Corporate Conquest

Corporate Conquest

Posted November 23, 2013 20:21:00

Macquarie Bank's pastoral arm includes a property portfolio boasting some of the nation's most famous merino studs and it's on a quest to breed even more productive and profitable sheep.

Source: Landline | Duration: 14min 39sec

Topics: agribusiness, wool, sheep-production, jerilderie-2716



TIM LEE, REPORTER: It's judgement day at Pooginook Station, a famous name in the world of Merino sheep.

(Rams being checked in cages)

Every ram in the latest mature batch of stud animals is being carefully scrutinised, evaluated and graded.

It's an intensive, exhaustive process, combining computer software and human brainpower.

JOHN SUTHERLAND, "POOGINOCK" NSW: My job is to breed stud rams for sale and provide genetics that can survive and thrive in these varying conditions because really they're replicated across a lot of Australia's climatic zones.

TIM LEE: Pooginook Station, near Jerilderie in southern NSW, lies in the heart of the Riverina - renowned Merino country.

The vast plains suit large frame sheep that grow medium fine wool and heavy fleeces.
Pooginooks hallmark is its fine bloodlines that stem from a century of meticulous breeding.

JOHN SUTHERLAND: These rams that have come into what we call pen one are basically on the short list to be a worker on Pooginook.

They've got to get through another two or three reviews, but at this stage they look pretty smart in that pen.

TIM LEE: The term worker may not seem to confer special status, but it means that from these chosen few will come the rams that will sire and stamp their genetic merits on the next generation of elite sheep. The rigorous scientific approach should ensure that those lambs will be incrementally better than their parents.

JOHN SUTHERLAND: The modern Merino needs to be able to produce saleable meat carcass, preferably at 12 months of age for the male portion. And they also need to produce a fibre that is in demand, so we need a productive wool fibre, so in other words micron wool cut, we need growth for the carcass, we need it to happen in an earlier maturing sheep than they used to be.

(Sheep classer showing a ram)

SHEEP CLASSER: I guess we're looking for a high hindquarter, and you can see this bloke goes uphill, he's actually showing a lot of muscle and a lot of meat in his hindquarter which is very, very desirable.

TIM LEE: Pooginook Station comprises 20,000 hectares, a mix of salt bush country of mostly native perennials. It's at the edge of the Murrumbidgee Irrigation District, so its water entitlement is more than useful during dry spells.

JOHN SUTHERLAND: We actually predominantly use the native pastures and broadacre country to breed our sheep and we use the irrigation with fodder crops, fodder crops for pasture or fodder crops for grazing wheat crops to fill in those gaps in the autumn or in the seedy times in the spring. So it is a balancing act, but we try to make it all work so that we can maximise our profitability and our genetic gain.

TIM LEE: Profitability and genetic gain are foremost in the minds of most Merino producers. Margins for wool growers have remained tight for more than two decades. So most look to grow dual-purpose sheep.

Pooginook annually produces about 1,800 rams; it's what the industry calls a leading parent stud.

JOHN SUTHERLAND: There are three avenues for our sales sheep. One is to the butcher, one would be to the restocker and the other one is a wool producing animal until it ends up being at the butcher at the other end.

TIM LEE: Pooginook Station is also part of a larger corporation. It was the first major property bought by Paraway Pastoral, now one of Australia's largest rural enterprises.

JOCK WHITTLE, PARAWAY PASTORAL: Paraway is the operating company of the Macquarie Pastoral Fund. The Fund was established in 2007 to allow investors to gain exposure to Australian agriculture and the red meat sector in particular. So Paraway operates 17 stations across 3.6 million hectares.

So we run approximately 200,000 head of cattle and 200,000 head of sheep. We run Brahman cattle in our northern Australian assets, we run Angus cattle in northern NSW, and we also have big Merino sheep business across northern and southern NSW.

TIM LEE: The timing for Macquarie Pastoral Fund's foray into agriculture was exquisite. When Clyde Agriculture and Twynam Pastoral, another corporate, decided to sell off their pastoral properties, Macquarie leapt at the chance to buy some of the nation's best rural real estate.

JOCK WHITTLE: Those sort of large-scale assets can often be held by individuals or families for decades, or even centuries, at a time. So to have those quality properties of the scale that we wanted to acquire to come onto the market at the same time as we'd completed our fundraising was very fortunate. But we obviously went forward and were able to acquire those properties and they're obviously a key strength in our portfolio going forward.

