Boosting Profitability: An Analysis of Production Data and Profit Margins for Sernick Bonsmara Stud Bulls
Production data and profit margins for Sernick Bonsmara stud bulls
The efficiency of production in a feedlot is directly correlated to profitability which enhances sustainability. Various factors have an influence on production and resource efficiency which include growth, feed intake, morbidities, mortalities, and dressing percentage. Ultimately, the conversion of feed into consumable beef is the relevant measurement to be considered from a resource sustainability and food security viewpoint. Feed conversion ratio (FCR) is a general measurement to evaluate the efficiency of feed converted into live weight and ultimately into beef. The ratio is expressed by the kilograms of feed that an animal consumes to gain 1kg of live weight (Oosthuizen, 2016).
Sernick Bonsmara tested over 3 500 bulls for ADG, individual feed intake, and FCR from 1990 to 2022. The objective of the individual performance testing is for genetic efficiency selection. Figure 1 indicates the ADG of the bulls tested over time.
Figure 1: ADG for >3 500 Sernick Bonsmara bulls
Source: Sernick Bonsmara (2022), Stamboek (2022) and own calculations
It is evident from Figure 1 that the ADG increased over time due to selection. The last 10% of the bulls that were tested (2020-2022) had a ADG increase (p<0.05) of 0.22kg compared to the first 10% of the bulls (1990-1993) which is an improvement of 12%. Figure 2 indicates the change in feed intake over time.
Figure 2: Feed intake for >3 500 Sernick Bonsmara bulls
Source: Sernick Bonsmara (2022), Stamboek (2022) and own calculations
Figure 2 indicates a 6% (0.57kg/calf/day) decrease (p<0.05) in feed intake. The feed intake as a percentage of body weight decreased by 0.29% which was from 3.18% to 2.89%. The higher variation in feed intake is evident compared to the variation in ADG due to the higher number value of feed intake vs ADG, to a certain extent. However, the higher variation emphasizes the opportunity for the selection of lower feed intake animals to enhance the FCR. Figure 3 indicates the FCR which represents the combined effect of ADG and feed intake.
Figure 3:FCR for >3 500 Sernick Bonsmara bulls
Source: Sernick Bonsmara (2022), Stamboek (2022) and own calculations
A decrease (p<0.05) in FCR of 1.06kg (19%) is shown in Figure 3. The lower and therefore more efficient FCR is mainly due to the increased ADG but the lower feed intake also contributed. The effect of the improved FCR through the increase in ADG and decrease in feed intake was financially quantified and is presented in Figure 6. The ADG, feed intake, and FCR statistics is an indication of enhanced production, but they should be financially quantified to assess the relevance of the production improvement from an economic point of view. All the variables and prices were held constant in the profit margin calculation except for the ADG, feed intake and consequently the FCR to quantify the financial effect, as indicated in Figure 4.
Figure 4:Profit margin and FCR for groups of Sernick Bonsmara bulls
Source: Sernick Bonsmara (2022), Stamboek (2022) and own calculation
It is evident that the profit margin increased meaningfully with 56% from the first production data (10% of the data, 1990-1993) to the average production data (1990-2022) and an increase of 50% to the last production data (10% of the data, 2020-2022). The increase in profit margin is the result of the improved FCR of 8.6% and 8.1% respectively. It is clear that the improved feed efficiency converted into an increased profit margin which is meaningful and contributes to economic sustainability.
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