An analysis of the risks and benefits of beef intensification


  • Graeme Ogle
  • Philip Tither



Dairy beef enterprises are an intensification option for traditional sheep and beef businesses. Intensification largely refers to lifting soil fertility, the establishment of internal fencing and associated water supply, so that forage can be allocated with increasing precision. This precision enables higher stocking rates as a result of increasing pasture production, pasture quality, and intake leading to greater production of beef. Two beef finishing systems were compared; one a traditional system and the other a Technosystem. Using average parameter analyses, intensification was shown to pay at market returns of $2.50/kg of carcass weight under the production assumptions we used. The Technosystem showed significant returns on investment lifting the return on total capital invested in the farm business from 4.9% in a traditional system to 8%. We used two software programs; RANGEPACK HerdEcon and Stockpolâ„¢ to assess the risks a farmer would face when converting to a Technosystem. The two risks assessed were the variable climate of the East Coast and market prices. While these parameters vary considerably, the probability of doing better than the traditional system is high (84.7%). This declined rapidly if final stocking rates were less than 4 bulls per hectare with the probability of doing better reducing to 58% at 3.5 bulls per hectare. We also showed that the variability in cash surpluses is reduced by development with the coeffiecient of variation for the traditional system at 126% compared with the Technosystem of 95%. Variability does have a moderate effect on reducing overall profitability (13.4%), most of which (9.3%) is caused by markets rather than climate. Our conclusion is that beef intensification provides a reliable means of increasing net worth and cash surpluses. Keywords: beef intensification, bull finishing, climatic variability, financial analysis, price variability, risk, Technosystems