[Introduction Music 0:00:10.8]
Amanda:
Welcome along everyone to Farming Together’s fourth webinar in our series of seven, learning together collaborative business models and structures. Really looking forward to this evening’s webinar, it’s called Building Trust & the Power of Collective Data, and it’s all about how to improve your performance through sharing data. We’ve got two fabulous guests tonight who I’d like to introduce, who’ve got a wealth of experience in this space, and I’m really looking forward to hearing their presentations.
We’ve got Ana Pimenta from the King Island Natural Resource Management Group, and Bill Hoffman from Hoffman Beef Benchmarking Group, welcome to you both. And I of course forgot to introduce myself, so my name’s Amanda Scott and I’m the Program Manager from Farming Together, and I’ve had the pleasure of working with both Ana and Bill through the Farming Together program over the last few years in various projects, so welcome to you both again. And Ana I’d like to hand over to you to start the benchmarking conversation.
Ana:
Okay. Hi everyone, I am going to share my screen and put a presentation up. Sorry I’ve got an accent because I’m Portuguese, I’ve been here for almost 13 years but I still have an accent. So can you all see it?
Bill:
Yes.
Ana:
Alright. So I’m from King Island, I’ve been living there for 13 years almost, I was born in Portugal and I’ve got a Bachelor of Animal Production, I did that in Portugal. And I came here to work in agriculture for only six months but I ended up staying, I’ve got two kids and a husband and 2,000 cows. So a bit about myself, I am a self-made farmer, both my husband and I started the business from scratch, and we now have 750 breeders. King Island for the ones that don’t know, it’s that little dot in the middle of Bass Strait, it’s a small island but it does produce a lot of beef. We’ve got around 60 farmers, maybe a little bit less now, 60 businesses, about 100,000 head of cattle on 100,000 hectares, about 30% of the Island is also bush.
And we get a great average rainfall of 850 mLs to 1200, I know it’s a big difference in such a small island, but we do have that difference from north to south, and we produce 25% of Tasmanian beef with only 1.6% of Tasmanian land. So this group started a while ago, in 2016, and it started because we did have a Cost of Production workshop that was delivered by John Francis. And he really couldn’t get to the bottom of it without having some financial data from the participants, so we agreed that we would just get together with the participants that were happy to share some data and start a small group. And then the Farming Together program funding became available for a benchmarking group, and so we went and applied to start our benchmarking group.
We’ve had some challenges, and I’m sure Bill has also experienced this. So initially when you’re starting a group like this there’s a lot of data that’s going to be shared between participants, including financial data, production data, and there’s a bit of a trust issue about their data being taken outside the group, actually most benchmarking groups that are quite old, they don’t have any problems with it. So the fear, we didn’t have many members, so we really struggled to get to ten members, and confidence in the data, because the data is only as good as the data you put in, so is everyone putting in the right data and is that being manipulated. But at the end of the day that really doesn’t matter, because all you need to worry about is the data that concerns you and your business.
And I guess the other question is, is it really good value for money, and I will go into this later in the presentation. So this was our group, and this is King Island with lots of ocean to look at, this is actually a coastal country so not highly productive country that you’re looking at. So there were ten farming businesses and two of them were quite large businesses, so two of them now own about half of King Island, so we’re definitely having two corporates that are really buying everything at the moment, and five family farming businesses. And the area ranges from 386 hectares to 6,140 hectares, because some of those larger properties were divided into different areas as well. This was our consultant John Francis from Holmes Sacket, so the data collected was back from 2016/2017, and we did three visits and three case studies.
So keep in mind that this was related to only one year of analysis, so we can’t really make any judgements or any decisions about what we’re going to do in the future with one year analysis. But with this one year analysis there was definitely a lot of disparity with some of the key figures, and one of them was the production per hectare. So you can see there it’s a big range, 24.2 to 56.6, and that was mainly because of the land type managed, so some people have coastal land, some people have more heavy land, and that was part of the reason, but also how people managed their livestock across the year. Labour efficiency, so the range from 18,000 DSE per Labour Unit, to 6,000 DSE per Labour Unit, and also with the big corporates having better efficiencies in this case.
The systems we looked at breeder/steer feeder systems versus the breeder/finisher. Traditionally on King Island farmers are breeder/finishers, but lately there’s been a shift to the breeder/steer system, and benchmarking data definitely reflected that it is more profitable to go with a breeder/steer feeder business model and I’ll tell you why in a minute. So our cost of production, so that’s a key profitability driver, our cost of production, the best farmers in the group with the lowest cost of production were really good at managing their stocking rates according to the season. So King Island, the best growing season is now, the spring time. And so people that try to maximise the DSE’s or the number of heads, the stocking rate in the spring and minimises stocking rate in the dry months and in the winter, they generally had the lowest cost of production of the group.
And you can see that some of the groups there, well the top groups apart from the top line, they all did very similar and they all had a very low cost of production. Unfortunately King Island does come with a cost and our freight and selling costs are really high, we pay 25% more than mainland. So it did differ from the average of Australian farmers with ours being almost double the price of other farmers around Australia, but we can’t control that. So we do pay $110 to $130 per head, it is a significant cost, for example in my farm I can pay a full wage just on freight, and we had plans to start a new abattoir although that hasn’t happened yet, but it’s still out there. So the key finding for us was that although our cost of production was higher than the average data base, we did have additional income, so we were highly productive and so that balanced out.
