Bio-economic evaluation of grazing-management options for beef cattle enterprises during drought episodes in semiarid grasslands of northern Australia

Abstract

Context: The large inter-annual and decadal rainfall variability that occurs in northern Australian rangelands poses major challenges for the profitable and sustainable management of grazing businesses.Aims: An integrated bio-economic modelling framework (GRASP integrated with Breedcow and Dynama (BCD)) was developed to assess the effect of alternative grazing-management options on the profitability and sustainability of a beef cattle enterprise in the central-western Mitchell grasslands of Queensland over a multi-decadal time period.Methods: Four grazing-management strategies were simulated over a 36-year period (1982–2017) in the GRASP pasture-growth model, using historic climate records for Longreach in central-western Queensland. Simulated annual stocking rates and steer liveweight-gain predictions from GRASP were integrated with published functions for mortality and conception rates in beef-breeding cattle in northern Australia, and then used to develop dynamic BCD cattle-herd models and discounted cash-flow budgets over the last 30 years of the period (1988–2017), following a 6-year model-equilibration period. The grazing-management strategies differed in the extent to which stocking rates were adjusted each year, from a common starting point in Year 1, in response to changes in the amount of forage available at the end of the summer growing season (May). They ranged from a low flexibility of ‘Safe stocking rate’ (SSR) and ‘Retain core herd’ (RCH) strategies, to a moderate flexibility of ‘Drought responsive’ (DR), to a ‘Fully flexible’ (FF) strategy. The RCH strategy included the following two herd-management scenarios: (1) ‘Retain herd structure’, where a mix of cattle were sold in response to low pasture availability, and (2) ‘Retain core breeders’, where steers were sold before reducing the breeder herd. Herd-management scenarios within the DR and FF strategies examined five and four options respectively, to rebuild cattle numbers and utilise available pasture following herd reductions made in response to drought.Key results: Property-level investment returns expressed as the internal rate of return (IRR) were poor for SSR (–0.09%) and the three other strategies when the herd was rebuilt following drought through natural increase alone (RCH, –0.27%; DR, –1.57%; and FF, –4.44%). However, positive IRR were achieved when the DR herd was rebuilt through purchasing a mix of cattle (1.70%), purchasing pregnant cows (1.45%), trading steers (0.50%) or accepting cattle on agistment (0.19%). A positive IRR of 0.70% was also achieved for the FF property when purchasing a mix of cattle to rebuild numbers. However, negative returns were obtained when either trading steers (–2.60%) or agistment (–0.11%) scenarios were applied to the FF property. Strategies that were either inflexible or highly flexible increased the risk of financial losses and business failure. Property-level pasture condition (expressed as the percentage of perennial grasses; %P) was initially 69%P and was maintained under the DR strategy (68%P; average of final 5 years). The SSR strategy increased pasture condition by 25% to 86%P, while the RCH and FF strategies decreased pasture condition by 29% (49%P) and 65% (24%P) respectively.Conclusions: In a highly variable and unpredictable climate, managing stocking rates with a moderate degree of flexibility in response to pasture availability (DR) was the most profitable approach and also maintained pasture condition. However, it was essential to economic viability that the property was re-stocked as soon as possible, in line with pasture availability, once good seasonal conditions returned.Implications: This bio-economic modelling analysis refines current grazing-management recommendations by providing insights into both the economic and sustainability consequences of stocking-rate flexibility in response to fluctuating pasture supply. Caution should be exercised in recommending either overly conservative safe stocking strategies that are inflexible, or overly flexible stocking strategies, due to the increased risk of very poor outcomes.