Appendix A – Revenue and cost assumptions for the mixed 50/50 crop/sheep business case study
Variable | Assumption | Unit |
---|---|---|
Effective Ha | 2500 | ha |
Land value | 3000 | $/ha |
Average useful life of plant and equipment | 8 | years |
Capital available (debt + equity) | 11.1 | $m |
Plant and equipment | 0.9 | $m |
Livestock | 0.4 | $m |
Land | 7.5 | $m |
Debt | 2.3 | $m |
Equity (net assets) | 6.5 | $m |
% equity | 79% | % |
Wheat/barley yield | 2.8 | t/ha |
Wheat price Free-in-Store (FIS) | 300 | $/t |
Grain handling farm to port costs (Cartage, receival, freight, EPR, levies, cartage) | 46 | $/t |
Lamb price for 22kg cwt | 88 | $/hd |
Wool price clean | 11.50 | $/kg |
Ewe price | 50 | $/hd |
Ewe stocking rate | 6.5 | ewe/winter grazed ha |
Dry Sheep Equivalent (DSE) stocking rate | 9.8 | DSE/winter grazed ha |
Wool cut/ewe | 5 | kg/ewe |
Ram % | 2 | % flock |
Marking rate | 90 | % |
Income and costs | $/ farm ha | Assumptions |
---|---|---|
Grain income | 420 | 2.8t/ha x $300/t x 50% farm area |
Lamb income | 257 | 6.5 ewe/ha x 90% marking rate x $88/hd x 50% farm area |
Wool income | 112 | ewes and rams 5kg x 65% clean x 90% clip x $11.50/kg |
Culls | 33 | 20% flock at $50/hd |
Total income | 821 | - |
Farm overheads | 39 | Rates, licences, water, elec, gas, admin, insurance, buildings, fences |
Seed and treatment | 14 | 85kg/ha + 10% pasture farm @ $30/ha + treatment @ $50/t |
Fertiliser and lime | 95 | Fertiliser: 20kg MOP (2500ha), 55kg Urea (625ha), 110kg Urea (625ha), 55kg DAP (1250ha), 100kg Super (1250ha); plus cartage $23/t. Lime: $40/t x 25% land area |
Chemical | 36 | Planfarm Bankwest Benchmarks |
Fuel and oil | 30 | Planfarm Bankwest Benchmarks |
Plant repairs | 13 | 4% machinery value |
Permanent labour | 28 | 1 x FTE @ $70 000 including super |
Casual labour | 4 | $30/hr for seeding at 6ha/hr and harvest at 9ha/hr |
Contract shearing | 23 | $7/ewe (includes shed hands, work cover and super) |
Contract crutching | 6 | $0.80/ewe/lamb 4% work cover + 9.5% super |
Contract marking | 5 | $1.30/lamb + $0.20/hd ear tag +4% workcover +9.5% super |
Supplementary feed - ewes | 31 | 270g/day barley or equivalent for six months at farm gate price |
Supplementary feed - lambs | 10 | 30% lambs sold in nov (not supp feed); 70% lambs feed for two months @400g/day |
Animal health | 17 | Drench: Ewes $0.80/h (two drenches) + lambs $0.60/h (inc vitamin E). Lice $1.40/hd; Jet $0.25/hd. Vaccine lambs @ marking $0.50/hd + vac&drench $0.50/hd |
Cartage | 68 | $3.70/hd freight and yard fees, $8/t grain cartage, wool freight $11/bale + cost of wool pack ($12.50each), CBH receival and freight charges $31.50/t |
EPR, levies, commission | 34 | EPR $3/t. 2% AWI levy, MLA min 2% sale value or $1.50/hd, DPIRD biosecurity $0.12/hd, 1.02% GRDC levy. 4.5% wool selling fees, 5.5% sheep selling fees |
Depreciation/machinery allowance | 44 | Machinery replacement value ($0.9m) / eight year replacement cycle / farm area |
Sheep purchases | 65 | 20% rams @ $1000/hd + 3% death replacement of ewes + 20% maidens (ewe replacements) @ $70/hd |
Finance costs | 60 | 6.5% interest on term debt |
Working capital costs | 7 | Cost of inputs, feedcosts and overheads carried for four months at 7.5% interest |
Total costs | 631 | - |
Net profit before tax and drawings | 191 | Equivalent to $477 103 over the 2500ha farm |
Profit margin | 23% | Profit before tax and drawings /total income |
Return on equity | 7% | Pre-tax profit divided by equity $6.5m |