And we’re actually on average with everyone else, not better, but we were on average, so our high cost didn’t really affect our profitability. So a really important part of this project was believe it or not a trip to Flinders Island with all the farmers. Flinders Island for the ones that don’t know have a very strong benchmarking group, they’ve been doing benchmarking now for I can’t remember exactly the number of years, but I think it’s about 15 years, and they were just amazing in sharing. We got there and they gave us three pieces of paper with all their benchmarking data on it, everything, and here we were on King Island worrying about what other people were going to do with our data, so they were really open about it and it was very helpful for our group.
They were really good at Labour Unit efficiencies, they did understand the benefits of benchmarking, so they had no problems in sharing all their data with everyone else, they had nothing to hide, so that was really encouraging, and we also did a few other things over there. So what now, so this group in specific didn’t continue, mainly because we didn’t have a coordinator to keep going with the group, and some people still needed a bit more convincing to keep going forward. But we definitely got a better understanding of what we can control and not control, and what are key profit drivers and the things we should be working with. But some people in the group did continue by themselves and they’re now still meeting twice a year, they’ve been doing that for four years now.
And they’ve really got a clear picture of what improvements they can make and what can be changed every year, they really have a clear picture of how they evolved from where they were, and they’ve been focusing on production per hectare and cost of production mainly. And in three years they actually managed to increase their production per hectare by 150 kilos per hectare, which is quite impressive. So if you’re wondering why we wish to benchmark, benchmarking is a really good tool to use in your business for yourself, and compare within your business throughout the years, but it’s also really good to compare with other people. And we got a lot out of it by having meetings with all the farmers, and we were all helping each other.
We were not there to criticise, everyone was doing things a bit different, and it was really good to pick on things that people were doing that we could do differently on our farms. And so what works for other people why can’t that work for me, and we all think we do our best and we’re all there to do our best, but really can we do better, and a lot of the times we can. I think that’s the beautiful thing about agriculture, is that we can always improve what we do, and benchmarking just helps us to really do that. It’s a really good tool to understand the level of risk, even if you’re buying more land or doing something different, you can actually analyse and calculate that risk rather than just having a gut feeling about it.
And it is good value for money, and anyone that does benchmarking will tell you that whatever you pay your consultant to do, it does return a lot of profit for your business. And we all would like to look at someone else’s farm from the fence, but really you can’t really see what’s behind the fence unless you look at their data. And one thing that I think we don’t do really well in Australia–I mean specifically on King Island, and that still has a lot of room for improvement, is the sharing of what we do, our successes and failures. We should be able to share with everyone else because we’re not in a competition, especially on King Island there’s no competition for prices, we’re all selling the same product. There might be a little bit of competition between farmers but that’s it, we don’t really need to compete so why not share what we do.
So I would like to thank all our participants who had the courage to share, and this is King Island in the winter, we can pretty much grow rice but we don’t, and some of my contact details as well if you ever want to get in touch with me or want to find out anything else. Thank you for listening, and I’ll take questions.
Amanda:
Thank you so much Ana that was really fantastic. I always enjoy listening to your presentations, you just always cut through and make it really real, and there were some great insights so thank you. Is it questions Simone now?
Ana:
I’m drinking water by the way it’s not wine [Chuckles].
Amanda:
We wouldn’t notice if it was wine [Chuckles].
Simone:
Yeah question time if anyone’s got a question for Ana. I saw this one in the chat, what is LWT?
Ana:
LWT, oh okay, live weight.
Simone:
Great.
Ana:
You forget that some people are not in beef.
Simone:
Yeah they’re in the horticulture industry, no worries. If anyone else has got a question if they don’t want to type it we’ve got a pretty small group tonight, so you can switch on your mic if you just wanted to ask a question.
Ana:
I don’t bite, you can ask me anything.
Simone:
[Chuckles]. Okay, well we might move on to Bill’s presentation, Ana’s going to stick around so if something comes up–oh you’ve got one here from Gregg, does your group deliver into different supply chains?
Ana:
Oh thank you. Yes we do, so we don’t have a specific group, I mean we’ve got a group of farmers and that’s a really large group, a beef producers group, and King Island does have different supply chains. We work quite differently on King Island, we don’t use stock agents, I mean we use them very rarely. So we usually sell directly to a market and our markets are usually Greenham’s and JBS for slaughter, so finished animals, and also feedlots and also some traders as well, so people that want to buy young stock from farmers and grow them and sell them.
But our main markets are the slaughter market in Tasmania through Greenham’s and JBS, and also feedlot market, there’s one feedlot in Tasmania and there’s other feedlots mainly in New South Wales from JBS as well that we supply to. They are main markets, and all those markets most of them will incur freight costs. Does that create some tension within the benchmarking group, so Gregg do you mind turning your microphone on and just explain that a little bit more, what do you mean tension with people not agreeing with what the other ones are doing, is that what you mean?
Gregg:
Yeah thank you Ana, and great presentation. It was just more that perspective that you bring I think, that you’ve got a group of producers that are island based obviously. And you’ve got different supply chains out of that when it comes to benchmarking and being quite open as best you can be, supplying into Greenham’s versus JBS, does that create a barrier if you like to sharing information?
Ana:
No, no, it’s quite open. Most farmers on King Island will get agreed–it’s quite easy to get agreed from either one of those so it’s quite an open–we all know what each one are paying. And there was a tension when we did–so JBS used to own an abattoir on King Island up till 2012.
Gregg:
Oh that’s right, yes.
