kept to 18 months of age before being joined to rams or transferred to the prime lamb flock (see Figure below). When converted to the same DSE rating per hectare the gross margin per hectare for the ewes joined to terminal meat rams was $321 / ha compared to the self-replacing flock compared gross margin of $279 / ha (see Figure below). Gross margin comparison of a dual purpose flock joined to White Suffolk rams or rams to breed replacement ewes and merino wether lambs for sale. The comparison per breeding ewe. The ewes joined to White Suffolk rams have a lower DSE rating than the ewes joined to merinos. The comparison per hectare when both flocks are stocked at the same DSE rating per breeding ewe. 24

Industry application Gross margins per hectare The key finding was that lamb and wool production with specialist dual purpose merinos had higher gross margins per hectare when ewes were stocked at the same DSE per hectare. They were more profitable than both lamb focused sheep production from BL x M ewes or wool focused lamb production from medium wool merino ewes. In our study, Centre Plus s were selected to represent the newly emerging specialist dual purpose merino type. They were selected because of their good ASBVs (Australian Sheep Breeding Values) for dual purpose traits. An examination of the ASBV database indicates a number of merino ram breeders could supply similar genetics. Specialist dual purpose merinos when joined to terminal sires, represented in this trial by Centre Plus s, had higher lambing percentages, lamb growth and higher wool value over time. They produced higher gross margins per hectare by an average of 30% above the other four breed enterprises and 18% above the local s at the same DSE stocking rate per hectare. These higher gross margins were consistent over the four location systems tested. Specialist dual-purpose s are likely to be the most profitable alternative provided the animal health problems of internal parasites and feet are not issues in high rainfall environments. Returns per ewe Some sheep producers are reluctant to increase stocking rates to economic optimum levels because of seasonal and price risk. In these cases, the returns per ewe, rather than per hectare become more important. When the breeds were compared using gross margins per ewe; specialist dual purpose merinos averaged 29% above the other four breed enterprises and 33% above the local s. However, in times of lower wool and higher lamb prices, the BL x M and SAMMs were about equal to the CP. Feed value A third method to compare profitability is the returns per kilogram of feed eaten, both pasture and supplement expressed as c/kg DM. Again this method gave the same rank order as gross margins per hectare. Sourcing the best genetics There are many dual purpose merinos on the market, but only some have objective information about their genetic background. Outward appearance is no guide to essential information on wool characters, reproduction, body growth, disease resistance including worms and easy care including fly strike resistance. Australian Sheep Breeding Values (ASBVs) are an essential part of sourcing the most appropriate genetics for a sheep farming system. Change genetics or change enterprise This study has shown that, other things being equal, genetics has a major influence on sheep profitability. It is often stated that the risks associated with changing an enterprise are generally greater than from improving an existing one. However, changing sheep genetics can be an easier option compared to the high risks and costs of pasture improvement and the associated increases in stocking rate. Bigger risks, both technical and financial, might occur from a change from sheep to cattle or cropping. For self-replacing wool focussed or dual-purpose flocks, the risks and costs associated with changing/improving genetics are relatively low as it can simply involve purchasing different rams. A total change from one breed of ewe to another (eg. to BL x M or composite) may have implications on cash flow depending on relative prices paid/received for ewes. Flock age structure of BL x M ewes BL x M ewe lambs, ready to join are readily available at sheep sales in Southern Australia. Weights are normally 45 to 60 kg, the heaviest mobs being born in April, grazed on lucerne and fed supplements to achieve these weights for the replacement ewe auction markets in November to