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Labour key to wool efficiency

14 Oct, 2012 03:00 AM
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3
 

  • More than 10,000DSE/person realistic with best management
  • 2pc return on asset improvement through labour savings
  • Move to cradle crutching good place to start to change

    LABOUR efficiency is one of the key differences in performance in the top 20 per cent of farms, benchmarking data by consultancy company SBScibus shows.

    Speaking at the final WoolClip forum in Burra, South Australia, last month, consultant Graham Lean, based at Hamilton, Victoria, gave woolgrowers tips on improving labour efficiency on their properties.

    He said the average farm ran 7500DSE a person but it was possible to run more than 10,000DSE/person with efficient labour practices.

    “From benchmarking data of our own clients, for an improvement in labour efficiency of 5000DSE/person there is an improvement in return on asset of two per cent,” he said.

    “Stocking rate is associated with improved profitability but there’s also labour efficiency that comes up as one of the big drivers of farm profit.”

    Labour was one of the biggest costs on-farm, with a recent Victorian Department of Primary Industries study finding that $99 a hectare, or 12pc of gross farm income went into labour costs, for either the owner/operator or permanent labour.

    Mr Lean said ways to improve efficiency included:

  • Syndicating equipment and jobs with neighbours.
  • Considering contract services – which could sometimes appear high but for a specific job, on a whole farm basis, could be cheap and well worth considering.
  • Combine operations where possible such as crutch or jet ewes at marking or weaning, summer drench ewes at weaning or draft out the tail of ewes at weaning. Adult sheep should be condition scored and drafted whenever they were in the yards.
  • Sound fencing, laneways, good dogs and well-lit yards.
  • Changing lambing to spring which matches the demand of the animals more with pasture supply instead of in autumn, when often stock were being supplementary fed, which required more labour. Cradle crutching and jetting could be combined with mulesing and a later lambing.
  • Autumn shearing has better weather, resulting in possibly one crutching and fewer rain delays.
  • Mr Lean said growers needed to totally rethink their livestock enterprise if it was not efficient because, in most cases, it was the system that led to inefficiencies.

    “To get a 25pc return on investment, if you are saving $25,000 a year in labour costs, which is less than half a labour unit, you can afford to spend $100,000 on capital and that can buy an awful lot of equipment and good yards,” he said.

    Raised shearing shed boards were a good labour-saving opportunity, improving output by 7pc. Self-pinning presses improved output by 11pc and satellite yards around the farm could improve sheep processing before getting to the shed.

    Weigh and autodraft scales were also a worthwhile investment. Mr Lean said at $15,000, amortised over five years, the annual cost was equal to 28 Merino weaners, in terms of capital value and gross margin.

    “From farm survey data, we know weaner mortalities are an issue and less than optimum growth rates in prime lambs is also an issue,” he said.

    “About 80pc of weaner mortalities actually occur in the bottom 20pc of the weaner mob on weight, so if you can identify those accurately there is potential that in an average flock, where 160 deaths equates to $16,000 a year, the cost of the weigh-draft is quickly recouped in savings in terms of weaner mortality.

    “Obviously there might be some costs of additional feeding of saving those bottom 20pc but accurately identifying and running them separately is a big part.”

    He said another large benefit was in prime lambs hitting the grid accurately and not incurring price penalties, as well as less feed being given to animals that did not need it because they were assessed visually.

    “One study just on sheep delivered to the grid alone, showed close to a $9 a head improvement in prices per head from using an autodrafter when selling direct.”

    He said using electronic identification could deliver substantial gains in terms of sheep quality at $10 a head if farmers were able to cull reasonable rates.

    But one of the easiest steps toward labour efficiency was use of crutching cradles, with capacity to crutch more than 800/day/person.

    Mr Lean said it could be combined with other operations and there was potential to improve profits by $2-$3/head in higher wool returns because less wool was removed.

    He said cradle crutching deskilled the task to some extent, because the operator did not need to know how to shear, only how to use a handpiece, which meant potentially a larger workforce.

    “A lot of shearers don’t like cradle crutching and a lot of farmers are resistant to it because they think it doesn’t save anything. But time and time again, when I’ve seen people change to cradle crutching, it’s the best thing they’ve done because they take less off out the back and you have better access to the breach and it’s flexible.

    “A lot of people are loyal to their shearing team and don’t want to put their noses out of joint but at the end of the day, you are paying the bills, it’s your livelihood.

    “The best thing the shearing team can do is get a crutching cradle team up and going and do that too.”

    Mr Lean said to attract good staff it was important to have a farm that would attract good talent.

    “As sheep numbers recover it will get worse. In dealing with people looking for a career in agriculture, they are interested in working at places with good facilities and where things are done the smart way.

    “Because of the demand for labour in Australia, wages have gone up in Australia by something like 4pc a year in real terms. If you have good facilities and are labour efficient you can justify those wages.”

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    READER COMMENTS

    J Johnstone NSW.
    15/10/2012 7:34:45 AM

    So, labour costs are really important to reduce costs? Doooohhh.
    Ian Mott
    15/10/2012 3:34:14 PM

    Yep, so get some Peruvian shepherds on $5 an hour and train them well, and work them under Australian conditions (ie hours and holidays etc) See http://en.wikipedia.org/wiki/List _of_countries_by_GDP_(PPP)_per_ca pita But wait, all our major competitors can use guest workers but we can't. For some perverse reason our Union goons, who don't want these jobs anyway, think there is something noble about a 63 year old farmer working his guts out 12/7 to stay afloat in an international market place. As long as it isn't their own pay and conditions at stake they couldn't give a stuff.
    Ian Mott
    16/10/2012 9:35:08 AM

    And when can we expect public servants (or management consultants)to lift their labour productivity by 33%? That is the equivalent of a shift from 7500DSE/man to 10,000DSE/man, and it is only achieved by 20% of the market. The reality is that this so-called benchmark is what is achieved by 20% of farmers in their prime, and under ideal conditions. In the real world people make do with farms they can afford, and throughout their working life, and with and without school fees. A 5000DSE/man (66%) improvement in labour productivity for a 2% return on assets?

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    COMMENTS

    light grey arrow
    A solution looking for a problem.
    light grey arrow
    The return we get as a wage for our Beef production in particular is a minus, let the Chinese
    light grey arrow
    Macdonalds are NOT the biggest beef customer it is the PEOPLE who eat beef that are. If you