Ana:
Yeah they closed in 2012, so if we did this benchmarking group before then yeah you definitely would see some tension. Now that we don’t have an abattoir on the island there was no tension, because we all were trying to do what was best for our businesses. And I know beef prices are really good now but back then it wasn’t flash, so we’re all trying to get maximum price for our beef, so there wasn’t really a tension. I guess if we did have an abattoir there would be the tension, people would say ‘oh you shouldn’t be selling feeder/steers, you should be supplying the abattoirs’, so there would be tension then, but in this case there wasn’t because things had changed in 2012.
Gregg:
Thanks Ana.
Ana:
That’s okay, thank you. I’m not on King Island at the moment by the way; I’m actually in Victoria on holidays.
Gregg:
Enjoy.
Ana:
Thank you.
Simone:
Okay, would anyone else like to ask Ana a question? I know we’ve had a couple of people just join us. For those people Anna’s just finished her presentation, and we’re just having some question time and we’re about to let Bill take the floor.
Marie:
It’s Marie Vitelli from AgForce in Queensland, really interested in getting that trust happening. With your King Island beef areas, are the farmers or the graziers in your group do they do that Quality Assurance under JBS or that [0:21:56.3] as well? Because you’ve done a lot in marketing King Island beef as a premium product, it’s seen in many areas up here in the north.
Ana:
Yeah we’re quite used to audits these days. Actually Greenham’s are more–they’ve got the GAP, some of you will know the GAP program. So the GAP program is actually more difficult than the JBS Assurance one, and for example on my property I do both, because I want to have the opportunity to supply to both markets. And yes we get a couple of audits a year, and most people on King Island will be doing the same. And if you’re having problems with people adapting to that I can only tell you that it’s been really good, because it does help you keep a record of things, being on top of things actually, it just helps you being more organised, and it’s just an incentive to become more organised, so I find it quite helpful actually.
Marie:
No that’s good. We had a best management program up here which was a bit about benchmarking; it was for industry by industry. Australian Government kick-started the investment, but then the Queensland Government got a bit involved, then it became another pathway for reef regulations, we’ve got these fairly strict regulations for the Great Barrier Reef. So then it hijacked it and it lost trust, and anyhow it’s folded now because too many partners involved. Yeah don’t make it a regulatory pathway into government, but if it’s an industry run program I think it’s great.
Ana:
Yeah that’s right, yeah that’s right. And we do it because we get paid a better price, it’s not compulsory; you just get paid a premium price for what you do. But the industry should regulate themselves, we should really try to do our best and be transparent, because one day or the other you’re going to be asked to do it. The days are over where we could just do whatever we wanted, so might as well just adapt to that and be proactive about things. Thanks Marie.
Simone:
Thank you Ana, and thanks again, it was such a fascinating presentation. And I loved all your tips at the end as well about what you see isn’t always what you get when you scratch beneath the surface, you know it’s such an important point to advocate for sharing data, thank you, and lots of thanks in the chat there as well.
Ana:
Yeah I’ve seen that, thanks everyone, very kind of you.
Simone:
And I’ll just hand over to Amanda to introduce Bill.
Amanda:
Thank you, thanks Ana and welcome Bill. So for everyone who has just joined us, Bill Hoffman heads up Hoffman Beef Benchmarking Group. And I’m not sure if you’re going to come from a different perspective or a similar perspective Bill to what Ana’s shared, but I know it’s going to be very interesting, so looking forward to it, thank you.
Bill:
Okay thanks Amanda and Simone, and thanks Ana for the opportunity to listen to your presentation. I’m going to take a little different tack, I haven’t prepared a PowerPoint presentation so I’m doing this PowerPoint free, I’m just going to talk to you in a conversational way so I hope you don’t mind that. Look just a little quick bit of my bio, I’ve been around this industry for a long time. I don’t know if some of the people in this forum here tonight maybe you’ve come across me somewhere in my long career in the beef cattle industry. I did 37 years in the New South Wales DPI in the beef cattle extension branch, which would frighten any younger person to death thinking that you would possibly stay in one career for 37 years, but I did.
And that was all at the frontline dealing with beef cattle producers in a frontline extension role, and I left the New South Wales DPI in 2010 and started a little one person consulting business called Hoffman Beef Consulting. But along the way in all those years I did work outside New South Wales DPI on a couple of secondment roles, with [0:26:47.2] of Australia and the Beef Co-operative Research Centre. And I was unbelievably fortunate in that the area I covered in those roles was southern Australia from an MI [26:57.6] point of view, which was everywhere south of the line drawn from Geraldton on the west coast, to the Queensland/New South Wales border on the east coast, and as far south as the tip of Tasmania, so I’ve been to King Island in those roles doing that work.
And the fortunate part about that was I met an amazing number of beef cattle producers, industry stakeholders, and saw lots of different production systems, lots of different perspectives, you name it, in relation to extension and technology transfer. But one thing stood out amongst that I guess towards the end of my career, and that was a project we were doing within the Beef Co-operative Research Centre, and it was centred around doing group work. And group work is nothing new, it’s been around as long as I was doing that 37 years, it’d come in phases using group work to get messages across. But that influenced me to base my little consulting business on group work, not alone; I do work other than the beef group work.
And the intended plan was that I would get two or three groups of beef cattle producers together and I gave them a lifespan of two to three years, and then I’d just cruise off into retirement drinking lattes and reading the Sydney Morning Herald on my phone screen all day. That hasn’t happened, so 11 years later I’m still going at a far greater pace than I probably should be. And also of relevance since I left the DPI I operated a small or I guess you may say a medium sized cattle business in my own right where I produced a turnover of 800 to 1,000–I’ll throw in a northern term of flat back feeder/steers, for the Southern Queensland 100 day grain fed market. And that certainly is a reality check on the advice that I give to my clients in my consulting work.