January. The three groups of ewe lambs entered in the Elmore trial in Jan 2009 weighed 40 kg at 7 months of age, 50 kg at 8 months and 52 kg at 8 months respectively. They were joined in late February and averaged 105% lambs marked. The effects on gross margins for a BL x M enterprise from buying replacement ewes as lambs and keeping for the ewes for an extra year were analysed as it is a common question asked by producers. Using the Elmore Lucerne system and prices over the last eight years, these analyses indicated that buying BL x M ewe lambs rather than 1½ ewes would increase gross margins by $22/ha (from $334 to $356/ha) if ewe numbers were unchanged. If BL x M ewes were kept for an extra adult lambing their gross margin would increase by $19/ha, but by only $13 if the death rate of the older ewes increased. If both options were implemented the gross margin would increase to $369/ha or about 10%. Self replacing flocks vs buy in ewes Other important factors affect a simple breed choice than just gross margin per hectare. Producer meetings associated with this study indicated a strong preference to run a self-replacing merino flock with surplus ewes joined to terminal sires. Reasons for this include: the high cash costs of buying in replacement ewes and price risk which increases as lamb prices increase, diminishing the profit per hectare; the availability of ewes of good genetic merit ; the disease risk and the time taken to find suitable replacements. 25

Reasons for having a prime lamb only flock put forward by producers include that a self-replacing flock with some ewes joined to terminal meat rams complicates farm management; young sheep need more attention to nutrition and health during their growing out period. There may be additional shearings with merino wether lambs sold in autumn or ewe lambs being shorn at a separate time to adult ewes. In some cases these producers have a large cropping enterprise which is their priority and complicated sheep production systems are hard to justify. The cost of buying-in replacement ewes is one of the highest costs in a lamb enterprise and is a significant factor in enterprise choice. It is reason for the numerous ewe breeds now available to choose from for self-replacing flocks, including SAMMs, Dohnes, Composites, Dorpers and dual purpose s. For most of these breeds, ewe lambs can be joined at 8 months of age, to increase gross margins. Sheep health problems in wet areas Another important factor affecting choice of sheep breed or genotype by producers is how well they are perceived to perform in different environments with different animal health risks. While GrassGro can simulate variable animal production in response to variable seasonal conditions and pasture supply, it cannot simulate the susceptibility and possible effect of animal health risks such as internal parasites, foot-rot, fleece-rot etc. In higher rainfall environments, cross-bred sheep or meat breeds (Coopworths, composites) are often preferred by producers as they are thought to be less susceptible to internal parasites and feet problems than s as well as fewer lamb deaths in poor weather. There are a range of management strategies that can reduce the susceptibility of s to these risks. They include an integrated approach to worm control including WEC monitoring, strategic drenching, drench rotation and cattle/crop areas to reduce worm contamination of pastures. In the longer term there are opportunities to improve merino suitability for higher rainfall areas by breeding for low WEC (worm egg count) as in Western Australia, foot-rot resistance as in New Zealand and breeding for more easy care sheep (low breech & body wrinkle, bare breech and low dag) as demonstrated in recent research projects. In this modelling we have held constant the DSE or amount of grass eaten per hectare and expressed all results as dollars/ha. When producers change enterprises they change a range of factors and results are usually discussed on a dollar/head basis. These two factors mask the truth. Gross margins do not accurately account for production differences that occur between breeds unless the production factors are taken from modelling work. Overhead costs have not been included in this study, but benchmarking indicates they are commonly $100 to $150 per hectare. Including overhead costs would dramatically increase the whole farm profitability differences between the