An economic framework to evaluate alternative management strategies for beef enterprises in northern Australia

Abstract

Context Beef producers in northern Australia are continually presented with new technologies and opportunities to enhance beef production. They need to be able to accurately and efficiently assess the potential impact of alternative strategies on profitability, risk and the period of time before benefits can be expected. Aims Our aim was to demonstrate the value of the farm-management economics framework for assessing alternative management strategies applicable to beef cattle enterprises in northern Australia. Methods Beef cattle herd models incorporated into a farm-level partial discounted cash-flow framework were used to evaluate the potential effects of alternative management strategies on the performance of enterprises. This was undertaken using constructed, representative beef enterprises developed for the following three regions in Queensland: Central, Northern Downs and Northern Gulf, and the Katherine region of the Northern Territory. The analysis considered the expected response to change in the management of the base herd. Strategies that targeted (1) overall herd or property performance, (2) breeder reproductive performance, (3) steer growth rates, (4) alternative beef cattle marketing options, or (5) enterprise expansion were assessed. All of the changes considered to the current management strategy of the base herd and property were put forward by industry participants as potentially positive. Key results The framework efficiently identified substantial differences in net benefits among strategies and allowed ranking of the alternatives at the property level. Strategies that improved profitability also generally increased management complexity and financial risk. While strategies that could substantially improve profitability were identified, many other strategies were likely to reduce profitability at the property level. Key insights were gained into the time taken to implement the strategies, the complexity of implementation, and the level of financial risk incurred. Conclusions This study (1) demonstrated the appropriate framework to compare management options and support decision making, (2) efficiently indicated the potential range of outcomes, and (3) provided insight into the risks associated with development processes and technology adoption. Implications This farm-management economics framework could be used to assess alternative strategies for individual beef enterprises and to guide appropriate adoption of technology.