An evaluation of beef finishing systems in Canterbury using computer modelling as a decision support tool

Abstract

The profitability of beef finishing systems in Canterbury was analysed using computer modelling software as a decision support tool. A linear programming model along with Farmax software were used to calculate the most profitable beef finishing system using a theoretical scenario. The scenario was based on a 100 hectare irrigated Canterbury property finishing steer calves, heifer calves and two year steers. The optimum beef finishing system to maximise profits was running a selection of heifer calves and two year steers. On a stock unit basis this system was running 69% heifer calves, 20% 18 month steers, and 11 % 12 month steers. The heifer calves were on the property for a full 12 months while the 18 month and 12 month old steers were both on the property for seven months overlapping in October and April. A maximum net profit of $64,000 was achieved off the 100 hectares by running 348 heifer calves, 141 18 month steers and 71 12 month steers. This net profit is 23% higher than an all steer calf finishing system. The 18 month cattle finished from April to October fitted in well with the finishing system where their peak feed demand coincided with the peak pasture production in October. The slaughter ofthese cattle in October is also when the works schedule peaks, therefore receiving a premium carcass value to justify higher wintering costs. To achieve this optimum beef finishing system, the spring/summer accumulation of feed surplus is required to be transferred into the winter months when feed deficits are experienced. A total of 178 tonnes of dry matter silage is made over the summer period to meet stock demands through the winter. The fluctuating prices in store stock markets and availability of stock are the major issues faces the profitability of beef finishing systems. Variations in both store cattle prices and works carcass prices are unpredictable so reading market forces and predicting the best time to buy or sell can greatly change gross margins. With only slight changes in store prices required to tip the balance in favour of either heifer calf finishing (reduction of two cents/kg liveweight) or 18 month cattle finishing (reduction of nine cents/kg liveweight), the determining decision could be on the availability of stock. The interaction between the LP model and Farmax software was not easily comparable with the fixed limits on the Farmax model parameters restricting a direct correlation. A reduction in stock numbers of 29% was required from the LP model which achieved only 44% of the total net profit. From the experience in computer modelling gained from this study, it was concluded that the linear programming model is best suited to the user entering physical and economic fann data to produce optimum activity levels while the Farmax model is designed to test the feasibility of a farming system given the activity levels.