breeds. Some sheep farming systems would barely break even while others would be highly profitable. Prices and seasonal risk One of the major contributing factors when considering a different enterprise is a change in commodity prices, particularly the relativity between wool and meat. Specialist dual purpose merino enterprises had higher gross margins than BL x M cross ewes in times of lower lamb prices from 1994 to 2001 as well as when lamb prices were higher from 2011 to 2018. For example, in the Elmore Lucerne system the BL x M gross margin increased by $139/ha between the two periods while the CP increased by $62/ha, however the CP was still more profitable by $125/ha during the time of higher lamb prices. The differences were lowest from 2012 to 2014 when wool prices were relatively low and there was less than 3 % premium per micron for fine wool. However this period was only for 3 years of the 8 year period and 3 years out of the 24 year period under study. Sheep enterprises that have low wool income (BL x M) carry more market risk as they are more reliant on the sheep meat market. Profitability is also more sensitive to reproductive rate. When lamb prices are low and reproduction is low then enterprise profitability is very low. If the lamb price and reproduction are high then the profit per hectare is high but still behind the dual purpose merinos. Other profitability studies The results of this study are consistent with findings from farm benchmarking data and other sheep enterprise comparisons. Sheep enterprise profitability studies commonly use two techniques (i) simulation studies as used here or (ii) benchmarking comparisons. Sheep profitability studies normally classify enterprises into three general categories. Wool enterprises are those where all merino ewes are joined back to a merino ram. Dual purpose enterprises are those where all merino ewes are joined to a terminal or maternal sire. Prime lamb flocks are those flocks where specialist meat sheep breeds are used such as the traditional 1st Cross Border Leicester Ewe. Relevant data from several sheep profitability studies are summarised below. Benchmarking comparisons Farm benchmarking from many farms over several years can give general trends but it is unable to define causation. The farm benchmarking list below shows a long term trend towards dual purpose systems being slightly more profitable; but there is a very large variation within enterprises. Hassall & Associates Pty Ltd (2004). In both the sheep wheat zone and high rainfall zone s joined to terminal sires had approximately 15% higher gross margins compared to BL x M ewes joined to terminals using average prices over the previous 5 years. Comparing sheep production systems it can be seen that that production is profitable and provides a large number of enterprise options to suit different environments and farming. Their calculations were based 26

on (a) 35 years of benchmarking clients flocks, (b) review of publications from other benchmarking service providers and (c) personal consultation with extension officers, brokers and processors. Australian Wool Innovation (2005a). In the Victorian Sheep Wheat Zone, an analysis by Graeme Lean indicated the farm profit (as distinct from gross margin) of dual purpose flocks averaged around $10/DSE compared to around $6/DSE for wool and prime lamb flocks over the previous 5 years; based on an analysis of the Vic DPI farm Monitor Scheme. Across all rainfall zones the average gross margin was $21/DSE for dual purpose flocks, $19 for prime lamb flocks and $17 for wool flocks. The report also noted this was a period of lower wool prices. It also stated there was more variation within enterprises than between them, which highlights the main finding from this analysis. It is not what you run that determines profitability, but how well it is run. That is, management is more important than enterprise choice for determining profitability. For example, the Top 20% of Wool enterprises are more profitable than the average Prime Lamb flock in the high rainfall zone, where it is said by some that s can t be run. Australian Wool Innovation (2005b). A report prepared for Australian Wool Innovation Limited by Sandy McEachern, Holmes, Sackett & Associates Pty Limited. Five year average gross margins (1999/00-2003/04) from Homes & Sackett benchmark data (see Figure below) indicated dual purpose flocks had a 15 