{"id":3126,"date":"2021-04-30T00:04:31","date_gmt":"2021-04-30T00:04:31","guid":{"rendered":"https:\/\/www-dev.absglobal.com\/au\/?p=3126"},"modified":"2021-06-21T09:29:55","modified_gmt":"2021-06-21T09:29:55","slug":"drought-recovery-transaction-driven-by-data","status":"publish","type":"post","link":"https:\/\/www-dev.absglobal.com\/au\/2021\/04\/30\/drought-recovery-transaction-driven-by-data\/","title":{"rendered":"Drought recovery transaction driven by data"},"content":{"rendered":"\n

A cattle trading deal valued at more than $6.2 million turned around the financial fortunes of one NSW farm business in just four months.<\/em> Underpinned by data, the transaction including up to 2500 Angus heifers, not only recouped the losses from 2.5 years of drought, it proved the value of profitable genetics and the opportunities within the livestock sector.<\/em><\/p>\n\n\n\n

When it comes to business, Nigel Kerin knows it is all about the numbers. Whether its breeding Poll Merinos or selecting Angus semen, the NSW farmer would be the first to tell you \u201cdata doesn\u2019t tell lies\u201d. After all, he and wife Kate\u2019s farm business at Yeoval in the NSW central west has surged during the past decade, mostly off the back of genetic and performance data, combined with innovative marketing.<\/p>\n\n\n\n

So, it\u2019s no surprise that big data underpinned the couple\u2019s most recent bold drought recovery plan. But this time the stakes were high \u2013 the numbers were big, the money was borrowed, and the heifers were to be bought, joined and sold within four months. Nigel was aiming for a fast and high turnover, and it worked. The strategy delivered a 47 per cent return on investment, net of all costs, in just four months.<\/p>\n\n\n\n

It all started last October. \u201cIt took us six weeks to bring in 2500 heifers,\u201d he said. “We started buying in October last year and were (artificially inseminating) in November. We sold them all on March 5. The turnover of money was very important because it was all borrowed money, including the cost of carry.” The sale of the in-calf heifers, via online platform AuctionsPlus, grossed $3,798,000 for an average of $2824 across 1345 heifers. This was in addition to other heifer sales via forward contracts. \u201cIt got us back to where we were financially at the start of the drought in 2018,\u201d Nigel explained. \u201cFinancially, one trade that lasted four-and-a-half months repaired the financial damage that was done in 2.5 years of drought. The lesson here is Australia is an amazing place and there are so many ways of creating turnover in the livestock industry.\u201d<\/p>\n\n\n\n

Setting the scene for a sale<\/strong><\/p>\n\n\n\n

Planning for Kerin Ag\u2019s drought recovery started long before Nigel and his livestock agent Todd Clemments purchased the first 1000 heifers last spring. During the drought, Nigel researched the market and consulted mentors. He wanted to know what class of livestock would deliver the highest return on investment once it rained again throughout Australia\u2019s east coast cattle country. \u201cIt was without a doubt, black heifers, that were pregnant,\u201d he said. \u201cThen I thought, \u2018what is going to make them special? We need something special for marketing\u2019, so the decision was made to AI rather than use bulls and we choose to AI them to Millah Murrah Paratrooper and Millah Murrah Nugget, because the stud has a good name and both the bull\u2019s datasets were excellent.\u201d<\/p>\n\n\n\n

The scene was set. The east coast female slaughter numbers remained stubbornly high at 4 per cent more than the level required for a herd rebuild. Nigel\u2019s strategy was to make the most of the \u201cemotion\u201d surrounding the drought and restock, he knew those wanting to return to the cattle business would want the best. That\u2019s why he targeted heifers from the top five Angus studs in the country \u2013 securing some of the most sought-after bloodlines \u2013 before selecting ABS sires Millah Murrah Paratrooper P15 and Millah Murrah Nugget N266 for joining. He even installed the help of Millah Murrah Angus breeder Ross Thompson to assist with \u201ctelling the story\u201d of the heifers via social media.<\/p>\n\n\n\n

\u201cThere was the most demand for Millah Murrah Paratrooper \u2013 big data sells,\u201d he said. \u201cIt\u2019s a very common thing, the bigger the data the more people pay for it. Cattle breeders are buying big data bulls. You can say it\u2019s all about bloodlines but that\u2019s not true. They buy off EBVS that\u2019s what they are chasing. Additionally, Nugget has some of the best data in Australia on calving ease.\u201d Millah Murrah Paratrooper P15 made headlines in 2019 when he was sold for $160,000 \u2013 an Australian Angus record, while in 2018 Millah Murrah Nugget sold for $54,000 and was the all breeds Australian record priced yearling bull.<\/p>\n\n\n\n

\"\"
ABS’ Bill Cornell & Annie Pumpa with Nigel Kerin<\/figcaption><\/figure>\n\n\n

