Flexibility in management strategies and their impacts on economic sustainability of East Coast dryland sheep farms: A dissertation submitted in partial fulfilment of the requirements for the Degree of Bachelor of Agricultural Science (Honours)

Abstract

An existing complex model was adapted to investigate the effects of various flexible management policies on the production and profitability of Canterbury East coast dryland sheep farms and their productivity, profitability and economic viability. The model incorporates a variety of seasonal and biophysical parameters of pasture and animal production and market prices. The model was used to test the flexibility and economic viability of different management policies in a dryland fanning environment. The policies incorporated a range of stocking rates, lambing dates, the effects of incorporating a "buffer mob",of various flexible culling policies, substitution of a wether mob to the system, and of varying the proportion of lambs sold at the first draft. The average Canterbury dry land sheep farm at 8.4 su/ha achieved an average annual gross margin per stock unit of $20.79 and per hectare of $184. This was accompanied by a standard deviation and risk measure of $19.10 /su and $169/ha respectively illustrating a high level of variability across years. Lowering the stock rate to 7.3 su/ha resulted in a significant increase in gross margin per stock unit of $6.87 and $41/ha. However, the benefit from greater economic gains at the lower stocking rates was mitigated by an increase in the variability or risk to $210/ha at a gross margin per hectare of $214/ha. Part of this increase in variability was caused by an anomaly in the way the model deals with the hay inventories and sales so that the estimated risk needs to be treated with caution. Raising the stocking rate resulted in lowering the returns and the variability from one year to the next as well. The result was different from that expected, predicting that risk would decrease with decreasing stock rate. As noted this was due to deficiencies in the model with regards to the accuracy in hay buying and selling. Delaying the lambing date by a week to the 15th August resulted in higher gross margins than on the lower stocking rates. The most significant effect was that it reduced the variability and risk in financial loss. The incorporation of a buffer mob of old ewes with an earlier lambing date increased the flexibility in production and management as well as lowered the risk. A buffer mob lambing two weeks earlier on July 25th, resulted in better risk return value and hence economic sustainability, than at the same stocking rates on the base farm. No valid conclusions on the effects of the wethers on the economics sustainability of dryland farm can be made due to deficiencies in the stocking rates but the indications were that at 5% wether risks were lowered, flexibility increased and the balance between risk and return improved. Lowering the drafting weight lowered the risk of financial loss. The results indicated that in Canterbury dryland sheep farm, a lower stocking rate of 7.3 su/ha, with the incorporation of a buffer mob of old ewes lambing two weeks earlier than the base mob, the base mob lambing a week later, selling lambs at drafting weights of 12.5 - 13 kg CW as opposed to 13.5 kg CW and the incorporation of no more than I 0% dry stock wethers as total stock units, would result in significantly increased production and management flexibility, a lower risk system with the higher gross margins at an economically sustainable level. A number of additional benefits and negative side effects were also identified.