So the group work I’ll touch on, I started this group work as I said when I left the DPI, and it was centred on getting together groups of beef cattle producers. And I called them likeminded, proactive, and in a lot of cases younger producers, who were looking to think a bit outside the square in relation to how they were going to run their businesses, or take over a family business, or through succession planning or whatever. And it was important that they were keen, knew from the start that we were going to collectively work together with a goal to improve productivity and profitability of their businesses. And as I said I started out with just two groups, but at the peak of pre covid I was trying to juggle on my own six groups, between 80 and 100 members across that network of six groups.
And a couple of years ago we did an audit, and collectively they were running between 80 and 100,000 head of cattle across those groups. And so we do in this group work far more than just to collect some financials and do some benchmarking, we look to use the experience and knowledge within those groups to share across a wide range of topics, be they production topics or financial type stuff. Okay, so I guess when it comes to group work and I’ve been doing it for so long, lots of people ask me well how do you make it work, and I guess there’s one word that probably comes to the forefront there and that’s commitment.
And to make it work the members have to basically be willing to commit to being open and transparent, and not think that they’re protecting some in-house secret that no one else knows about as to how to improve the productivity and profitability of every business. And also I’m a firm believer in this, they have to have skin in the game, so this is a commercial venture, I don’t get paid by anyone other than these guys, the people in this group. So they pay a membership fee, and I call it an affordable consulting fee, because we do it in a group situation. And I do have some long term from day one gold level sponsors who have stuck with me through thick and thin, who’ve subsidised that membership fee money we collect basically on a 50/50 basis, so it’s a commercial venture.
So they have skin in the game, so when they say they’re coming they’re going to turn up, they don’t just turn up whether they feel like it on the day and expect to get a free lunch and whatnot. They bring their own lunch, they bring their own chair, and we run this lean and mean and we get on with it. And as an example I just thought that this time last week we were sitting in a shed, a hastily cleaned out shed, and one thing that I have got a lot of joy out over the years is the positive comments I get back from mostly wives, who say you should’ve come here for this workshop years ago because it may so-and-so clean out the shed. So we were sitting in a shed having a beef group get together, and I’ll just give you a quick snapshot of what we had on the agenda for that day to give you an idea of the scope of the sharing.
So we started with three producers presenting on a case study on their business, about certain aspects of the businesses. First one was the importance of having a dynamic operational plan, and being able to implement change when circumstances require that, and of course we were referring to three years of devastating drought. And that person presented how they managed, how they changed their business, marketing plans, the influence of that then on income and cost to production and things like that, and then how they managed at the end of it. The second case study presented was timely, because it was about social license to operate and what the community expects and is willing to accept about certain aspects in relation to managing our businesses.
And I say relevant because it just happened that Landline ran a whole feature on that the Sunday before this workshop. So this producer presented about how he had implemented into his business the use of Tri-Solfen as a pain relief in castration, so that was a great discussion. We had a few more, then one of the other ones which was a little bit relevant to Ana’s presentation, was about profit drivers and key performance indicators, and using those to make decisions as part of a recovery plan. As I say the bottom of the barrel we were in approaching Christmas last year when it was just devastating. And then of course we had other things and we had a webinar session, maximising animal production of welfare, an update on sustainable internal parasite management delivered by an external presenter.
So we even used this technology in a hastily cleaned out shed, trying to run it on a hot spot off a mobile phone, it’s not for the fainthearted, it’s challenging I can assure you. But that’s a snapshot of the scope that we’re covering in our sharing. Does it work, of course I’m going to say yes, but it doesn’t work by accident, there’s quite a bit of work involved in it, in getting trust, getting the things to come together, making sure everyone’s in there for the right reason. We don’t really tolerate stalkers, we have stalkers come at different times, but great for me I’ve never had to tell someone to leave. The other members have given them the body language and whatnot and they tend to leave themselves, so the stalkers don’t stay around long.
They sort of come to make a statement about themselves or whatever, not really wanting to say anything much about their businesses and they tend to move on. So in all those years, nearly 12 years of doing this now, and lots of different groups and lots of different people, I’ve got one group there who had a stable membership basically for 11 years and I gave it a lifespan of three, so I got that really really wrong. Okay and I guess to recap a little, to go back a little bit now to cover–not greatly about Ana’s point of view. The one thing that we do do, is that we ask people to step back from the tactical every day jobs you do on a farm which we all love doing, and putting off having to go into the office and do stuff, let alone do Zoom meetings over the last six months.
And I’ve led that by being a strong advocate for doing a simple cost of production calculation, not so much a full business benchmarking and producing tables and things like that, a simple how did I go in the last 12 months in relation to cost of production for my business. And I’ve been a tragic for that for a long time, because I actually did the ground truthing for MLA for their cost of production calculated before it was launched 12 years ago. So again we did ground truthing work in beef groups and stuff, and sorted through what people would be able to manage to collect in data, because we’re not talking about sophisticated corporate businesses here, we’re talking about family operated commercial farms where people are busy.
So since then I’ve been a very strong advocate for doing that cost of production, and that was a mission, I was on that mission from the day I started my little business. And I accept that cost of production for people who will say ‘oh look that’s hard, not worth really doing’, I would advocate that if you have never done it before in your business, it’s a great starting point, it’s a simple snapshot, and it’s a great platform to move forward from. And when I started this business I didn’t want to compete with–Ana mentioned his name, John Francis who [0:37:38.6] more but separated into two separate businesses, John’s a friend of mine, I had no intention of trying to run a big benchmarking business and compete there, I was looking for a niche where I could do something a little bit different.
