Lamb backgrounding in Victoria
Currently in WA, there is a large supply of finished lambs in the spring, and a much reduced supply during summer, autumn and winter. While prices vary on a seasonal basis that reflects the seasonal supply of lamb (Figure 1), the prices currently do not allow producers to profitably background and finish lambs in their own location, mainly in the Great Southern using grain or cereal stubble to background lambs.
In a similar manner, twenty years ago the Victorian industry’s lamb supply was dominated by spring turnoff. Lamb backgrounding is now an established enterprise in parts of Victoria.
Recent prices for Victorian trade lambs (Figure 2) show a similar price pattern to prices paid in WA.
Agriculture Victoria estimates that about 50%, or four million, of the eight million prime lambs produced in Victoria each year are backgrounded and finished out of season before being slaughtered.
Lamb backgrounding has grown considerably over the last twenty years and particularly in the last ten years in Victoria.
Over this time there has been a gradual build-up of farmers participating in this type of enterprise and those participating have got bigger. Some farms are turning over very large numbers of lambs, by backgrounding and finishing 10 000 – 20 000 lambs.
Most lambs destined for backgrounding that are purchased as stores, are purchased in the late spring when the flush of lambs hits the market. But lambs will be purchased at other times of the year depending on pricing and availability.
Lamb backgrounding occurs in three main regions of Victoria with very different production systems:
- about three million lambs are backgrounded on summer green fodder crops, or grain supplemented, in the high rainfall zone to the south and west of Bendigo, which is south of the Great Divide
- nearly another million lambs are backgrounded predominantly on lucerne pastures in the eastern Riverina in northern Victoria, and this occurs on both sides of the Murray River
- The balance, which is lost in rounding, is backgrounded in the Wimmera of western Victoria, typically on faba bean stubbles that can also finish the lambs at times.
While the typical backgrounding enterprise will be described for each of the Victorian regions identified, there is a lot of enterprise variation within each of these major regions, and lambs are also backgrounded in other areas of Victoria. There are some backgrounders who use grain to ensure lambs reach target weights, but most do not.
The largest of the Victorian saleyards is Ballarat (Figure 3).
There are three regions of WA that share characteristics with the lamb backgrounding regions of Victoria. They are the high-rainfall south west of WA (comparable to the Victorian high rainfall zone), the southern Sandplain (lucerne-growing potential comparable with the eastern Riverina) and the Wheatbelt (comparable with the Wimmera).
Gross margins
A gross margin for lamb backgrounding in each region was prepared given best guess scenarios using 10-year average real commodity prices for meat, grains and skins. They indicated good profitability was generated by backgrounding in all three Victorian zones with typical Merino cross genotypes.
The backgrounding and finishing gross margin generated was at least $25/lamb, which resulted in a return of capital invested in lamb, inputs and labour of at least 25%. This assumes that the store lambs are purchased when prices are at seasonal lows.