to 20% higher gross margin than prime lamb flocks. Five year average gross margins (1999-00 to 2003-04) AWI report derived from Homes & Sackett benchmark data. Holmes, Sackett and Associates, AgInsights 2008. The gross margin expressed as $/DSE, for the 11 year period, 1998 to 2008 was ; wool $17/DSE, dual purpose $21/DSE and prime lamb $20/DSE. Holmes, Sackett and Associates, AgInsights 2015. The gross margin expressed as $/DSE, for the 2014-15 year was; wool $38/DSE, dual purpose $40/DSE and prime lamb $37/DSE. The benchmarking data from HSA always shows a wide range in gross margin ($/DSE) between the average and top 20% of producers within each enterprise. Benchmarked gross margin differences within an enterprise are due to many factors even in the same district with the same rainfall. Key differences in profitability are due to pasture species and quality, pasture establishment and maintenance costs, stocking rate, lambing time, sale time of prime lambs and animal health programs as well as seasonal conditions and prices. On a gross margin per DSE comparison dual purpose production were generally higher than prime lamb production. Simulation study comparisons Warn et al (2006). GrassGro was used to model fourteen sheep enterprises at four different locations in south-eastern Australia: Mortlake, Rutherglen, Naracoorte and Cowra. Simulations were run over 37 years (1965-2002), using historical weather data for each location and relevant soil types and pasture species. Overall the dual purpose enterprise using fine ewes was consistently the most profitable. It was followed by prime lambs, then the self-replacing enterprises, with the wethers the least profitable enterprise at all four locations and at two commodity price scenarios. In general, the self-replacing enterprises were only slightly less profitable than the prime lamb enterprises. However, when a large price premium existed for super-fine wool (i.e. 5 year average price, 1999-2003), the super-fine yearling enterprise was as profitable as the dual purpose enterprise. Graham P. and White A. (2010). GrassGro was used at two locations in southern NSW, Yass and Cowra, for the period 1960 to 2007. The results indicated that no enterprise performed consistently better based on profit per hectare, but overall the average gross margin from dual purpose enterprises was $181/ha while prime lamb enterprises averaged $162/ha. More detailed work within enterprises showed that the range within an enterprise due to changes in genetics or replacement 27

costs was far greater than the differences between enterprises. The risks associated with changing an enterprise are generally greater than from improving an existing one. It is important that advisers base their comments about enterprise choice on robust information rather than the simplistic information that circulates within the sheep industry. Behrendt, R and Young, J (2010). Evergraze trials simulation analyses found (Table 3 in their report) that wool-meat merinos to terminals had around $100 to $140/ha advantage over 1 st Cross to terminals with two times of lambing. Young J, Bathgate A & Behrendt R. (2011). An analysis of sheep breeds and farming systems was undertaken with data from the EverGraze experiment. The profitability of the Coopworth system; (Composite breed for prime lamb production with replacement ewes bought in and mated for their first lamb at 2yo, 139% lambing) was about $100/ha lower than the Terminal system; ( merino ewes mated to a terminal sire for prime lamb production, replacement merino ewes are purchased, 89% lambing) system with the standard prices. The report states: There was an increase in sales sheep income in the Coopworth system, however this is insufficient to compensate for the reduction in wool income. NSW DPI website (2016). Sheep Enterprises improve further in 2016 Assessed Dec 2016. The gross margins of s joined to terminal sires had a slight advantage of about $2/DSE over terminal sires over BL x M ewes ($37 vs $35/DSE). Information based on gross margin analyses of 10 sheep enterprises. Conclusion Sheep production systems that combine prime lamb and merino wool by using specialist dual purpose merinos with good lambing percentages, wool value and lamb growth were more profitable than the other four breeds tested. The CP s tested had higher gross margins per hectare by an average of 30% above the other four breed enterprises