Fodder crop gross margins
Gross margin budgets were prepared to evaluate the economic performance of mixed annual fodder crops used for grazing or dual-purpose (graze and grain) production.
The purpose of these gross margin budgets is to provide producers with a planning tool to evaluate economic returns under different strategies.
These budgets draw from several sources including the 2022-2025 Mixed Annual Fodder Crop Project research trials, producer case studies, and expert opinion from NSW DPIRD staff and the project reference group, a committee of producers and farm advisors from across NSW.
The degree to which these budgets reflect actual future returns will be influenced not only by general factors common to all farms, such as prices and seasonal conditions, but also by the individual farm characteristics, such as soil type, crop rotation, pasture quality and management.
It is strongly recommended that the budgets be used as a GUIDE ONLY and should be changed to take account of movements in commodity prices, changes in seasonal conditions and individual farm characteristics.
In this context, "graze & grain" refers to mixed species crops managed for both early grazing and subsequent grain harvest. Graze only crops are managed to maximise forage utilisation without the need to protect grain yield.
Key assumptions across generic gross margins
The budgets only apply for the fodder or graze and grain crop time period, and have used a trading lamb or steer enterprise to account for the grazing benefits for the crop time period.
A consistent set of assumptions were used to prepare the budgets, covering agronomy, livestock and economic values. Sensitivity tables have been used to test the impact of key variables.
Calculations are based on an average starting liveweight for all animals in the mob or herd which results in all animals having the same sale weight and value. This method could overstate potential income, since in practice, livestock performance is variable, resulting in different sale lots at different weights and thus prices.
Key economic assumptions include:
- All budgets are prepared on an ex-GST basis.
- Livestock price information from 2025 from the MLA Market Database was used, prices will likely change in future years.
- A purchase price is applied to all livestock. In cases where stock is bred on-farm, the purchase price could be thought of as an opportunity cost. This allows producers to evaluate the value added by grazing the livestock on these fodder crops instead of selling them earlier.
- Allowance was made for vaccines, drenches and supplementary licks, as well as transport and selling costs.
- Labour is not included. This is usually accounted for at either an enterprise level or a whole farm budget level. However, producers should consider that labour requirements can differ substantially between enterprises, particularly where rotational grazing management or specialist machinery is required.
- Additional benefits, such as spring grazing breeding stock, or hay production, are not included but may be relevant to some operations. For example, brassica-legume mixes without a cereal or grass may provide a disease break in a cereal cropping system.
Key agronomy and management assumptions include:
- Weed control is assumed to have been conducted prior to sowing to minimise early competition and ensure successful crop establishment. This includes the use of fallow herbicides, where applicable, to reduce the early weed burden and conserve soil moisture. A pre-sowing herbicide mix is included in the budget as an example; however, the specific products used by you will depend on your paddock history, expected weed spectrum, and the pasture/cropping rotation.
- Sowing is assumed to occur in February or March into sufficient moisture and a suitable seed bed allowing for good establishment of all species prior to grazing.
- Seed is assumed to be of good quality and pre-treated to prevent disease.
- Optimal grazing management is assumed for the purpose of the enterprise, e.g. rotational or strip grazing to reduce spoilage, maximise regrowth, and extend the productive life of the fodder crop. Overgrazing is avoided to preserve grain recovery and soil structure.
- Stocking rates are assumed to be matched to expected growth potential of the fodder crop, preventing over- or underutilisation.
- Where grain recovery is part of the system it is assumed that grazing will cease in July to allow plants to recover adequately and complete their reproductive phase. Grain recovery was assumed to be 4 t/ha for wheat sown alone at 70 kg/ha, and 2.5 t/ha for wheat sown with a mix at 40 kg/ha.
- Topdressing (urea) is included in grain recovery budgets, reflecting common practice to support grain production post-grazing.
- An end of season knockdown herbicide is costed to terminate the fodder crop effectively and manage weed set, but the specific product or practice will vary depending on your situation and plans for the paddock in subsequent years. Consult an agronomist to select the most appropriate herbicide strategy. To minimise the risk of herbicide resistance, rotate herbicide groups and integrate diverse weed management tactics.
- In-crop fungicides and insecticides for crops being taken through to grain have not been included in the budget. These should be considered based on crop susceptibility and seasonal pest and disease pressure. Always check the resistance ratings of cultivars sown as to whether you need to allow for any such costs.
