SHEEP have consistently outperformed cattle in gross margin terms across Queensland in recent years.

The startling finding has been revealed in ongoing comparisons of a range of livestock enterprises in Queensland by the Department of Primary Industries.

The analysis reveals all types of sheep enterprises, from pure Merinos to prime lambs, have routinely generated better gross margins per dry sheep equivalent (DSE) than cattle.

The figures are borne out of a DPI&F monitoring program which has tracked and compared the gross margins of 10 different types of livestock enterprises in Queensland over the past four years.

The enterprises include a self replacing cattle herd, 19 and 21 micron Merino flocks, first and second cross prime lamb operations, boer goat herds and recently introduced breeds such as Dorpers, Damaras, Dohnes and SAMMs.

The latest findings from four years of monitoring are to be detailed in a presentation by DPI&F sheep extension officer Lloyd Dunlop to a Leading Sheep field day at St George recently.

The rampaging strength of the sheepmeat market has been the main reason for the superior performance of sheep operations, including Merinos.

Despite another run of lean wool prices, purebred Merino operations are currently averaging gross margin returns of $10-$12/DSE, which compares with $8-$10/DSE in a self-replacing cattle herd.

It is estimated between 45percent to 65pc of the returns now achieved by Merino enterprises are drawn from lamb and sheep sales.

The figures defy a general perception created by the storming cattle market and the ongoing spread of cattle-only operations into former sheep country that the sheep industry in Queensland is a spent force.

Since 1964, Queensland’s sheep flock has declined from 24 million head to an estimated four million today. More than 80pc of country that once ran sheep now runs cattle.

But the DPI’s monitoring suggests that, despite the recent powerhouse strength of the cattle market, many cattlemen could still have achieved better financial returns had they run sheep.

Of the sheep enterprises measured, second cross prime lambs or prime lambs from commercial flocks of British breed origins (eg Coolalee, Poll Dorset or White Suffolk) sold to slaughter have consistently been the star performers, routinely generating gross margins of $18 to $20 per DSE.

Sheep meat prices began rising about one week after the last bullet was fired in the Merino culling program that followed the wool floor price collapse in 1992, and tended upwards to a peak in 2002.

Despite coming back by about 80c/kg since then, prime lamb prices were still bubbling along at $3.20-$3.30/kg, a level which looked very sustainable.

Mr Dunlop said meat sheep offered a “cattle-type” operation to sheep people. “The best performer is second cross over the hooks lamb, or even a Coolalee, which are being produced around Barcaldine and Muttaburra,” Mr Dunlop said.

“Producers can either send them to slaughter, or in dry years when they can’t finish them, they can turn them off at 20kg-25kg as F1 feeder lambs and still make better gross margins than the 21 micron Merino.”

By comparison, wool prices had to move from the current level in the 500-600c/kg clean range to 800-900c/kg clean for the benchmark 21 micron Merino to match the $18/DSE that commercial prime lambs operations were achieving.

The biggest improvers among the enterprises have been the dual purpose meat and wool breeds, Dohnes and SAMMS, which have benefited from a decision in June by southern meatworks to accept progeny from both breeds as prime lambs and pay higher prices accordingly.

Until that decision was made, gross margins for the two breeds were tracking at about $10/DSE, but the increased value of their progeny had now generated overall gross margins of $15/DSE.

“Dohnes and SAMMs were seriously adversely affected prior to that decision being made because their wool cuts were below 21 micron Merinos and the wool prices were the same or worse, and they were all buying very dear rams which really cruelled their gross margins,” Mr Dunlop said.

“Now they have got prime lamb values in their prices, and their good reproduction rates over Merinos multiply those good prices even further.”

The performance of Boer goat enterprises (which includes Boer/feral goat crosses) had also improved.

One year ago, these enterprises were ranked behind Merinos and cattle, but a move by processors to lift the price for heavier goats had boosted returns for producers turning off cast-for-age and adult goats and in the process lifted goat returns above 21 micron Merinos.

At a glance

Gross margins for all sheep enterprises have outperformed cattle in Qld in recent years.

Despite poor wool prices, high sheepmeat returns push Merinos above cattle.

Second cross prime lambs are the best performers in Queensland livestock paddocks.

This article is from the Queensland Country Life of Thursday 17 November.