![Feed budgets and stock numbers should be the top priority right now as a lower cattle market collides with dryer seasonal conditions, consultants say. Feed budgets and stock numbers should be the top priority right now as a lower cattle market collides with dryer seasonal conditions, consultants say.](/images/transform/v1/crop/frm/38U3JBx5nNussShT8aZyYjc/fe276b6a-f422-4ceb-b7e4-e5ff35d81ed6.JPG/r0_224_4386_2856_w1200_h678_fmax.jpg)
The speed and ferocity of the cattle market drop appears to have caught out some producers and now that is combining with forecasts of drier seasonal conditions, the warning has gone out to get feed budgets and stock numbers lined up quickly.
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While the decline in livestock prices was widely touted, many built into risk management programs the concept there would be plenty of signals which would allow offloading of stock that owed them a fair bit in cents-per-kilogram.
"But the fall happened within a far shorter time period than expected and they didn't get that space," northern NSW beef consultant Bill Hoffman said.
"And so some are holding onto cattle they didn't plan to be under the current conditions.
"They are now hesitant to sell on a depressed market but the risk is they might hold too long and get themselves into a more difficult situation come spring when they are forced to sell.
"The longer you carry, and especially if you start to feed them, the more they will owe you.
"It is now very important to get cattle numbers right for not only winter but for a potentially dry spring."
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Mr Hoffman said it was now clear that a number of people would not this year have the normal crop of oats to carry cattle through winter.
Agents in southern parts of the country have reported a solid number of producers rebuilt numbers to a level higher than before, spurred on by years of a record cattle market.
That will be adding pressure as dry conditions set in, they said.
"Everyone realised the cattle market would retreat but what stunned was how fast that correction came and the gravity of it," Mr Hoffman said.
"Due to that, there is now a lot of concern out there - people are very uncertain about what will happen next, particularly with the weather forecasts being what they now are."
Feed budget
Farm business consultant John Francis, Agrista at Wagga Wagga, urged producers to conduct a feed budget to work out where they are at the moment and compare where they might end up under different rainfall scenarios going forward.
"If the paddock feed supply has already declined significantly relative to where feed supply typically is, then analyse options for supplying additional feed and compare those with selling livestock," he said.
Actions will typically depend on existing paddock feed, confidence in forecasts, risk appetite and psychological exposure to loss aversion bias, suitability of resources for feeding and water availability.
"Investigate the cost of filling the expected shortfall in feed," Mr Francis said.
"Options for increasing feed supply may include gibberellic acid or nitrogen which deliver more feed by growing more in the paddock. This is desirable as it is simple and doesn't require additional labour for the feeding but these options won't work as well if soil moisture is depleted.
"Other options include supplementary feeding grain, hay, pellets or silage or anything else that provides energy in a cost effective manner. The amount of feed required will depend on the expected shortfall which is highlighted in the feed budget scenarios."
Compare the costs of supplementary feeding with the cost of selling trading livestock prematurely and breeding livestock requiring liquidation.
"This requires a forward-facing view of the market to work out current versus future livestock value," Mr Francis said.
"Decisions don't need to be all or nothing. Doing a percentage of both can suit some personality types.
"Make contact with your financier as soon as possible to let them know what your analysis shows, how it deviates from the initial budget and how you plan to deal with it. You'll need the funds to support the plan."
Victorian Farmers Federation president Emma Germano said despite many farmers being well-placed following years of good conditions, now was the time to prepare for the impact of potential drier months ahead.
"It's a difficult balancing act, with farmers juggling skyrocketing input prices and volatile market conditions," she said.
Long-term thinking was needed by decision makers to ensure the industry was equipped to navigate the inevitable change in forecast weather conditions, Ms Germano said.
"For drier times, that means prioritising drought preparedness, sustainability, resilience and risk management for farming businesses and communities well ahead of when drought strikes," she said.