and 18% above the local s at the same DSE stocking rate per hectare. When the comparisons were on gross margins per ewe specialist dual purpose merinos averaged 29% above the other four breed enterprises and 33% above the local s. The gross margins per hectare of traditional prime lamb enterprise (where BL x M ewes are purchased) could be increased by up to 10% by buying replacements as heavy ewe lambs ready to join rather than as 18 month-old ewes. Keeping purchased 18 month old ewes to 7 to 8 years of age rather than 6 to 7 years increased gross margins by up to 7%. If there was a 5% increase in ewe mortality from the older ewes the gross margin advantage was reduced to 4%. This halved the smaller difference between the BL x M and LV groups, but had a smaller impact on their difference with the CP s. Stocking rate sensitivity analyses indicated the gross margins per hectare of the local s and CP s were less affected by higher stocking rates than that of BL x M cross ewes. This was because wool growth and wool income were more stable than the returns from prime lambs when pasture was limiting. Many properties producing prime lambs from merinos also have self-replacing flocks with surplus ewes joined to terminal sires. A case study analysis comparison indicated the gross margins of a whole farm sheep system where dualpurpose ewes were split to breed both ewe replacements and merino wether lambs with surplus ewes joined to terminal sires was slightly less profitable option than joining all ewes to terminal sires but could solve other problems of buying suitable replacement merinos and biosecurity. 28

Appendix 1. Production and financial summary tables Appendix 1.1 Elmore lucerne pasture with crop and stubble grazing System details Elmore lucerne pasture with crop and stubble grazing BL x M XB ewe Loddon Valley CP Dohne SAMM Key production info Breeding ewes per hectare, 1~2yo & mature 7 days pre lambing ewes/ha 3.12 4.09 3.50 4.09 3.12 Ewes per hectare at shearing, mature only ewes/ha 3.03 3.99 3.41 4.00 3.03 DSE calculated by GrassGro DSE/ha 8.55 8.61 8.45 9.10 8.57 Ewe weight, aver 21yr, matures, 15 Jan kg/head 73.9 60.1 66.6 66.8 75.1 Ewe Condition Score, aver 21yr, matures, 15 Jan Condn Score 3.4 3.4 3.4 3.5 3.5 CFW, aver 21yrs, mature ewes kg/head 3.77 4.59 3.93 3.39 2.54 Wool fibre diameter, aver 21yrs, mature ewes um 30.1 20.6 18.9 20.7 24.5 Lambs marked, 24 yr aver % 124% 88% 107% 89% 124% Prime lamb aver weight at sale, ewes & wethers, aver 24yrs kg/head 51.7 49.3 50.5 50.4 51.8 Prime lamb weight gain g/day 219 208 213 213 220 Wool prodn, 24 yr aver kg/ha clean 11 18 13 14 8 Lamb prodn, 24 yr aver kg/ha live 199 177 188 182 200 Supp feed, 24 yr aver $/ ewe 94 89 91 86 93 Key financial info Gross wool sales, 8yrs 94-01 low lamb prices $/ewe $24 $45 $57 $33 $19 Gross wool sales, 8 yrs 02-09 drought $/ewe $20 $44 $44 $32 $20 Gross wool sales, 8 yrs 10-17 recent years $/ewe $20 $54 $52 $40 $25 Gross wool sales, 24 yr aver $/ewe $21 $48 $51 $35 $21 Gross lamb sales, 8yrs 94-01 low lamb prices $/ewe $119 $81 $100 $84 $119 Gross lamb sale, 8 yrs 02-09 drought $/ewe $144 $94 $118 $98 $145 Gross lamb sales, 8 yrs 10-17 recent years $/ewe $191 $128 $160 $134 $193 Gross lamb sales, 24 yr aver $/ewe $151 $101 $126 $105 $153 Gross wool income, 8yrs 94-01 low lamb prices $/ha $74 $182 $200 $135 $59 Gross wool income, 8 yrs 02-09 drought $/ha $61 $179 $154 $132 $62 Gross wool income, 8 yrs 10-17 recent years $/ha $62 $222 $183 $164 $78 Gross wool income 24 yr aver $/ha $66 $194 $179 $144 $66 Gross lamb income, 8yrs 94-01 low lamb prices $/ha $370 $331 $352 $345 $372 Gross lamb income, 8 yrs 02-09 drought $/ha $449 $385 $414 $401 $453 Gross lamb income, 8 yrs 10-17 recent years $/ha $597 $525 $560 $547 $603 Gross lamb income, 24 yr aver $/ha $472 $414 $442 $431 $476 Average lamb price (ewe & wether), 8yrs 94-01 low lamb prices $/lamb $93 $87 $90 $90 $94 Average lamb price (ewe & wether), 8 yrs 02-09 drought $/lamb $125 $118 $121 $122 $125 Average lamb price (ewe & wether), 8 yrs 10-17 recent years $/lamb $155 $145 $149 $150 $155 Average lamb price (ewe & wether), 24 yr aver $/lamb $124 $116 $120 $121 $124 Ewe replacement price, average last 8 years $/head $170 $137 $152 $137 $172 Capital invested in ewes, at purchase price, av last 8 years $/ha $527 $561 $534 $563 $535 Capital invested in ewes, at current market value, av last 8 years $/ha $355 $375 $355 $387 $359 