Lessons learned ten years on after establishing a Cattle Stud Operation
Background
The stud principle (Steven Manwill) missed a generation in beef production (as his parents left the agricultural sector) and it took him until the age of 34 years to enter it himself. This was later than he would have liked but this how long it took to create enough wealth to purchase and establish an operation. The cost was also more significant as it needed to be in close proximity to Brisbane (within two hours drive).
On this basis the Lone Station Simmental Stud was born. Its objectives were for the stud principal to “cut his teeth” on something small in scale (prior to investing significant funds into a larger venture), develop the value of the land, and to provide the benefits of the country to his family along the way. Whilst the stud was in start up phase animals were finished on property, processed locally and retailed directly into Brisbane through existing personal and business networks. This activity was invaluable in understanding the commercial realities of beef.
Tactically, Simmental was chosen as the desired breed as entry costs were low (i.e. when compared to Brahman for example), commercially the breed appeared to “stack up” considering a number of factors and the stud owners liked the breed. Selecting foundation females was always going to be a problem (as the best are generally retained) but it was known that years of “breeding up” would be required to build a strong female base. Significant capital was required as forecasts showed that the enterprise would not turn a profit until a number of years later.
Approximately ten years later the operation had endured a period of extremely low cattle prices, six years of drought, one catastrophic flood (a number of smaller floods) as well as the stud principle being hit by lightning. On top of this access to an appropriate selling outlet was withdrawn (for no fault of the stud), a number bushfires went through the property within a six week period (one of which destroyed nearly the entire property except infrastructure).
All aside the stud outperformed the majority of larger more established Simmental Studs Australia wide in both average and clearance rates in 2017 and 2018. Although down on sale bulls in 2020 the quality is there and the breeding herd is better than ever before and the future looks bright.
The following lessons have been learned in the ten years to date at Lone Station.
Lesson One
Character
Farming teaches perseverance, resilience, provides great life experiences for adults and children, is fulfilling and when managed correctly financially viable. These characteristics build character. In farming what can go wrong will go wrong and if you think “I should probably do that just in case”- go and do it immediately, this adds discipline.
Lesson Two
Decision Making and Time
Genetic decisions made today impact profitability three years from now and for a long time into the future. It’s better to take short term pain for long term gain and there is always difficulty in balancing this with immediate financial pressures. Many factors are outside of the cattle producer’s control and margins in the beef production industry are tight. Capital and liquidity is key as is providing a quality product (knowing that you may think a particular bull is great now- but in years to come you will be more critical and not rate it so highly)
Lesson Three
Balancing what to do yourself verses outsourcing
Cattle stud production is unique as it requires the producer to have skills in animal husbandry, genetic selection, science and metrics, financial analysis, relationship management, sales and marketing and practical hands on skills and experience. It is difficult for anyone person (or even two people) to possess all of these skills so the need is to focus on what you’re good at, develop skills in other areas where you are interested (or where you can rapidly acquire new skills)- then outsource the rest to trusted providers (despite the cost). Otherwise some things never get done or they get half done.
Lesson Four
Surround yourself with people who understand that by working together means better outcomes for all
The use of co-operatives has long been successful in agriculture and even within a stud breed people exist who together will market and support the breed to achieve a win-win. This can also create efficiencies in cost. At the end of the day as a stud producer you are producing a product- “a bull to your specification” and other breeders are doing the same. There is an element of “competition” but the commercial cattle producer will decide on what animals sell for what price- let them decide. Criticising other studs, other breeds of cattle or individual animals is best left alone. After all what one person decides is cracking animal the next person might dislike completely.
Lesson Five
Appropriate access to Market
You can have the best bulls in the world but if they are not for sale at the right time and in the right location (and marketed effectively)- they will never sell (or if they do at least for not what they should). Securing appropriate access to market is critical as without this the operation will fail. Just a like a shop front in retail- the selling location, branding, packaging and marketing needs to represent the product. In general business (industry specific) 5% of turnover is considered standard for marketing. For a cattle stud in the early days of operation this percentage needs to be much higher and spent where a return on investment (ROI) can be realised.
Lesson Six
You will keep learning for the rest of your life and the longer you’re involved in Cattle Stud Breeding the more you realise you need to learn more. (self explanatory)
