What does High Production + High Production + High Carryover + High Input Price Equal?

What a production year Western Australia is having so far – especially coming hard on the heels of 2021, which was a record year for grain production and sheep profitability. When you talk to the older Boomers and Gen X’s, they can’t remember two in a row such as ‘21 and ‘22 in their farming careers. On the flip side, and as we come into our peak selling season for both grain and livestock, profitably marketing record production is a challenge. We are already looking at another 20 + mmts of grain, however, extreme input costs and logistical bottlenecks will create a negative basis (lower WA grain prices versus the world). The Covid / staffing issues in the livestock processing industry have left us with a “lamb hangover”, where we are still dealing with high numbers of old season’s lambs when new season’s are coming onstream (sounds familiar to grain producers!). In recent years, we have become accustomed to higher volatility in all supply chains – a 6-month wait is nothing nowadays. Same said volatility applies when you sell – the grain market over the last 5-6 months is a good example.

So, the answer to the initial question is Opportunity and Risk.

Risk is nothing new to our farming community. We have professionally evolved to reduce the risk in our farming systems with advancements too numerous to mention here. However, the risk in both supply and price of crop inputs for 2023 is a higher stakes game (oh - and throw in some weather variations too).

So far, I have just been another problem finder commentating on all the issues that are current and well reported. Let’s get to an Opportunity that may suit your business: increase ewe numbers.

Things we know:

·      We had a very solid lambing state-wide. Lamb survivability and growth has been above average.

·      There is a backlog of old season’s lambs in the system and suckers are hitting the market.

·      East Coast buyers aren’t taking huge numbers of lambs east and don’t look to be chasing ewes.

·      Live export isn’t drawing large numbers out.

·      Ram sales have been very strong and well supported.

And most importantly:

·      All sheep values have significantly dropped in the last 6 months.

·      The Store lamb price is well under what we all budgeted for.

·      The export of lamb meat is still very strong, with a good outlook.

·      The WA Lamb S&D equation is suggested to be back to “normal” by March 23.

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So, if you are a mixed farming business, there is an opportunity for 2023 to increase your sheep numbers and reduce your cropped area. We have all done the opposite in years where the pricing signals from the markets suggest we get a few extra paddocks of crop in and tighten the sheep up or sell down. This may be the year where we reduce our cropped area (and risk), given we have high input pricing locked in for 2023, with the grain pricing and weather anybody’s guess. Retaining higher numbers of your ewe-lambs, or even purchasing Store ewe-lambs now, may be an inexpensive pathway back into higher ewe numbers for your business. “But we don’t get a lamb from these lambs until 2024”, I hear you say. My answer to that is, “Let’s talk about purchasing ewe-lambs that have the genetics to get to joining weight by Mar '23 and get a lamb by Aug '23”. Here is a link to a previous article on joining ewe-lambs.

So now I hear you say, “Where’s the pellet sell?”. If you want to discuss this profit opportunity - how we can get these ewe-lambs productive for 2023, contact Brett Blanchett 0429 884 528 or Wayne Manoni 0427 099 002, or call the office direct on 9351 0726.  

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