Costs - Wool sales 24 yr aver $/ewe $2 $4 $4 $3 $2 Costs - Sheep sales 24 yr aver $/ewe $16 $11 $13 $11 $16 Costs - Supp feed 24 yr aver $/ewe $25 $24 $24 $23 $25 Costs - Pasture 24 yr aver $/ewe $13 $10 $11 $10 $13 Costs - Shearing and husbandry 24 yr aver $/ewe $15 $15 $15 $15 $15 Costs - Total variable 24 yr aver $/ewe $70 $62 $67 $61 $70 Gross margin GM/ha, 8yrs 94-01 low lamb prices $/ha $211 $242 $298 $219 $200 GM/ha, 8 yrs 02-09 drought $/ha $148 $160 $191 $135 $154 GM/ha, 8 yrs 10-17 recent years $/ha $352 $400 $418 $378 $372 GM/ha, 24 yrs $/ha $237 $267 $302 $244 $242 GM/DSE, 8yrs 94-01 low lamb prices $/DSE $24.69 $28.10 $35.22 $24.12 $23.36 GM/DSE, 8 yrs 02-09 drought $/DSE $17.29 $18.59 $22.63 $14.88 $17.94 GM/DSE, 8 yrs 10-17 recent years $/DSE $41.18 $46.49 $49.43 $41.55 $43.40 GM/DSE 24 year aver $/DSE $27.72 $31.06 $35.76 $26.85 $28.23 Gross margin per breeding ewe, ewe count pre lambing Gross margin per breeding ewe, 8yrs 94-01 low lamb prices $/ ewe $67.73 $59.19 $85.02 $53.61 $64.30 Gross margin per breeding ewe, 8 yrs 02-09 drought, drought $/ ewe $47.42 $39.15 $54.64 $33.08 $49.39 Gross margin per breeding ewe, 8 yrs 10-17 recent years $/ ewe $112.97 $97.91 $119.32 $92.37 $119.44 Gross margin per breeding ewe, 24 yrs $/ ewe $76.04 $65.42 $86.33 $59.69 $77.71 29

Appendix 1.2 Elmore annual pasture with crop and stubble grazing System details Elmore annual pasture with crop and stubble grazing BL x M XB ewe Loddon Valley CP Dohne SAMM Key production info Breeding ewes per hectare, 1~2yo & mature 7 days pre lambing ewes/ha 1.96 2.55 2.35 2.54 1.96 Ewes per hectare at shearing, mature only ewes/ha 1.89 2.47 2.27 2.47 1.89 DSE calculated by GrassGro DSE/ha 5.08 5.06 5.34 5.38 5.09 Ewe weight, aver 21yr, matures, 15 Jan kg/head 76.2 61.8 68.4 68.7 77.4 Ewe Condition Score, aver 21yr, matures, 15 Jan Condn Score 3.6 3.6 3.6 3.7 3.7 CFW, aver 21yrs, mature ewes kg/head 3.75 4.55 3.90 3.35 2.52 Wool fibre diameter, aver 21yrs, mature ewes um 30.0 20.5 18.8 20.6 24.4 Lambs marked, 24 yr aver % 133% 97% 116% 97% 134% Prime lamb aver weight at sale, ewes & wethers, aver 24yrs kg/head 47.5 43.5 45.3 45.5 47.7 Prime lamb weight gain g/day 259 234 246 247 261 Wool prodn, 24 yr aver kg/ha clean 7 11 9 8 5 Lamb prodn, 24 yr aver kg/ha live 124 107 123 112 125 Supp feed, 24 yr aver $/ ewe 80 72 75 73 79 Key financial info Gross wool sales, 8yrs 94-01 low lamb prices $/ewe $24 $44 $56 $32 $19 Gross wool sales, 8 yrs 02-09 drought $/ewe $20 $43 $43 $32 $20 Gross wool sales, 8 yrs 10-17 recent years $/ewe $20 $53 $51 $39 $25 Gross wool sales, 24 yr aver $/ewe $21 $47 $50 $35 $21 Gross lamb sales, 8yrs 94-01 low lamb prices $/ewe $108 $71 $89 $75 $109 Gross lamb sale, 8 yrs 02-09 drought $/ewe $119 $74 $94 $80 $123 Gross lamb sales, 8 yrs 10-17 recent years $/ewe $169 $108 $139 $117 $171 Gross lamb sales, 24 yr aver $/ewe $132 $84 $107 $91 $134 Gross wool income, 8yrs 94-01 low lamb prices $/ha $46 $112 $133 $83 $37 Gross wool income, 8 yrs 02-09 drought $/ha $38 $111 $102 $82 $39 Gross wool income, 8 yrs 10-17 recent years $/ha $38 $136 $121 $100 $48 Gross wool income 24 yr aver $/ha $41 $120 $118 $88 $41 Gross lamb income, 8yrs 94-01 low lamb prices $/ha $211 $181 $209 $192 $213 Gross lamb income, 8 yrs 02-09 drought $/ha $234 $189 $221 $204 $240 Gross lamb income, 8 yrs 10-17 recent years $/ha $330 $275 $326 $298 $334 Gross lamb income, 24 yr aver $/ha $258 $215 $252 $231 $262 Average lamb price (ewe & wether), 8yrs 94-01 low lamb prices $/lamb $78 $70 $74 $74 $78 Average lamb price (ewe & wether), 8 yrs 02-09 drought $/lamb $94 $84 $88 $91 $97 Average lamb price (ewe & wether), 8 yrs 10-17 recent years $/lamb $126 $112 $120 $121 $127 Average lamb price (ewe & wether), 24 yr aver $/lamb $99 $89 $94 $95 $101 Ewe replacement price, average last 8 years $/head $172 $137 $152 $137 $172 Capital invested in ewes, at purchase price, av last 8 years $/ha $336 $349 $358 $350 $335 Capital invested in ewes, at current market value, av last 8 years $/ha $225 $234 $239 $242 $227 Costs - Wool sales 24 yr aver $/ewe $2 $4 $4 $3 $2 Costs - Sheep sales 24 yr aver $/ewe $14 $9 $11 $10 $14 Costs - Supp feed 24 yr aver $/ewe $23 $20 $21 $21 $23 Costs - Pasture 24 yr aver $/ewe $20 $16 $17 $16 $20 Costs - Shearing and husbandry 24 yr aver $/ewe $15 $15 $15 $15 $15 Costs - Total variable 24 yr aver $/ewe $74 $63 $68 $63 $74 Gross margin GM/ha, 8yrs 94-01 low lamb prices $/ha $107 $127 $174 $112 $102 GM/ha, 8 yrs 02-09 drought $/ha $31 $37 $59 $21 $37 GM/ha, 8 yrs 10-17 recent years $/ha $174 $199 $233 $190 $187 GM/ha, 24 yrs $/ha $104 $121 $155 $108 $109 GM/DSE, 8yrs 94-01 low lamb prices $/DSE $21.10 $25.17 $32.59 $20.78 $19.98 GM/DSE, 8 yrs 02-09 drought $/DSE $6.07 $7.22 $10.99 $3.86 $7.31 GM/DSE, 8 yrs 10-17 recent years $/DSE $34.25 $39.39 $43.70 $35.39 $36.75 GM/DSE 24 year aver $/DSE $20.47 $23.93 $29.09 $20.01 $21.35 Gross margin per breeding ewe, ewe count pre lambing Gross margin per breeding ewe, 8yrs 94-01 low lamb prices $/ ewe $54.71 $50.01 $74.02 $43.95 $52.02 Gross margin per breeding ewe, 8 yrs 02-09 drought, drought $/ ewe $15.74 $14.34 $24.96 $8.17 $19.03 Gross margin per breeding ewe, 8 yrs 10-17 recent years $/ ewe $88.82 $78.27 $99.26 $74.85 $95.69 Gross margin per breeding ewe, 24 yrs $/ ewe $53.09 $47.54 $66.08 $42.32 $55.58 30

Appendix 1.3 Rutherglen annual pasture System details Rutherglen annual pasture system BL x M XB ewe Loddon Valley CP Dohne SAMM Key production info Breeding ewes per hectare, 1~2yo & mature 7 days pre lambing ewes/ha 3.91 4.98 4.40 4.98 3.91 Ewes per hectare at shearing, mature only ewes/ha 3.79 4.85 4.27 4.85 3.79 DSE calculated by GrassGro DSE/ha 9.59 9.41 9.49 9.97 9.62 Ewe weight, aver 21yr, matures, 15 Jan kg/head 72.7 59.3 65.7 65.6 73.8 Ewe Condition Score, aver 21yr, matures, 15 Jan Condn Score 3.3 3.3 3.3 3.4 3.4 CFW, aver 21yrs, mature ewes kg/head 3.77 4.60 3.93 3.38 2.53 Wool fibre diameter, aver 21yrs, mature ewes um 29.9 20.5 18.8 20.5 24.4 Lambs marked, 24 yr aver % 126% 89% 108% 89% 126% Prime lamb aver weight at sale, ewes & wethers, aver 24yrs kg/head 44.0 40.5 42.2 42.1 44.1 Prime lamb weight gain g/day 260 236 248 248 261 Wool prodn, 24 yr aver kg/ha clean 14 22 17 16 10 Lamb prodn, 24 yr aver kg/ha live 217 180 201 186 219 Supp feed, 24 yr aver $/ ewe 65 59 61 63 63 Key financial info Gross wool sales, 8yrs 94-01 low lamb prices $/ewe $23 $44 $57 $33 $19 Gross wool sales, 8 yrs 02-09 drought $/ewe $20 $43 $44 $32 $20 Gross wool sales, 8 yrs 10-17 recent years $/ewe $20 $56 $53 $41 $26 Gross wool sales, 24 yr aver $/ewe $21 $48 $51 $35 $21 Gross lamb sales, 8yrs 94-01 low lamb prices $/ewe $87 $55 $71 $59 $88 Gross lamb sale, 8 yrs 02-09 drought $/ewe $95 $56 $74 $59 $96 Gross lamb sales, 8 yrs 10-17 recent years $/ewe $157 $100 $127 $106 $160 Gross lamb sales, 24 yr aver $/ewe $113 $70 $91 $75 $114 Gross wool income, 8yrs 94-01 low lamb prices $/ha $92 $220 $249 $162 $73 Gross wool income, 8 yrs 02-09 drought $/ha $77 $217 $191 $159 $77 Gross wool income, 8 yrs 10-17 recent years $/ha $80 $277 $234 $204 $100 Gross wool income 24 yr aver $/ha $83 $238 $225 $175 $83 Gross lamb income, 8yrs 94-01 low lamb prices $/ha $339 $275 $313 $295 $342 Gross lamb income, 8 yrs 02-09 drought $/ha $369 $278 $324 $295 $374 Gross lamb income, 8 yrs 10-17 recent years $/ha $615 $496 $558 $529 $624 Gross lamb income, 24 yr aver $/ha $441 $350 $398 $373 $447 Average lamb price (ewe & wether), 8yrs 94-01 low lamb prices $/lamb $65 $57 $61 $62 $66 Average lamb price (ewe & wether), 8 yrs 02-09 drought $/lamb $85 $76 $81 $81 $86 Average lamb price (ewe & wether), 8 yrs 10-17 recent years $/lamb $120 $106 $112 $113 $121 Average lamb price (ewe & wether), 24 yr aver $/lamb $90 $80 $85 $85 $91 Ewe replacement price, average last 8 years $/head $172 $137 $152 $137 $172 Capital invested in ewes, at purchase price, av last 8 years $/ha $671 $684 $669 $684 $671 Capital invested in ewes, at current market value, av last 8 years $/ha $450 $455 $447 $472 $452 Costs - Wool sales 24 yr aver $/ewe $2 $4 $4 $3 $2 Costs - Sheep sales 24 yr aver $/ewe $12 $8 $10 $8 $12 Costs - Supp feed 24 yr aver $/ewe $19 $17 $18 $18 $19 Costs - Pasture 24 yr aver $/ewe $10 $8 $9 $8 $10 Costs - Shearing and husbandry 24 yr aver $/ewe $15 $15 $15 $15 $15 Costs - Total variable 24 yr aver $/ewe $58 $51 $55 $51 $57 Gross margin GM/ha, 8yrs 94-01 low lamb prices $/ha $164 $201 $276 $165 $151 GM/ha, 8 yrs 02-09 drought $/ha $43 $52 $94 $6 $51 GM/ha, 8 yrs 10-17 recent years $/ha $381 $432 $463 $400 $408 GM/ha, 24 yrs $/ha $196 $228 $277 $190 $203 GM/DSE, 8yrs 94-01 low lamb prices $/DSE $17.13 $21.31 $29.05 $16.51 $15.67 GM/DSE, 8 yrs 02-09 drought $/DSE $4.52 $5.55 $9.86 $0.57 $5.34 GM/DSE, 8 yrs 10-17 recent years $/DSE $39.71 $45.94 $48.75 $40.09 $42.43 GM/DSE 24 year aver $/DSE $20.45 $24.27 $29.22 $19.06 $21.15 Gross margin per breeding ewe, ewe count pre lambing Gross margin per breeding ewe, 8yrs 94-01 low lamb prices $/ ewe $42.01 $40.27 $62.72 $33.04 $38.57 Gross margin per breeding ewe, 8 yrs 02-09 drought, drought $/ ewe $11.08 $10.49 $21.29 $1.14 $13.15 Gross margin per breeding ewe, 8 yrs 10-17 recent years $/ ewe $97.40 $86.80 $105.22 $80.25 $104.47 Gross margin per breeding ewe, 24 yrs $/ ewe $50.16 $45.85 $63.08 $38.14 $52.06 31

