Higher cattle prices prompt stockyards spend

Suppliers are reporting turnover in the past few months has lifted by as much as 20 per cent, further boosted by an end-of-financial-year flush of buyers taking advantage of the $20,000 immediate asset tax deductibility.

Beef consultants and advisers say inquiries about stockyard design have never been so high.

“There hasn’t been a great deal of discretionary spending in the budgets of most producers so capital investments that have fallen by the wayside are now at forefront of mind,” farm business consultant John Francis said.

“Something that offers safety and productivity is a great place to invest.”

NSW Department of Primary Industries beef development officer at Armidale Todd Andrews said he was receiving most inquiry about larger designs of 200 to 250 head capacity.

The big things producers were looking to achieve were reduced time requirements and increased safety.

“These are hard to attach a price to but are still top priorities for beef producers and both come from better design, better stock flow and, in some cases where old yards have long been neglected, being more stock proof,” he said.

From a purely economic perspective, big spending on yards can be difficult to justify in terms of rate of return in productivity increases, farm business consultants say.

Like any investment where profitability is the key driver, establishing what the marginal costs and benefits are should be the first priority, according to Mr Francis, Director of Holmes Sackett, Wagga Wagga.

In the case of stockyards, the marginal benefit comes primarily from labour savings.

“Yards are something it is easy to spend a lot of money on,” he said.

“If your strict criteria is increasing productivity and profitability, look for returns that exceed 20 per cent as there are plenty of other places on farm where that level of return could be generated.

“So by a quick calculation, if you looked at investing $50,000 you would need to save $10,000 worth of labour a year. At $40 an hour, that is 250 hours or 31 days per year.

“For many operations, it would be difficult to make up those sort of saved hours.”

Mr Francis said often it was a case that yards might not be brilliant but were workable. Producers should then ask what was the marginal cost and benefit of a new set against what could be done to get existing yards to a better standard.

“Of course, it may be a producer will accept lower investment returns if safety is the key decision driver,” he said.

“Safety is important and a difficult one to quantify, as is animal welfare.

“For example if the existing yards induce bruising resulting in downgrading of livestock to a lower-value market specification, there may be a case for investment but you should ask can those factors be offset at a lower cost by simple modifications.

“And it has to be said that anything that makes life easier could be reason enough - you don’t often find someone who has put in a new set of yards and has regrets.”

Mr Andrews said judging from the inquiry he was receiving, designs with good cattle flow, such as no corners and curved races, and safety features such as self-locking latches and safety gates were clear priorities.

“Most yards are well-designed these days, and incorporate a lot of those features,” he said.

“Almost all yards are now steel and come in pieces, and so if a design doesn't work they can often be changed.

“So even things like capacity can be changed simply by adding panels, a big advantage over the the days of wooden yards.”

Mr Andrews said some things producers should think about included location of yards, size of areas and shade.

“Having yards with good road access is important, but they should also be reasonably central to the property and its paddocks,” he said.

“Take advantage of existing laneways or fencing systems that also make the yarding job easier for one person.”

Even in big yards, the advice is to not make the drafting or forcing area too big.

These jobs are still more efficiently done with smaller numbers, Mr Andrews said.

“Get some trees planted as soon as the yards are in - it looks better, provides shade and shelter for workers and stock and a place for kids to watch the whole procedure,” he said.

The increased inquiry about stockyards also appears to be reflected at the shopfront.

With Australia’s largest showcase of agri products, the three-day Commonwealth Bank AgQuip field days at Gunnedah, just around the corner, many stockyard specialists are launching new products with safety and reduced labour the key features.

Managing Director of National Stockyard Systems Murray Schaefer said along with putting cash in pockets, the improved cattle market had led to an increase in property sales and one of the first things new owners do is upgrade stockyards and fencing.

“With the average age of a farmer now at 57, it is definitely that combination of productivity, safety and functionality being sought in yards,” he said.

“One of the major causes of accidents in yards is overcrowding so it is important to have a set-up with a realistic working capacity rather than just a holding capacity.”

George Caldwell, Arrow Farmquip Territory Manager for Queensland/Northern Territory, said along with cattle prices and the $20K tax incentive, recent rains had played a role in the level of inquiry.

“An underlying trend with serious cattle producer inquiries has been off the back of bad experiences with poor quality import product, where they are realising it’s letting them down or just not up to the task of providing adequate safety, so are looking for a long-term, high quality solution this time around,” he said.

“Priorities are operator safety, productivity and low stress - producers are increasingly relying on unskilled labour so are needing livestock handling gear that’s easy to use, provides operator safety and encourages low-stress handling.

“Alternatively producers are looking for handling solutions that deliver operational efficiencies and allow them  to handle the same number of head with less man-power.”