Forward sale contracts with supermarket giant Coles, for any heifers that failed to get in calf, or those which weren\u2019t suitable for his joining program \u2013 removed some of the risk out of the transaction. The contracts were for 30 per cent of the 2500 heifers, as Nigel anticipated a lower conception rate due to the animal\u2019s high protein diet because of the abundant season. In the lead-up to artificial insemination, the heifers were gaining 1.8-2.4kg a day. \u201cThat\u2019s how come we knew we would be battling conception, the weight gain and high protein and energy- it all adds to it,\u201d he said. \u201cBut the economics were built in, the buy price, plus the cost of carry determined our break even and we knew what that was before we even bought them. Everything was calculated. If we never got one heifer in calf, we still would have made a really good profit because the weight gain was so high.\u201d<\/p>\n

The AI program ran across four weeks and involved 2200 heifers for a total conception rate of 61 per cent. CIDRS (controlled internal drug release) were inserted twice during this time and heat detection pads were used to detect estrus and those with a return heat were inseminated again. \u201cWe worked it out, there was 28,520 cattle that went through the crush while we were doing this program,\u201d Nigel said. \u201cThe logistics of it, it\u2019s like something you\u2019d see in the feedlots in America.\u201d Much like the rest of this carefully laid out four-month plan, Nigel was prepared to handle the big numbers in the yards and on-farm thanks to Kerin Ag\u2019s autonomous cattle yards and its experienced team of stock people.<\/p>\n

Five years ago, Kerin Ag was home to Australia\u2019s first autonomous cattle yards. Designed to handle large numbers \u2013they were built \u201cwith no expense spared\u201d for the businesses steer trading enterprise and this infrastructure negated the need for human interference. The automatic crush, drafting gate and extensive laneways and paddocks close to the yards were crucial for the logistics of managing the cattle from delivery, through joining, AuctionsPlus assessments and on sale day.<\/p>\n

 <\/em><\/strong>Pay-day<\/strong><\/p>\n

Suggest to Nigel Kerin that his business move was \u201crisky\u201d, and he will refute. \u201cYou can call it calculated risk, I guess, but to me it wasn\u2019t because my breakeven was way less than what I contracted to kill heifers for,\u201d he said. “The ones we knew were going to be dry and we worked on 30 per cent being empty.\u201d For him, the move to source 2500 heifers at the start of the east coast restocking frenzy was just \u201ccommon sense\u201d.<\/p>\n

Nigel said the largest challenge was convincing his financial backers. \u201cWe weren\u2019t overly blessed with coin after 2.5 years of drought, I can tell you that,\u201d he said. \u201cWe got the money thanks to our business performance, our numbers and how we bounce back after dry periods.\u201d The latter a testament to Kerin Ag\u2019s business plan of \u201cworking with climate, rather than fighting through it\u201d.<\/p>\n

One example is its drought management strategy. \u201cOnly a certain proportion of our total stoking rate is made up of breeding,\u201d Nigel explained. \u201cThe reason we do that is so we can match stocking rate to carrying capacity very quickly when things turn against us. The way we have our business structured at the moment, the biggest single thing that is working in our favour is climate change.  Because when everyone else is still feeding, we are restocking, and we are able to get back into the market with not a great deal of competition. We are a land manager first, a livestock manager second. The guts of our business is grass. We don\u2019t make money out of livestock; we make money out of grass. So, we just specialise in growing grass.\u201d<\/p>\n

When the joined heifers were sold on March 5 \u2013 the work wasn\u2019t finished. Nigel said individual buyers purchased different types of heifers and some with different AI dates. These needed to be kept separate and across such as a large number, this was a logistical \u201cnightmare\u201d. A total of 82 lots of cattle were kept separate following the sale. The AgriWebb mobile management app made it \u201cdoable\u201d, according to Nigel, while the farm\u2019s infrastructure and staff were vital.<\/p>\n

 <\/strong>Lessons learned<\/strong><\/p>\n

Thanks to this deal, the financial position of Kerin Ag returned to where it was pre-drought. Nigel insisted this was the result of \u201cremoving the emotion\u201d from agricultural decision making and relying on the data \u2013 or numbers. \u201cIt might seem really complex to most people, but I knew I had the staff and the facilities,\u201d he said. \u201cI didn\u2019t own a bull and I wouldn\u2019t know the front end of the bull from the back end of a bull, to be honest with you. I don\u2019t own a breeding cow and I never have in my life. You don\u2019t need to be some whiz-bang smart person out of the beef industry to do what we have done. We are sheep cockies that\u2019s what we do well. We turn grass into money.\u201d<\/p>","protected":false},"excerpt":{"rendered":"

A cattle trading deal valued at more than $6.2 million turned around the financial fortunes of one NSW farm business in just four months. Underpinned by data, the transaction including up to 2500 Angus heifers, not only recouped the losses from 2.5 years of drought, it proved the value of profitable genetics and the opportunities…<\/p>\n","protected":false},"author":337,"featured_media":991,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-3126","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-beef"],"acf":[],"yoast_head":"\nDrought recovery transaction driven by data - ABS Global Australia<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www-dev.absglobal.com\/au\/2021\/04\/30\/drought-recovery-transaction-driven-by-data\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Drought recovery transaction driven by data\" \/>\n<meta property=\"og:description\" content=\"A cattle trading deal valued at more than $6.2 million turned around the financial fortunes of one NSW farm business in just four months. 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