Appendix 1.4 Hamilton perennial ryegrass pasture System details Rutherglen annual pasture system BL x M XB ewe Loddon Valley CP Dohne SAMM Key production info Breeding ewes per hectare, 1~2yo & mature 7 days pre lambing ewes/ha 5.35 7.00 6.13 7.00 5.35 Ewes per hectare at shearing, mature only ewes/ha 5.20 6.83 5.97 6.83 5.20 DSE calculated by GrassGro DSE/ha 14.64 14.78 14.72 15.67 14.65 Ewe weight, aver 21yr, matures, 15 Jan kg/head 81.8 66.0 73.4 73.3 83.0 Ewe Condition Score, aver 21yr, matures, 15 Jan Condn Score 4.2 4.1 4.2 4.2 4.2 CFW, aver 21yrs, mature ewes kg/head 4.14 5.00 4.28 3.69 2.78 Wool fibre diameter, aver 21yrs, mature ewes um 30.5 20.8 19.1 20.9 24.8 Lambs marked, 24 yr aver % 126% 93% 110% 92% 126% Prime lamb aver weight at sale, ewes & wethers, aver 24yrs kg/head 50.6 46.4 48.4 48.3 50.7 Prime lamb weight gain g/day 296 269 282 281 297 Wool prodn, 24 yr aver kg/ha clean 22 34 26 25 14 Lamb prodn, 24 yr aver kg/ha live 344 305 329 315 344 Supp feed, 24 yr aver $/ ewe 16 17 16 18 15 Key financial info Gross wool sales, 8yrs 94-01 low lamb prices $/ewe $26 $48 $61 $36 $21 Gross wool sales, 8 yrs 02-09 drought $/ewe $23 $50 $51 $37 $23 Gross wool sales, 8 yrs 10-17 recent years $/ewe $21 $58 $56 $43 $27 Gross wool sales, 24 yr aver $/ewe $23 $52 $56 $39 $24 Gross lamb sales, 8yrs 94-01 low lamb prices $/ewe $95 $64 $79 $67 $95 Gross lamb sale, 8 yrs 02-09 drought $/ewe $145 $97 $121 $102 $145 Gross lamb sales, 8 yrs 10-17 recent years $/ewe $157 $103 $128 $108 $158 Gross lamb sales, 24 yr aver $/ewe $132 $88 $109 $92 $133 Gross wool income, 8yrs 94-01 low lamb prices $/ha $138 $337 $375 $249 $110 Gross wool income, 8 yrs 02-09 drought $/ha $122 $351 $311 $261 $125 Gross wool income, 8 yrs 10-17 recent years $/ha $115 $406 $342 $299 $144 Gross wool income 24 yr aver $/ha $125 $365 $342 $270 $126 Gross lamb income, 8yrs 94-01 low lamb prices $/ha $507 $450 $485 $471 $508 Gross lamb income, 8 yrs 02-09 drought $/ha $775 $679 $740 $714 $778 Gross lamb income, 8 yrs 10-17 recent years $/ha $839 $721 $785 $758 $844 Gross lamb income, 24 yr aver $/ha $707 $617 $670 $648 $710 Average lamb price (ewe & wether), 8yrs 94-01 low lamb prices $/lamb $74 $68 $71 $71 $74 Average lamb price (ewe & wether), 8 yrs 02-09 drought $/lamb $111 $100 $106 $106 $112 Average lamb price (ewe & wether), 8 yrs 10-17 recent years $/lamb $127 $113 $119 $120 $127 Average lamb price (ewe & wether), 24 yr aver $/lamb $104 $94 $99 $99 $105 Ewe replacement price, average last 8 years $/head $172 $137 $152 $137 $172 Capital invested in ewes, at purchase price, av last 8 years $/ha $918 $962 $934 $962 $919 Capital invested in ewes, at current market value, av last 8 years $/ha $621 $648 $629 $669 $624 Costs - Wool sales 24 yr aver $/ewe $2 $4 $4 $3 $2 Costs - Sheep sales 24 yr aver $/ewe $14 $10 $12 $10 $14 Costs - Supp feed 24 yr aver $/ewe $4 $5 $4 $5 $4 Costs - Pasture 24 yr aver $/ewe $7 $6 $7 $6 $7 Costs - Shearing and husbandry 24 yr aver $/ewe $15 $15 $15 $15 $15 Costs - Total variable 24 yr aver $/ewe $42 $38 $41 $37 $42 Gross margin GM/ha, 8yrs 94-01 low lamb prices $/ha $348 $444 $530 $388 $324 GM/ha, 8 yrs 02-09 drought $/ha $517 $600 $641 $556 $526 GM/ha, 8 yrs 10-17 recent years $/ha $544 $667 $688 $606 $577 GM/ha, 24 yrs $/ha $470 $570 $620 $516 $476 GM/DSE, 8yrs 94-01 low lamb prices $/DSE $23.73 $30.03 $36.01 $24.76 $22.13 GM/DSE, 8 yrs 02-09 drought $/DSE $35.32 $40.59 $43.55 $35.46 $35.88 GM/DSE, 8 yrs 10-17 recent years $/DSE $37.16 $45.11 $46.73 $38.64 $39.37 GM/DSE 24 year aver $/DSE $32.07 $38.58 $42.10 $32.95 $32.46 Gross margin per breeding ewe, ewe count pre lambing Gross margin per breeding ewe, 8yrs 94-01 low lamb prices $/ ewe $64.94 $63.38 $86.41 $55.41 $60.59 Gross margin per breeding ewe, 8 yrs 02-09 drought, drought $/ ewe $96.63 $85.67 $104.50 $79.36 $98.22 Gross margin per breeding ewe, 8 yrs 10-17 recent years $/ ewe $101.68 $95.20 $112.15 $86.47 $107.78 Gross margin per breeding ewe, 24 yrs $/ ewe $87.75 $81.41 $101.02 $73.75 $88.86 32