DESPITE skyrocketing diesel, steel and urea costs, the much-touted beef trifecta of good seasons, high cattle prices and low interest rates remains in play.
The ongoing strong level of cash flow is now seeing a shift in where investments are being made, with staff retention and attracting new workers the key priority, farm consultants and advisors report.
And as interest rates start to creep up, there is still a strong argument that investing elsewhere in the business to boost longer-term productivity and profitability is money better spent than paying down debt, depending of course on debt levels and rate of return.
ALSO IN BEEF:
There has been no other time in the last quarter of a century that those three major factors have aligned for the beef producer and although cost of production pressures are strong, the trifecta still exists, senior extension officer with the Queensland Department of Agriculture and Fisheries Bob Shepherd said.
Speaking in a BeefConnect webinar, Mr Shepherd said such a 'trifecta' was a rare occurrence, likely to only occur once in a producer's tenure, and a 'business as usual' approach was typically a missed opportunity under these circumstances.
The initial reaction was to pay down debt, but unless that was in a critical state there were probably better options, he said.
However, with improved viability, now was a good time to test the market and consider a change of banker.
Even at 5pc, interest rates were still traditionally low, said farm business consultant John Francis, Agrista in southern NSW.
"It appears people are now moving more into internal investments like exclusion fencing and lime applications - investments that may take five years to break even on but have solid long-term benefits," Mr Francis said.
"Effectively, we have seen the move from fixing leaky troughs to putting in new ones."
Labour
Retaining, and attracting labour, was the number one issue for producers at the moment, Mr Francis said.
In reality, directing the high cattle price money towards labour has been forced, with many corporate beef operations acknowledging they are no longer interviewing potential workers but rather pitching to potential job seekers.
"It's simply the case if you don't invest, you don't have the staff," Mr Francis said.
That has forced producers to think well outside the square and their comfort zone - for example, investing in a social media presence.
"Having not just a safe workplace, but one that people want to be in above others, has become a factor," Mr Francis said.
"It's hard to do return-on-investment analysis for these investments, but if they're not made the opportunity cost is not having staff."
Weighing the options
Diversifying, via other agricultural enterprises on the home property such as irrigated cropping, grains or even horticulture, and even on-station tourism, was an option worth considering, as was off-property investment and selling some equity, according to Mr Shepherd.
Other options include increasing long-term carrying capacity, which could involve agisting other country which is well-priced and good quality at the moment; purchasing more land; upgrading infrastructure (look at the high-tech products available such as virtual fencing and walk-over weighing) and improving genetics and breeder herd efficiency.
Investments for environmental outcomes, such as excluding livestock from badlands, woody weed management and water quality improvements, was another option producers were taking at the moment, Mr Shepherd said.
The best options were seldom clear-cut so accessing expert advice - technical, financial, legal, facilitation and life skills - was important, he said.
"And not all these options are exclusive - look for synergies," he said.
For all the big news in beef, sign up below to receive our Red Meat newsletter.