So we focused for all those years in those groups on a simple cost of production calculation, and for people who have never done it I’ll be very quick. Now it’s a very short list, kilograms of beef produced, which is obviously a simple equation, kilograms of beef sold, beef purchased, plus inventory change. And then we break our costs into variable costs, enterprise costs whatever you want to call them, overheads and labour. And we put $115,000 dollars a year on an owner operated labourer as input cost for labour, divide those costs by kilos and then we’ve got cost of production. You might think that’s too simple, but the background story to that is that you can tease out of that process lots of other stuff, kilograms of beef produced per hectare, adding rainfall, and it becomes kilograms per hectare per 100 mLs.
I break down the costs on a dollars per head basis, or a per hectare basis if you put hectares in, or if you collect DSE data on a DSE basis. Average price received per kilogram live weight, average price per kilogram of purchased live weight, which if you’re running a trading business at the moment you have to know that, because it’d scare the pants off you if you look at some of the differential that people have got to make up on $6 plus steers when free to market is running at $4, that’s the sort of stuff that we tease out. Okay so what do we do after that, okay it’s a simple process, and I don’t do any sophisticated analysis as Ana has done with the Farming Together project bit. Simple data, the data comes to me, I collate it up, I produce a report which basically has columns on it and on top of the columns a name.
And my name I put mine in as a producer for one of those groups, names are on the top of the list, we don’t go down past into [0:39:57.8] it’s just this simple result. And we sit around a table and look across the table and go ‘wow how can you produce beef for $2.20 when it’s costing me $3.00’ or ‘why is my kilograms of beef per hectare’ or whatever, and it’s open for discussion. But the rules are that it stays within that group and you can’t be a stalker, you can’t come in and get that without putting your numbers in. And that’s unbelievably insightful, and the discussion it’s a fantastic discussion to be part of, and I guess that’s why I keep doing it. And we’ve never in all those years had a breach, I’ve never had to deal with an issue where so-and-so said oh someone was down at the local pub talking about my cost of production or how much did so-and-so spend on whatever.
And we’ve got our own little rules and stuff which I’m not going to bore you with here tonight about how we keep that simple. And I continually liaise with people, experts in the field like John Francis and those sorts of people, to make sure we’re not off track or way out of field. Because we do this on a group by group basis, and we produce some means and we produce some trend lines and things like that, but we don’t suggest by any means it’s analysed in any strict way. It’s data for the purpose we want it to be, indicative stuff that you can use and share and discuss, which might help improve your productivity and profitability. And I keep doing it because it’s a little bit difficult at the moment obviously post covid–and the 1920 financial year data would just scare the pants off you in relation to the devastating effect of drought on reduced kilos, elevated costs, massively reduced inventories which people have got to rebuild from.
But in my own personal role I at this time last year approaching Christmas I hit rock bottom after a slide, two and a half years prior to that in my steer trading business, and questioned whether I should be going on or quit. But I chose to use the data for that year to put in place a plan to recover, and I’m in that process now of recovering numbers, recovering kilos produced, reducing costs of production, and trying to return to what would’ve been a bit more normality three years ago. So look that’s a snapshot of what I do and what I have been doing for a long time, I did participate in a Farming Together project in Amanda’s program, where across four groups we collected a far greater level of data so that we were able to drill down into trading profit, gross profit and those sorts of things which were fantastic.
It gave us a one off opportunity with a little bit of support funding to do that, but we’ve continued on from that with just a simple annual cost of production calculation. So thank you.
Simone:
[Claps] yeah I agree, thanks Bill.
Bill:
Thanks Simone.
Amanda:
Fantastic. We’ll open up the floor for questions I think. I’m sure you’re going to get some good ones.
Carol:
Yes I’d like to ask Bill–we’ve got a bit of a paradox here, we’re getting too old to do this, my husband’s closer to 80 and I’m in mid 70s. I’m a local Councillor here in my area, we’ve been growing Angus beef for 40 years, and we’ve gone through times where we were battling to get a $1.00 to $1.60 a kilo. The last few years we’ve been cracking $4.00 a kilo and we’re doing less than we ever did, we’ve got down to two drenches a year, we still drench. We’ve got people near us who claim to be organic and biodynamic and all they do is they don’t drench, we’re not on big acres, we’ve only got 90 hectares in the Adelaide Hills. And the joke is–it makes me angry, because all they’re doing is failing to treat the internal parasites in their cattle.
So I mean you can get away with this up in the north of South Australia, where the cattle have got to walk 10 miles between waterholes and they don’t come back on the same ground, they’re not grazing over their own faeces. But it really makes me mad when I see people getting premium money for milk or for meat, when all they’re doing is failing to treat the parasites; they’re not actually organic or biodynamic. And I’ve seen these operations out 200-300kms North West of Whyalla or Port Augusta, and you can see properties there that they’re still walking, they’re on blue bush and salt bush, and yep you could say they’re organic or biodynamic, but not here.
But what do you think of these people and the strange times we’re going through? I mean a couple of years ago we spent $40,000 dollars on hay, and it was a matter of sell up and get out or bite the bullet and pay ridiculous amounts to keep the animals going. We did and we did this because we’ve got a closed herd, the only thing that comes on to our place is a new bull, at times we run three bulls to get the blood lines different. I have to search harder and harder every year to find a bull without genetic problems, and it just makes me mad that these keep appearing in the sales, I think they should be on hooks. I don’t know, I guess I’m getting too old and grumpy. What do you think of those things?
