High feed grain prices and historically expensive cattle have reduced custom lotfeeder, Sandalwood Feedlot, numbers on feed to a third of normal capacity.
Usually the Darling Downs feedlot, located 20 kilometres north east of Dalby, has up to 18,000 head of cattle on-feed but the challenging market environment has resulted in numbers declining to between 6000 and 7000 head.
Sandalwood Feedlot managing director Kev Roberts said the current numbers on feed are only one-third of total feedlot capacity.
“We custom feed cattle for a number of processors and currently they can’t continue feeding cattle due to negative profit margins,” Mr Roberts said.
“We’re not making money having empty pens, but our biggest single clients are processors and they’re simply not feeding cattle because the price they can currently sell their meat for is less than its cost of production.”
Mr Roberts also noted his belief that a custom feedlot is a business of “real market conditions” and Sandalwood Feedlot’s reduced capacity reflected a need for a one-third downward shift, shared between feed grain prices and feeder cattle prices, to return the Queensland domestic beef market to a sustainable long-term position.
“Something has to give and either the processed end has to be able to lift their prices, which I don’t see happening, or input cost prices have to decline,” he said.
Mr Roberts also said cattle supply numbers weren’t currently an issue, but feeder cattle prices were one of the major barriers to restocking the feedlot to full capacity.
Sandalwood Feedlot is paying $300-a-tonne for sorghum grain, which is a up from a $250-a-tonne price tag only a year ago.
“Feed grain prices have increased I believe due to current export market prices plus a subsidized ethanol industry in our Darling Downs region as well,” Mr Roberts said.
“For the last eight months cattle being feed at Sandalwood Feedlot are running at a $200-a-head loss.”
But some relief maybe in sight with feeder cattle prices at Dalby’s cattle sale falling this week. Domestic feeder weight steer prices dropped 9-cents-a-kilogram and heavy export feeder weight steers lost 4c/kg on average. Domestic feeder weight heifer prices declined 16c/kg on average at Dalby on Wednesday.
Normally, Sandalwood Feedlot is operated with two-thirds client custom feed cattle and one-third owned by the feedlot business with an average yearly turnover of $30 million.
The entire 100-acre facility has a conservative market value of $25 million.
Drones to overtake pen riding
Sandalwood Feedlot is currently investigating ways to improve WIFI reception across its entire feedlot facility to make way for potential drone pen riding.
The innovative idea has the potential to reduce labour costs and also attract more specialized and skilled workers to the feedlot job. It also has the capacity to reduce the time pen riding takes due to how easily a drone could move around feedlot pens.
Pen riding is the daily task of checking the health and well-being of cattle, plus identifying any other pen issues, in each feedlot pen and is normally done by a pen riding team of people on horseback, quad bike or even on foot.
Sandalwood Feedlot managing director Kev Roberts said the business never stops looking at ways to improve efficiencies and increase production outcomes.
“Using drones for checking feedlot pens is a real possibility and being able to send video images back to a central base in the feedlot office or other location in real time via WIFI would be a potential benefit,” Mr Roberts said.
“We simply never stop looking at ways technology can help improve our business.”
Mr Roberts also noted the cost of employees wasn’t a big issue for the feedlot business, but trying to find and retain talented expert employees was a problem.
“Unlike the manufacturing industry the cost of labour isn’t the ‘be all and end all’ for us, but I can tell you finding the employees with expertise and then keeping them in the feedlot industry is a real challenge,” he said.
Sandalwood Feedlot employs between 25 to 35 staff to meet their dynamic operational requirements. Specialist services of consultants and contractors are also used including a nutritionist and agronomist.