A growing demand for feeder cattle in line with recent feedlot expansions has prompted Mort & Co to diversify their procurement & feeder cattle supply strategies. One such strategy involves forming long term profit share relationships with graziers who have underutilised grass and have the capability to background young cattle from 200-300kg entry weights to feedlot entry weights at 365-480kgs.
The profit share concept will appeal to graziers who have grass or crops available but are faced with a significantly higher capital outlay associated with the current cattle market. These historically high prices potentially pose a greater level of price risk once purchased stock reach saleable weights. It also provides an opportunity for graziers to redirect their available capital to service debt or into other business ventures including off farm opportunities.
Under the profit share model, the capital outlay, sourcing & logistics of the cattle lies with Mort & Co. Once the grazier has grown the cattle by approximately 100 – 150kg liveweight, Mort & Co will arrange transport from the farm to one of Mort & Co’s feedlots. The cattle will enter the feedlot at an average of around 420kg and will then be priced according to Mort & Co’s market reflective grid on the day. Put simply, the producer would receive a large proportion of the profit between the value of the feeder steer to the backgrounder minus normal operational expenses incurred such as freight (to feedlot) and induction. Under this arrangement the producer is responsible for the labour involved in managing the cattle, maintaining infrastructure and providing supplement if required to keep cattle gaining weight. See Table 1 below which details the operational process and the responsibilities of each party.
Mort & Co is seeking expressions of interest from forward thinking producers who are strategically located in reliable performing country who are interested in developing a long term relationships with one of Australia’s largest and most professional feedlot companies.
Key criteria for backgrounders
- Exceptional infrastructure (water, fencing, handling facility);
- B Double access minimum – all weather desired;
- Management – on site;
- Ability to achieve 0.6kg+ live weight gain year round average;
- Willingness to develop long term relationships.