Feedlots near capacity as the drought impacts industry

REGIONAL feedlots are at capacity and are looking at decreased profit margins due to feed costs, but the drought is having a different impact on the industry as a whole.

It has highlighted the need for feedlots in hard times, which, with discussion about the benefits over grass-fed to grain-fed cattle in the food world, is a much-needed distraction during one of the worst droughts ever seen.

It might look good on paper and make consumers feel good about their concerns, but the grass-fed industry just can’t keep up in such dry times, according to Australian Lot Feeders Association president and Rangers Valley managing director Don Mackay.

“It (feedlotting) provides a means of producing a quality product year-round and during drought times it’s also an outlet for grass producers and their products,” Mr Mackay said.

Drought conditions in northern Australia and the ban on live exports has already increased numbers in feedlots but Mr Mackay said most were now at capacity. 

Rangers Valley, near Glen Innes, runs its own on-farm backgrounding operation on irrigated country and has another four nearby farmers backgrounding cattle for the feedlot.

“We’re at 31,000 and we can take a maximum of 32,000 head, so we’re nearly right on capacity,” Mr Mackay.

Acquiring grain is the biggest issue, with wheat and barley costing as much as $340 a tonne.

“If wheat is worth $340 a tonne, barley should be worth 10 per cent less and sorghum at least another 10 per cent less based on their energy values but they’re currently at the same price.

“To make the feed ration we like to use barley where we can because it’s got the energy and rough husk on it so it’s slightly different and easier to mill, but it’s getting hard to find.”

Sourcing roughage is also becoming a problem. 

The feedlot grows its own corn for silage and sources hay from a Texas farmer, but cotton seed and cotton seed hull is near impossible to find. 

It’s a similar story at Delungra’s Gunnee feedlot, owned by Sundown Pastoral Company.

General manager Matthew Monk said the feedlot – a 100-day operation – was full, with capacity driven by the drought.

“In a drought situation cattle have to go to feedlots because it’s the only way you can get them into a marketable state,” he said.

“The operation downside is that the grain prices go up and that makes margins tight.”

The feedlot’s grain ration is based on either barley or wheat, depending on the price and what can be sourced.

“We’re got grain at the moment but we’re relying on more after winter – the same as everyone else,” Mr Monk said.

Mr Monk said feedlots were akin to insurance of the beef industry in Australia.

“The reality is that in Australian agriculture, particularly the beef industry, you can’t supply meat on a consistent basis without feedlots.”

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