Bill:
Look I think Carol there’s a lot of questions there, and I can totally appreciate the frustration that I’ve possibly picked up in your voice there. Because look the reality is–and I’ve not quite seen as many years in the beef cattle industry and the changes you’ve seen, I’m not far behind you though I can assure you of that, I’m catching up. We could talk here for three days if we wanted to drill down into what’s happening in our industry at the moment. And look I don’t know, there’s things that are happening at the moment which I am not sure–you know in 12 months’ time we’ll be going wow we just didn’t read that right, I don’t know. I was talking to a mate of mine today, and we were making plans to go to the Beef Expo in [Rockhampton] next year for the triannual thing, it will be really interesting to see where our industry is come may next year, with all the changes that have happened, you named lots of them.
But what I try to do Carol in this group work is not to have–particularly me, I run a role here where I tread a line between technical presenter with my technical background, facilitator but not over facilitate, and have lots of bloody sticky things on walls and people putting smiley faces on them and that sort of stuff, to tread a line in the middle. But what I don’t do is tell people you’re on the wrong track with your business, you’re on the right track, or you’re in the top 25% or whatever and you’re in the bottom, we don’t do that. You get together and you assess the person who’s telling their story and if it’s going to work for you or isn’t, and that’s why we’re there in an open discussion. And we don’t get into name calling or using bad language or anything like that, so it takes a bit to tread that line but we get there.
Ana:
Yep. Can I add something to that Carol; I think unfortunately we are in an era where consumers tell us what to do. So for example with the GAP program we are meant to weigh in our cattle from six months onwards, and I can tell you, you probably know that it’s not actually a good animal welfare practice, it’s actually worse for the cows.
Carol:
You’re sending the cows up to get mastitis, yeah.
Ana:
Yeah and the cows just get skinny if you don’t take the calves off them. And the other thing is with antibiotics as well, antibiotics are there to be used when you need them and they prevent animal welfare issues, but again the consumers are telling us not to use them, and so we get all these programs like organic or the GAP program where you’re not allowed to use it. And I think the industry just needs to be more proactive, MLA and Cattle Council, everyone needs to be more proactive about educating consumers about what we do and why we do it, and I personally do it because I run farm tours.
But there should be more people like me, and the industry bodies should really be putting the messages out there as to why we use antibiotics, why we weigh in early. So it’s just unfortunately we’ve been told what to do, and that’s why you get organics when they’re not meant to be there, and nothing against organics but they are about what you can’t do. And my opinion is that animal welfare is our biggest priority, and environment should be, and sometimes we get different ways to achieve that, and sometimes it’s through organic systems and sometimes it’s not.
Bill:
Can I add a comment there, I watched the Landline thing a couple of weeks ago, and I thought they did a good job of presenting a balance where there were two sides to it, the social license both presented by articulate ladies. And one presented a story of [0:50:35.3] we’re going to tell consumers this is what you get and that’s it, and the other was no we need to listen to the consumer, and show them that we are doing good management practices that is going to enhance the quality of the food. Now I’m not going to take sides in that, but if you want to whatever you do–I don’t know, iView or whatever have a look at it, I thought it was a good discussion to watch happen on Landline two Sundays ago.
Simone:
Thank you, thanks for the question Carol. And it’s definitely a big issue in the industry, and with things changing there’s obviously a lot to discuss, and as Bill mentioned we could have a few days talking about it. But I do have another question in the chat now, and maybe you’d like to speak to this one Bill, how did you start your group? Did the beef CRC or some other bigger project play a crucial role, and who is the other party you mentioned that contributes 50% of the group costs?
Bill:
Okay, I’ll quickly answer that. Look the seeds were sown in the Beef Co-operative Research Centre partnership project, and I started one of those groups whilst I was working in DPI, Beef Co-operative Research and relationship, and that got some support from the Beef Co-operative Research Centre from a funding point of view. But when that finished we sat there that night and said ‘this is all over’, and they said ‘well what’s the options?’, and I said ‘well we could commercialise it and you start to pay’, and they said ‘yep let’s do it’. And then from that onwards the other groups have all evolved as part of a commercial venture. Now you can’t just put an ad in the paper and go and have a meeting and form a beef group tomorrow at the local hall at such and such, that doesn’t work, it’s through networking.
Look I’m not 100% sure because I suppose–and it isn’t easy, I’ve been around for a long time and I know lots of people. And you get a group of people who play tennis at the so-and-so court one day, then they know someone down the road, and the groups tend to come together, but it certainly doesn’t come from putting an ad in the paper and expect people to turn up and all get on brilliantly well from that day. So it’s not easy, but it has happened, I managed to do that. Who pays for this, look as I said I have got some sponsors, and I would prefer not to name them here publicly tonight.
They have been fantastic sponsors, and you’ll be going well what do they get for money out of this, they get to have a representative come to our meetings, excluding the one where we discuss the cost of production numbers in that forum, where the names are on the sheet, they don’t get to come to that, as does anyone else in the group who hasn’t put their numbers in, they don’t get to come. And I’ve tried initially having a table with numbers on the top, and I told you Simone that you were number one, and Ana that you were number three, and Carol you were number four, and the first hour of the meeting was wasted because you sat around there working out okay I think Ana’s number one, no she might be number three.
