Investigations into the economics and management of beef cattle on the Canterbury Plains: a thesis submitted in partial fulfilment of the requirements for the degree of Master of Agricultural Science in Lincoln College of the University of Canterbury

Abstract

Concentration on beef as a source of foreign exchange requires research into technical, marketing and economic aspects of the cattle enterprise. This thesis is concerned with the economics and management of beef on the Canterbury Plains. The conclusions from the study are as follows: 1. Examination of the world beef situation has revealed that long run demand for beef will be greater than the supply, but that this demand will be mainly in the form of boneless, frozen cuts for manufacturing purposes. The beef supply situation has been discussed with special reference to Canterbury. Production in this are has been insubstantial but continuing depression of wool and lamb prices and recent high beef price have led to a steady increase in beef cattle. Demand for store stock and trends towards turn-off of younger beasts have caused serious shortages in weaner cattle supplies and this will ultimately inhibit expansion of the cattle enterprise. Introduction of yield grading is seen to be beneficial to quality beef production. 2. A survey, involving thirty farms, was undertaken. Pasture is seen to be a critical resource and 70% of farms had summer grass available for cattle fattening. Breeding herds were carried on many properties to avoid fluctuations in store stock prices. A discussion of technical aspects, such as growth rate and feeding of cattle, has revealed that the relationship between levels of winter growth rate and subsequent summer gains on pasture is of critical importance. Wintering costs may be as low as .3.50 - $4.50 per steer and it would appear that an overall liveweight gain of 1.5 Ib per day is a desirable goal. Gross margins per cow are approximately $4 - $6 per ewe equivalent while $5 - $10 per ewe-equivalent can be expected from fattening cattle. These steers should reach carcass weights of over 500 Ib in 18-20 months at stocking rates of 1.5 - 2 beasts per acre. Labour coefficients, calculated from one year's data from five survey farms, confirms that cattle labour requirements are low. Beef is seen to be in direct competition with sheep on the Plains. 3. Linear programming has been used to explore the relative profitability of beef on the Plains. While this method facilitates analytical accuracy the 18 x 60 matrix suffers from several basic deficiencies. Among these are the exclusion of labour and capital which are both examined ex poste. Nevertheless, it has been possible to simulate a farming situation on the Plains and to draw conclusions which are consistent with present levels of technology. 4. A detailed comparison of programmed plans has revealed that, given the levels of production and prices used, the beef enterprise is capable of absorbing the additional interest charges which result from the high level of investment in livestock. The programming analysis indicated that beef fattening policies were the most profitable alternatives within the beef enterprise, while of the breeding activities, spring calving was most suited to the environment. 5. The derivation of beef supply functions at three levels of sheep prices has enabled the definition of critical price levels where beef cattle substitute for sheep and cash crops, (given the technical coefficients and assumptions of the study). At a wool price of 32 cents per lb and prime lambs at $5.31 per head, beef price of $15.00/100 lb are required before beef becomes more profitable than sheep. If wool and prime lamb price are reduced to 27 cent per lb and $4.10 per head respectively, then a beef price of $13.00/100 lb is required for beef to substitute for sheep. To compete with cash crops however beef prices in excess of $17.00/100 lb are required.