Key assumptions for lamb gross margins
- First cross lambs, purchased at 30 kg/head liveweight for $82.93/head, based on MLA Light Lamb Indicator prices https://www.mla.com.au/prices-markets/sheep/lightlamb/
- 1% mortality rate, based on the assumptions of:
- young healthy stock are treated with vaccine and drench to prevent disease and parasite load,
- stock are provided with lick or supplement for mineral balance, and
- sufficient shelter is available during cold and inclement weather.
- Crutching included in variable costs
- Livestock selling cost of 6.5% (agents fees, yard dues, transaction levy)
- Stocking rate 22 lambs/ha
- Lambs weight gain 300 g/head/day
- Grazing days
- Northern NSW mix, grazing only – 100 days
- Northern NSW oats, grazing only – 75 days
- Southern NSW mix, grazing only – 90 days
- Southern NSW, graze and grain mix – 60 days
- Southern NSW graze and grain wheat – 42 days
Key assumptions for cattle gross margins
- We have not specified breed or accounted for genetics/hybrid vigour, the sensitivity table on weight gains addresses variability.
- Yearling steers, purchased at 270 kg/head liveweight for $1,068/head based on MLA feeder steer indicator prices https://www.mla.com.au/prices-markets/cattle/feedersteer/
- Sowing is into sufficient moisture for adequate growth and root anchorage before grazing to prevent cattle tearing plants out of the ground when grazing.
- 1% mortality rate, based on the assumptions of:
- young healthy stock are treated with vaccine and drench to prevent disease and parasite load,
- stock are provided with lick or supplement for mineral balance, and
- sufficient shelter is available during cold and inclement weather.
- Stocking rate 2 steers/ha
- Weight gain 1.4 kg/head/day
- Grazing days
- Northern NSW mix, grazing only – 100 days
- Southern NSW graze and grain mix – 75 days
General analysis
The gross margin figures estimate the potential performance per hectare of different annual fodder crop options, based on assumptions on input costs, grazing days, animal performance, crop yield (where applicable) and commodity prices. As stated above, these results are best used as a guide to assess which options may offer the best returns under typical conditions.
The gross margin results are sensitive to several key parameters, particularly the difference between the livestock purchase and sale prices, weight gain per day, stocking rates, crop yield and prices, and the number of grazing days assumed.
- For the northern NSW budgets for lambs, the assumed longer grazing period on the mixed fodder crop (100 days) as opposed to the single species oats (75 days) resulted in a higher gross margin due to heavier lamb weights at sale. For producers in suitable environments this indicates that diversifying the fodder crop using appropriate species and management could deliver moderate profitability gains.
- For the southern NSW budgets for lambs, the graze and grain mix with wheat returned a slightly higher gross margin than single species wheat, due to an assumed longer grazing period, which added more value than the assumed grain yield. While the difference is modest, it demonstrates that a well-managed mixed crop can perform at least as well as a traditional cereal option, with the added potential for benefits such as improved soil health, greater flexibility in dry seasons, or reduced weed pressure. This reinforces the value of considering mixed-species fodder crops as a viable alternative within graze and grain systems.
- The highest gross margins were for lambs on a mix of oats and other species without grain recovery, due to the longer grazing period resulting in heavier lambs than the other gross margins.
The differences in gross margins between cattle and sheep reflect the different stocking rates, weight gain assumed, typical turnoff periods, and relative commodity prices. A hard conclusion should not be drawn that lambs will always outperform cattle. It does highlight the importance of matching the fodder crop used to the class of livestock and ensuring effective management of stocking rates and grazing.
While these gross margin budgets offer a useful guide, they are based on assumed values and in some cases a single season of data. Livestock prices, liveweight gain, management and seasonal conditions can significantly alter outcomes. Therefore, these gross margins are best used to test what-if scenarios (e.g. different stocking rates or weight gains) and identify management areas that could be refined to improve returns.
Further Information
NSW DPIRD - Livestock gross margin budgets
https://www.dpi.nsw.gov.au/agriculture/budgets/livestock
MLA – Prices & Markets
https://www.mla.com.au/prices-markets/
NSW DPIRD – Weekly Commodity Report
