Forecasting Stocking Rate back to Optimal

Two game changing grazing management methods

The two most valuable processes in grazing management for gaining control of the variables and using feedback loops to make better decisions are setting grazing plans and forecasting stocking rate. The results are game changing and consistent.

The reason is:

  • Planned grazing results in the allocation of stock to paddocks that generally results in greater understanding of how to meter out feed in the non- growing season or achieve better recovery periods when it is
  • Forecasting stocking rate puts numbers to scenarios with rules and assumptions very specific to the property in question. It flows the past into the future without judgement to allow objective decision making. Forecasting removes the personal angst and emotion to greatly simplify difficult decision

The result is that graziers don’t end up overstocked or understocked to the same extent thereafter because it is a process of constant improvement with immediate benefit. This article will explore Forecasting Stocking Rate and graze planning is covered elsewhere.

“We are not trying to predict the future; we are setting our assumptions down and checking how that looks as a sanity checker or to quantify implications of scenarios” is how people describe the process of using a forecast tool for stocking rate. Bart Davidson, MaiaGrazing Ag Consultant

Where does Forecasting stocking rate sit in the context of management processes?

Let’s put grazing management into context for a minute and think about the general progression of management towards doing the basics brilliantly on the way to mastery.

Overall, grazing enterprises will move along a path of management focus that travels from:

  • Recording and improving the accuracy of the Livestock Inventory, i.e. (daily/monthly/annual) head counts per stock class to go to the balance sheet reporting, to
  • Stocking rate today and for the year, i.e. the mouths carried converted into total animal units (and grass consumed) irrespective of the Profit & Loss, usually per Hectare and can be measured per graze, per month, per year to answer the question… how much grass did we yield this 12 month period, to then realising
  • Annualised Stocking rate per 100mm normalises this stocking rate carried so we can compare within and between seasons equitably, since stocking rate is so inextricably linked to seasonal precipitation. This gives us a metric for the property (or parts thereof) that describes the conversion of rainfall into dry matter consumed over time. Which then leads to comparing what the stocking rate is with what it should be, that is the
  • Carrying capacity, which is really just the stocking rate per 100mm this property or land class has demonstrated it should optimally be running at to quantify the variance between where it is and where it should ideally be for the actual season experienced. This then allows the next logical step which is to flow data through into
  • what the Forecast Stocking rate per 100mm will be under business as usual or explicit assumptions about rainfall, stock numbers, or timing of either. This is what is referred to as Forecast stocking rate to carrying capacity which flows through what it will it be versus what it should be under various

This last point is where the real game changing value lies in recording your stock numbers and represents a beautifully simple means of making hard decisions easy in a practical logical manner.

Note, if you don’t know what some or all the terminology above means or how to calculate any of them… don’t worry, stick with the principle to understand the value, and worry about how to work it from there. If you have grazing history and rainfall it can all be flowed through.

Should a Forecast Rely on The Past?

Whilst we might like to, we can’t make decisions about the future without accounting for the past. What we mean by that is that a production business is built on performance which is built on conversion. Our probable predictable future is available to us in the records of the past using the same conversions but with current assumptions about the variables that drive the conversion performance.

In an IT business, performance probably means conversion of marketing efforts to leads to sales, and in a grazing business it means conversion of rainfall into grass into kilos of saleable beef or wool, etc. These are not arbitrary random conversions. Every paddock, soil type, pasture type and Property has a demonstrable capacity to convert precipitation into grass harvested. This is the Carrying Capacity when measured in stocking rate per 100mm of rainfall.

Over time, better paddocks will yield more per unit of rainfall than poorer paddocks with the same rainfall, we accept that as logical because we see it most years. The point is that when our current rolling stocking rate is under of over where it should be for the rainfall that grew the grass consumed so far, there will be an impact in the coming months.

In simple terms, when overstocked we are eating future grass and when understocked we are potentially wasting production if we don’t harvest it before perishing. Both these results are evident in result of Forecasting.

We cannot set todays stocking rate independently of the last few months decisions (or lack of!). ie we have the grass quantity and quality we have today as a result of the past.

In just the same way, we cannot expect the future to play any differently. The future conversion of rainfall to grass consumed will basically be a rolling forward of the current position plus or minus assumptions.

The further into the future we look, the more freedom there is to change it, to take it where we want it to be versus where it is. Hence time matters. We can’t change grass on the farm tomorrow by more than a tiny fraction, but we can change grass available in 3 or 6 months dramatically depending on our decisions between now and then.

Where does Optimal fit into this?

Forecasting stocking rate without rolling the past forward is just hoping and guessing. Forecasting with a benchmark, i.e. the Carrying Capacity, to provide comparison against optimal provides the ultimate sense of direction.

In the same way a Pilot flying from Sydney to Auckland needs to know the rum-line between those two points, it is an imperfect world and the plane will of course end up veering by some amount from the most direct route as a result of weather, unforeseen variables etc. The rum-line, or in our case, the benchmark Carrying Capacity, gives something to aim at and alter course towards along the way when periodically checking in.

Calculating the benchmark carrying capacity is built into a tool like MaiaGrazing or we can help you calculate it based on approximations of principle. Like any destination, the benchmark can change and probably should as management improves the performance (aka conversion) of paddocks and property.