So we wasted half an hour of the meeting while they didn’t pay any attention to what I was saying, but trying to work out who was who. So we came to an agreement that we’d save that wasted hour and put the names on them next year, so that’s what we’ve done ever since. And there’s a high level of trust involved in that, and that doesn’t come from just drafting some people off the street via an ad in the paper, yeah it isn’t easy, I accept that.
Simone:
Yep, great point, thanks Bill. Anyone else have any final questions before we finish up tonight?
Carol:
There’s a question there.
Simone:
Ah there is, it just popped in. Okay Ana and Bill, acknowledging animal welfare etcetera, what do you feel the main drivers of cost to production up or down are? And I’ll leave you to answer that one first.
Bill:
You want to go first Ana? You go first.
Ana:
Yeah okay. First of all animal welfare has a direct relationship to profitability, because if you don’t have healthy animals you’re not making money. So anyone that is doing a good job, anyone that is earning a lot of money in the beef industry or any industry in animal production, is looking after their animals, so I think that goes hand in hand. And if you feel producers have good levels of financial management skills, I actually personally don’t think so. Some do, the top ones do, but most farmers in Australia I think lack in financial management skills, so it’s [Reading Comment]–
Simone:
To enable them to be brought into that [Crosstalk]–
Ana:
Yeah, so I don’t know Bill, but I think that can be a problem. But with the right facilitator, and I’m sure Bill is because he’s got years of experience, you can get people that don’t have very good financial management skills to actually learn a lot from the group, and bringing them up to the same level as everyone else, isn’t it Bill?
Bill:
Yeah, I agree totally. Look the key driver in cost of production really is kilograms of beef produced, because we look at the cost structures and things like that. And it’s also about looking at trend lines, not about one year, because we can devise a program to get our cost of production down to $1.00 a kilo for this next 12 months by not putting input costs in such as fertiliser or things like that which don’t have an instant effect. And I say to people if you’re not willing to do at least three years, preferably five, you probably are wasting your time other than getting bragging rights down the pub on a Friday night, if you get a really low number by doing just one year and not going onwards from there.
So kilograms of beef produced, and some people might take that as I’m advocating rape and pillaging the land, we focus on kilograms of beef per hectare. The difference between groups, we’ve got high performance pasture systems where they’re targeting 800 kilos of beef per hectare, they’re really high input, high performance pasture systems in niche areas and things like that. And as I said I don’t produce a lead table that says you’re in the top 25% and you’re in the bottom 25% or whatever like that. But a lot of people I think get fixated on costs, and of course we do because we bloody well used to write out a cheque and now I need a net transfer all the time.
So we know what’s going on cost wise, but it really is about the kilograms of beef that those costs are going to be divided by. And that comes to answer your question now, maximising kilograms of beef produced is a multifaceted thing, it takes in animal welfare issues, but I think we can be smart about how we do our animal welfare stuff. The myth that we don’t get attracted to one silver bullet fixed everything, give them an injection of this it’ll only cost you $1.50 and everything else will be sold, well look that’s just bloody pie in the sky stuff. In my business I look for maximum performance, so I run a lot of my cattle in high internal parasite areas so I routinely worm test, I drench, I post worm test, to make sure the efficacy of the drench to get 95% plus reduction in egg numbers.
And that’s the sort of stuff that I see, the people in my business, in my groups who are really focused and not getting taken off to the sideline with some distractions, a fad or whatever, but they’re committed to the main game and animal welfare. Sure we’ve got to look after it, and we’ve got to make sure we not only think we’re doing a good job, but we’re seen to be doing a good job down the supply chain.
Ana:
And Bill can I just add something to the discussion about benchmarking in our groups. Because you might look at this as benchmarking been very focused on numbers and on being profitable and doing our best to be profitable and productive, but I think there’s also room for people. So different farmers have got different aims, and your aim might not be profitability, but you want to improve something and that’s where benchmarking is really good. And I think Bill is really good, I’m really happy you are doing social licences and all of that, because I personally don’t agree with everything.
I personally do not agree the labour unit efficiency at the levels that were given to me, I don’t think that’s actually achievable in a sustainable way, this is my personal opinion, and other people might think the other way but this is just my personal opinion. But that’s okay, I’ve just got to be okay with the fact that I’m going to compromise on that, and I’m going to improve other things of my operation. And I think it’s important to remember that there’s room for everyone in the group, and we don’t always have the same aims, and it’s just about being respectful with everybody.
Bill:
And I totally agree, and I should’ve said that we do that. Before we talk, people get the opportunity to put forward what their aim is, and it could be very well you could be looking at just your high equity business looking for an easing of lifestyle, so no pressure cooker situation. Particularly after this last drought, a lot of people have gone well we’re just not going to do that again, we just cannot subject ourselves to the physical, emotional and financial stress of what this drought took. And they may be for a good range of reasons, like high equity or whatever, no great need for capital reinvestment or whatever to take the foot off the pedal, absolutely, I totally agree.
Simone:
Thank you both. Another one from Fiona here, do you feel producers should get a premium for their product for being proactive in achieving Accreditation GAP or Grazing BMP? Or do you feel people get enough of a financial benefit from productivity and profitability improvements from being in your or other groups?
Bill:
Okay I’ll go first. Look wow some of that I guess is the cost of doing business, so it is a cost. The discussion I guess early on was about–and I certainly see this in my client base at the moment, the big move from slaughter cattle to feeder cattle, driven by Carol mentioned $4.00 for Black Angus steers. Well in Southern Queensland and most of the Territory you can be writing $4.35 for Black Angus steers, and that’s one hell of an incentive to [Audio Cut Out 1:02.53.3] steer, as opposed to taking a steer to a second [1:02:56.0] and try to go to a market to tick boxes for a range of things and passing MSA tests.
