When setting a strategic direction for your beef enterprise, the first step is to determine your enterprise strategy. This needs to be carried out as part of the wider process of planning your whole farm business.
You need to balance your available resources and work out potential directions for improvement. You also need to establish the herd structure most likely to maximise your profit .
The allocation of resources, such as labour, pastures and finance needs to be balanced, so that your chosen herd structure can be supported and your proposed markets targetted effectively.
As part of this planning stage, any buffers you may require in the future, need to be defined, in order to minimise financial risk.
Guidelines:
There are five components to establishing the most profitable herd structure and markets:
Herd structure.
The herd structure is set by your stocking rate, including the proposed numbers of each stock class; such as weaner steers, weaner heifers and cows with calves. Other factors influencing herd structure include: seasonal pasture conditions, the age, sex and breed of your stock, and the calving and weaning dates relative to your target markets and the timing of stock sales.
Feed Supply
You need to understand how well your feed supply matches the requirements of your herd, for maintenance, growth and reproductive performance.
You can build a picture of your normal feed supply and demand by regular feed budgeting. This enables you to predict your likely seasonal fluctuations in feed supply, and from this better judge your feed reserves, the ‘buffers’, you need to manage this risk.
Regardless of how you go about building your enterprise strategy, you will need to know your feed supply and demand. Feed budgeting is detailed further in article 2: Tactical stock control, and in article 4: Pasture utilisation.
Changing feed supply
You need to develop a range of options for changing your feed supply.
This may be undertaken by equating the changing feed demand with changes in your herd structure. You should also consider this when targeting new markets. The basis for determining these options will come from consultation with a range of people including other successful producers, family members, staff, private sector consultants and state department staff.
Alternative Strategies
To demonstrate which strategy is more profitable compare the predicted performance of alternative strategies, with the current performance of your beef business.
There are several methods available for analysing current performance and alternative strategies. These methods use tools and services of varying complexity, but they all require good records of property and production performances, along with corresponding financial records. An analysis will provide a way of quickly narrowing down your options and will ensure that all aspects of any major change are considered, so that profitability of these changes can be assessed.
Financial constraints
You need to take into account your financial constraints relative to your goals when making decisions on your preferred herd structure and market options, .
Transition Plan
A transition plan from the current enterprise structure to the preferred enterprise structure should be outlined. A model transition plan is examined in Setting Strategic Directions of Beef Enterprise, 2.
Choosing the best options:
Analysing the most profitable herd structure and markets is a complex task involving many constantly changing factors that will be particular to your resource base and personal circumstances. Making these important business decisions often requires specialist skills and expertise, in which case you may wish to employ the services of a farm management consultant with appropriate knowledge and tools. This type of service is explained in the section on Enterprise modelling.
If you believe the scale of your enterprise or the significance of the change being considered does not warrant this expenditure you can analyse the impact of changes to your enterprise using partial budgeting (see Tool 1.2).
Benchmarking your performance against similar enterprises, but using alternative enterprise strategies, is another way of considering the merit of other enterprise options. Also, private consultants and the staff of state departments of agriculture regularly conduct analyses of various enterprise options that may be relevant to your situation.
Farm record keeping
The key to sound decisions is having accurate information readily available.
There are a number of computer software programs available to assist in record keeping. Some packages include both paddock and animal records, as well as financial accounts. A number of these programs have the capacity to help calculate feed budgets. Increasingly, with widespread electronic identification of animals, data capture and storage can be automated.
Even without computer programs, the information you need is readily available from a variety of sources. A sound economic and performance evaluation of the current and/or alternative enterprise strategies can be conducted using your accountant’s report, the knowledge you have about your property’s physical characteristics, livestock business and trading records, and information you record in your diary such as animal performance and rainfall.
Tool 1.3 describes the types of information required to conduct an analysis of your business.