What Problem Is This Solving… The Why

Planned grazing solves the problem of allocation of stock to feed on hand for the next period of time. If graze plans for the whole property are always up to date, there is a strong feedback loop that helps refine stocking rate to optimal, graze by graze, plan by plan. If, however, a portion of the property is not included in the graze planning or planning lapses for a while, the feedback loop breaks, and a quick summary of position is needed to check assumptions. This is where the Forecast fits in, to quickly check scenarios at a high level for the property and quickly ascertain the extent to which changing stocking rate is going to be needed.

Completing a Forecast will allow you to quantify the gap between where stocking rate is and where you want it to be in future months.

Most graziers have a good instinct for what they need to do to run the place optimally. The trouble is that instinct is hard to objectively test and share with others or play around with the variables.

Most importantly, using gut instinct or guessing cannot quantify by how much variables need to change to arrive at the desired outcome of carrying capacity. I.e.,

  • how much rain per month or series of months are needed to get back to where we recall was a comfortable stocking rate for keeping optimal ground cover and quality and stock
  • How many animals for how many months will it take to get back to benchmark is a common method used to correct an overstocked situation, to work out the time it takes to unwind over grazing in the past that is affecting current and short-term

Doing this in your head is not really an option and experience suggests is likely to compound past decisions that got you into trouble in the first place.

Completing a forecast takes the variables for this property and makes it into a scenario everyone at the table can review objectively. This in itself can be a game changing experience when confronting the stress and angst of feeding animals in drought or pressure to restock early or in fact lift confidence in purchasing earlier than others when the good times inevitably return.

The How

The best way to forecast is to approach it with a clear objective for the situation you find yourself in.

  • We are under or overstocked and need to quantify how to get back to where we were comfortable
  • framing a production budget will need an approach based on setting assumptions for production based on long term rainfall. For example, let’s set the budget based on 75% of long-term monthly rainfall such that we can achieve the targeted production levels, but do so knowing it is realistic if current rolling 12-month rainfall is 70-80% of average. If it improves, we will do better but we are setting ourselves to succeed on pessimistic
  • Testing the outcomes of a change in production cycles, for example moving peaks and troughs in demand forward or back in the year, such as calving or weaning, or perhaps taking on more or less total area in production to address a current

The Data

Then the process is fairly straight forward, we will decide how long the forecast time period is based on the scenario we are wanting to test, perhaps three months for a quick check of assumptions coming into a late autumn break, or a 12 month time period when budgeting for the coming Financial Year. Ultimately, I find the best time period to use is that which results in the stocking rate return to optimal, whether that takes 3 months or 12 or more.

Pick a rationale for rainfall per month… will the current conditions continue, i.e wetter/drier than long term average or will it continue like that and return to average. What if it doesn’t rain for two or three months in our growing season worst case scenario? These are all the kind of questions we can and should ask and see the implications for

Roll up stocking rate to monthly animal units (DSE, LSU, SAU etc) for the coming months based on deviations from ‘now’ or last year, based on intended sales, purchases, weaning, agistment in or away etc.

  • It can be as simple as more of the same, no change or as complicated as a change in enterprise cycles arising from a plan to change calving time or moving to smaller / larger maintenance animals or increasing/decreasing area in production.

The maths of this can get tricky because it relies on calculations with multiple dependencies to rolling time, area, stock and rainfall but it can be done with spreadsheets (with some complexity) and it is done for you in MaiaGrazing from a standing start as long as your numbers are up to date with some history.

When: ?

The Benefits of Forecasting Stocking Rate

The value that comes from having a plan, a set of numbers that you built for your property based on its actual past and data cannot be under stated, particularly in testing times of drought or wild market fluctuations and second-guessing stocking rate options.

In short, the primary benefits of forecasting stocking rate are:

  • turning a problem of being under or over stocked into a ‘plan’ back to carrying capacity, over months in a realistic way and not a magic wand. They are only numbers but there is enormous relief to be gained from making tough decisions with numbers not guessing. It changes the dynamic around the table during tough times of
  • It takes time to undo past mistakes and the forecast tool reflects that in the results is the reality. It takes what it takes to undo the past. Recognising this changes the mental outlook of stress when you are overstocked and provides an end in sight from taking action instead of the dilemma of
  • The single most common experience is that forecasting in this way removes the angst and stress around thetable when making business decisions about stock numbers when there is understandable emotional investment in the past. By charting the predictable probable future under agreed assumptions, we deflect the focus from being my opinion or your emotion to being about numbers … which is a world of difference and removes so much stress from family decision making.
  • Forecasting builds a link between the people and the numbers that was previously he said she said. When we link decisions to numbers from the past it builds motivation to do better instead of allowing ourselves to roll with the weather and hope while options
  • Communications with others is just essential, such that others on the team e.g. advisors or the finance manager at the bank can see what we are thinking and what our decisions are based on. Using the methods described above to communicate control over optimal stocking rate gives your lender confidence in you as managers of the assets and

This Tool can be the single biggest improvement to your decision making in grazing life as you know it… that is the experience of others that make it part of business as usual.

 

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