And it might look good on paper, $7.00 plus per kilo for a grass fed steer, but he’s got to index this and he’s got to pass this, and all that. So that feeder/steer price at the moment is having a huge impact on the industry in the area that I operate in, because they’re going let’s get them on a truck and take the money, $2,000 dollars for a feeder/steer, I’ll take the money when he’s in his mid-400s kilo wise and be done with it. Now I don’t know what happens next under discussion with a processor, a mate of mine today–and he’s trying to decide whether to buy short or buy long and think what the market might be in March next year, and I said I wouldn’t have a clue.
Ana:
But also for example on my business I supply mainly feeder/steers, the majority of our steers go as feeder/steers, I am still accredited for GAP and JBS assurance, and that’s mainly also because we’ve got cows and the heifers and everything else. But it doesn’t cost me anything; it’s not really a cost, so why not do it and it actually helps me stay on track with things I think, so I don’t think you need to choose one or the other, somethings come for free and this is one them.
Bill:
Absolutely, I totally agree, and if you’re accredited for JBS or grass fed beef why wouldn’t you just do whatever you have to do to keep that box open for a later date, even though you might divert some cattle for a range of reasons, feeder/steer market for the next 12 months or six months or whatever it is. Yeah absolutely, totally agree, because it’s about having market opportunities.
Ana:
Exactly, yep.
Bill:
You need to maximise and not minimise.
Ana:
Yep.
Simone:
And I think Carol has one more question to finish us off for this evening.
Carol:
Yeah, I was just going to say I do think there’s a place for a bit of compassion, because down here we took a lower price for an excellent line of heifers to make sure they went to a person trying to replace stock, we took a lower price. And I don’t know how many people do that but I hope more do, because they just can’t compete with the butchers, the butchers are there every time and they just outbid everybody else. So the one thing we’ve learnt in 40 years is how to make use and be friends with the stock agent, and we’ve had some good stock agents overtime, and that’s the way you can place stock and that’s proved very useful, but yeah we did take a lower price, but I think there’s a place for that.
Ana:
Yeah I agree.
Bill:
Can I finish Simone on a comment that I often ask. One of my take home messages often when I do these, is in this industry you need to surround–I phrase it you need to surround yourself with people, competent people who add value to your business, not take value away from your business. And that could be as you just said a good stock agent who adds value, and you’re willing to pay the 3.5% or 4.5%. Because you sit back at the end of the year and go was that money well spent, if you go yes move on, don’t dwell on it, don’t live in the past, move forward, look forward.
Ana:
And also I totally agree with Carol, we’ve done the same Carol, we sold recently 146 steers locally at a lower price because they were staying locally as well, and there was less transport for the animals, for me it was more of an animal welfare issue and supporting another farmer. And we’ve actually been building that market, so we’ve been selling over three years now, and everyone’s been really happy with our cattle, so they’re actually paying a better price now because we started by doing that. But I completely agree with you, I had a lot of help throughout my years and from people like you, and I really appreciate it and I intend to do the same actually.
Bill:
Okay, thank you.
Simone:
Thank you, thank you both so much. I just want to reiterate what everyone has shared in the chat and how much we’ve really gained from all of your wisdom and insight this evening, it’s just been spectacular, and I’m sure Amanda you’ve got something to say on that as well.
Amanda:
Yeah, I just wanted to say I really resonated with what Anne Marie actually put in that comment box, and thanks for those comments. I think this is not just relevant to beef, but we’ve really seen some of the topics that we’ve discussed and that’s relevant to all of agriculture, and these principles of trust and good practice and working together, and I think also the idea of respect. But even just from what I’ve seen tonight it’s the opportunity just to come together and talk together as well, that can be actually so powerful. So thank you to everyone who has been involved tonight, I’ve thoroughly enjoyed this, I’ve learnt a lot. And I wish we had more time to keep going, because I think maybe we need a round two at some point down the track. But thank you to our guest speakers Ana and Bill, it’s been really fascinating, thank you to the audience for your really valuable contributions and great questions.
Simone:
And I was going to add as well if anyone is looking for people to partner with or need some people to form their groups, do be in touch with the Farming Together program, because we have got networks and we can help to share and spread your message as well.
Amanda:
Fantastic.
Bill:
Okay, goodnight.
Amanda:
And we will make this recording available on our website www.farmingtogether.com.au, and is it emailed as well Simone?
Simone:
Yeah it’ll be emailed to everyone who registered to come along to this evening, so you’ll get a copy as well.
Amanda:
And then we’ve got one next week as well don’t we?
Simone:
We certainly do.
Amanda:
What do we–?
Simone:
What have we got on next week?
Amanda:
What have we got on next week, oh number five I think this is, so enabling farmers joining forces, so it’s about again sharing and working together, sharing knowledge and resources. So we’ve got some guest speakers, a lot of them are working in the regenerative agriculture space, so that should be another fascinating discussion, so please register for that one if you’d like to come along and listen. But thank you again to Ana and Bill, and we look forward to keeping in touch with you, and as Simone said please feel free anyone to reach out to us at any time, we’re here to help. So thanks very much for joining us tonight and we’ll see you all again next week hopefully.
Carol:
Thank you.
Bill:
Bye.
Simone:
Thanks everyone, goodnight.
Ana:
Night.
[End of Webinar]
