Backgrounding beef for benefit

Page last updated: Wednesday, 2 October 2019 - 2:08pm

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The Department of Primary Industries and Regional Development (DPIRD)'s Northern Beef project collaborated with industry groups to evaluate returns from the value-added beef method of backgrounding cattle.

Backgrounding in Western Australia's agricultural region improves marketing and finishing opportunities, providing improved access to live export markets and provides opportunities for grain producers in the south of the state to feedlot cattle for entry into southern domestic processors.

Q: What is backgrounding?

A: Backgrounding is a stage post weaning where animals can be value-added, by growing them out to a heavier weight and higher condition score to target a diversity of higher-value market options. It is the process of grouping, growing and acclimatising animals in preparation for a particular purpose or market.

Q: What are the benefits of agricultural region backgrounding?

A: The northern rangelands and agricultural region production systems can be complementary. The mustering season in the northern rangelands coincides with the agricultural region growing season from May to November. Backgrounding in WA's agricultural region improves marketing and finishing opportunities, providing improved access to live export markets and provides opportunities for grain producers in the south of the state to feedlot cattle for entry into southern domestic processors. Southern backgrounding systems can reduce environmental risk of drought in the northern rangelands by providing access to finishing systems in alternative geographical locations.

Q: Why would producers in WA's northern rangelands want to background cattle?

A: Retaining ownership of weaners and paying a fee for finishing can increase returns on weaned cattle if markets of higher value are accessed through backgrounding. For instance, feeder cattle could be raised to heavier weights for slaughter ready markets. If higher value markets are not available, producers have the potential to increase overall pastoral lease returns by increasing breeding productivity. This can be achieved by replacing weaners with breeding units on the pastoral lease, improving the body condition and subsequently the fertility of breeding units through early weaning and reducing mortality by removing young weaners from the rangelands.

Q: Backgrounding has been around for years, so why model backgrounding now?

A: New and emerging markets have different supply chain demands and delivery time (scheduling) and consistency of specification have become more important. For example, the current live cattle export protocol for slaughter cattle to China requires cattle to be processed within 14 days of delivery. In order to maintain the profitability of a processing facility in China, a regular, year round supply of slaughter ready cattle at a consistent specification is required. Under current China health protocols, in-country restrictions deter switching between imported and domestic cattle.

To access this market, WA supply chains will be required to fit a 14 day shipping schedule and provide cattle that meet the correct specification. Backgrounding could be employed as a business model to accumulate and deliver consistent specifications of live cattle and access diverse live export markets, in addition to the domestic market.

Q: What are the developing market options?

A: New market opportunities are emerging for branded rangelands grass-fed boxed beef and new live export markets, including China, Thailand, Vietnam, the Middle East and South East Asia (Cambodia). These emergent markets may have different specification requirements and backgrounding could offer alternative market options for pastoralists.

Q: What types of cattle perform best in a backgrounding scenario?

A: It is generally accepted that large framed animals perform best in a feeding situation, with steers outperforming heifers in most cases. Genetics, quality of feed and nutrition ultimately determine how well an animal performs.

Q: What makes a successful backgrounding relationship?

A: Trust, collaboration and frequent communication between pastoralists and their backgrounders is essential to establish a successful business relationship and build a long term, stable pathway to market.

Q: Can I guarantee a sale of cattle before committing to backgrounding?

A: Various domestic supply chains offer aggregation and supply arrangements based on a product specification. Benefits of these arrangements include delivery scheduling and target end markets. New and emerging markets are looking at new ways to secure cattle supply.

Q: What pricing premiums could I access using backgrounding to finish cattle at different times of the year?

A: Market prices fluctuate throughout the year depending on supply and demand. The Darwin light steer market has been on average AUD$0.40 higher during the period from October to February than in July over the last four years. The last three years out of four have had a positive price differential.

Darwin light steer prices
Figure 1 Darwin light steer price movements July 2012-March 2016 (Meat and Livestock Australia 2016)

Q: How long should I background for?

A: Backgrounding timeframes depend on the location of cattle and the cost and quality of available feed. A feed budget and intended market should be identified before entering a cattle backgrounding arrangement. Depending on pasture types and feed quality, a 150-200kg weaner backgrounded in the agricultural region from the calendar month of May could be grown to 340kg in about six months.

Q: What will backgrounding cost and what are the returns?

A: Backgrounding returns should be evaluated in terms of a total operation, including turn-off and production improvements. Backgrounding arrangements may vary depending on the level of risk the backgrounding provider and the pastoralist are willing to negotiate and agree on. For example, the pastoralist may retain the risk of daily weight gain with a fixed daily agistment fee, but retain the margin of high performing cattle. Fee per kilogram of weight gain transfers the performance risk to the backgrounding provider, of which the backgrounding fee would be greater.

Q: What tools are available to help me decide the best option?

A: The Department of Primary Industries and Regional Development's (DPIRD) northern beef activities and other projects are developing tools to enable pastoralists and backgrounders to better understand the cost and margin relationship of each industry segment. These prefeasibility tools can be used to assess southern agricultural backgrounding options, northern irrigation options, northern aggregation and feedlot options.

Q: Can I background in the northern rangelands?

A: The full benefit of backgrounding can be achieved when young weaners maintain growth rates on a 'rising plane' of nutrition to maximise conversion rates and eating quality. New investment in irrigated agriculture is facilitating access to winter feed options which have the potential to be used for backgrounding. Each backgrounding proposition is unique and should be assessed in terms of freight, induction costs and cost of agistment, compared to expected weight gains of backgrounded cattle and final end market location.

Q: Would I be better off installing a pivot than sending my cattle for backgrounding?

A: DPIRD is undertaking baseline economic analysis into the productivity of irrigated agriculture in the Pilbara and Kimberley regions. Consideration should be given to the cost of water abstraction, depth of water, sustainability of water supply, the preferable soil types for irrigated agriculture and forage crops to be grown. If a pastoral cattle station is located where groundwater is deep, returns may be maximised through backgrounding in alternative locations.

Contact information

Mark Ritchie
+61 (0)8 9780 6263