Sustainable grazing systems: economic and financial implications of adopting different grazing systems in north-eastern Victoria

Abstract

Data from experimental sites at Maindample and Ruffy, on which different grazing systems were implemented, was extrapolated to a 100-ha paddock on a commercial property to determine their economic and financial implications. Included into the analyses were risk assessments to allow for sowing failures due to adverse seasonal conditions and price variability of meat and wool during the life of the pasture. Where graziers carried out pasture improvement, the results indicated that changing from control (low-input pasture stocked at a low intensity) to high-input (high stocking rates and fertiliser addition) rather than medium-input pasture was the more profitable option. In changing to high-input pasture at Maindample, a cattle activity using nominal discount rates of 10%/year required success rates in pasture establishment of ≥80% for profitability. For cattle at Ruffy, using the same discount rate, the change was profitable for success rates in pasture establishment of ≥70%, but lamb and wool activities were only profitable for success rates in pasture establishment of ≥90%. Over both sites, cattle at Ruffy was the only activity in which the change was profitable for nominal discount rates of 15%/year, but success rates for pasture establishment also had to be ≥90%. Financial analyses performed on these increases in profitability confirmed that they were feasible because the payback periods for deficits incurred during the development and management of the improved pasture were less than the 13-year life of the investments. However, using a contractor to improve the pastures was not feasible because the deficits could not be repaid within the period of the investment. These results support the current low adoption of perennial pastures and have significant implications for catchment management bodies in Victoria and New South Wales where heavy reliance is placed on perennial pastures to improve catchment outcomes.