TIM LEE: David Taylor and his family sold the property to Paraway five years ago, but David has stayed on as the sheep classer. The stud had long been an industry leader, but corporate ownership has injected new life into it.

DAVID TAYLOR, SHEEP CLASSER: They've been fantastic. To see Paraway putting so much money into the genetics here which is paying off, it is leading us in a new direction, but I think it's probably refining the old, if I may say so. Without getting off the beaten track of the golden objectives that my family had for three generations.

TIM LEE: The sheep yards are new, every animal wears electronic ear tag ID and the latest data-collecting technology allows an affordable means of compiling detailed information about every sheep on an unprecedented scale. From birth, stud sheep are weighed and measured for growth rates and assessed for quality. All the data forms a breeding index.

JOHN SUTHERLAND: We're trying to use blood DNA and parentage on a large scale and it has its challenging moments, but it also has very exciting moments, because within our large genetic pool here at Pooginook we do have some extreme animals that are very productive.

TIM LEE: But breeding larger, faster maturing sheep can be detrimental to the quality of the wool.

SHEEP CLASSER: We want to maintain this nourishment that we have in our wool and the softness. Beautiful deep crimp that we have here. So it's a bit of a juggle because body weight and body size sometimes acts in a different direction to nice crimpy wool.

Blue indicates that he's in the top 5 per cent of this mob. Yearling weight is telling me that he's above the average when he was weighed at 200 days. The greasy fleece weight tells me he's actually plus eight, so he's well over the average for wool cut which is very, very important to us. We're trying to increase this type of nourished wool.

TIM LEE: So despite all the science, the keen eye of the sheep classer in visual assessment remains vital.

SHEEP CLASSER 1: To get that nourishment in the piles is hard to get and you've got it, so don't sell it.


(Sheep classer talking about the sheep to clients)

SHEEP CLASSER 4: You know when you're bringing in a sheep and they haven't had a feed for a while, you see that hollow, they get a little bit of a hollow in on the stomach.

TIM LEE: And in the often secretive world of Merino breeding, Pooginook has taken another bold step. It has begun to hold field days for its clients across southern Australia to help them understand how best to utilise all the data.

JOHN SUTHERLAND: I think also it's about bringing the latest research work and knowledge we've got about managing sheep to be more profitable.

I think that's a terribly important thing, for my business anyway, is that we need to increase our profitability in the Merino industry to continue to be a sustainable industry into the future. Today it's about bringing that information out to our clients and we run four of these across NSW and Victoria.

(Jason Trompf giving presentation to clients)

JASON TROMPF, ANIMAL NUTRITIONIST: And why do people eat lamb? They eat lamb because it tastes good compared to our other competitors and if we push that too far you compromise the eating quality of the product and we lose one of our competitive advantages.

JASON TROMPF: On both the genetic and nutrition side, we have really good scientific information for what you select on, what you manage the animal for, what the outcomes will be and the real challenge is to enable a commercial farmer to improve their own game plan and deliver better results on their farm. And it's translating science like Lifetime Wool that've showed better nutrition of the ewe improves her and her progeny's performance and subtle differences can make big differences to outcomes.

Similar on the genetic side. Subtle differences for performance in given traits can make a big difference to the outcome in the paddock.

TIM LEE: So, back on the station after some long, intensive days in the sheep yards, this year's crop of rams has been finally graded and sorted into five different divisions. The top pen, the elite animals being kept for breeding will get the royal treatment.

The next two grades will go to Pooginook's annual on-farm auction.

(Sound of auctioneer calls)

This year, there were 250 rams on offer. 100 of them were Poll Merinos, reflecting the growing trend towards hornless sheep. And every sale lot was accompanied by its very own detailed production figures. But it was lot 10, a large-framed, horned animal with 19 micron wool that topped the sale.

AUCTIONEER: Done! The Inders family, thank you very much indeed.

TONY INDER, ALLENDALE STUD NSW: We paid $9,000 for him. We thought we might have had to go to $15,000 or better. We've been buying rams here for 14 years and without doubt this is the best sire that I've seen here to purchase. Try and buy a ram here every year to use as sires within our own stud and this is without doubt the best sire that we've purchased here. I'm still a bit surprised that we actually got him to be honest.

His wool's exceptional for a ram of his size. It's a very free-growing wool and he's just a very square sheep. Very, very good sheep.

(Sound of auctioneer calls)

BUYER: I've missed the last two!

AUCTIONEER: Well, have a go! I've got $26,000 here!

TIM LEE: These rams will go to properties across southern Australia and a good many are off to Western Australia.

(Sound of auctioneer calls)

TIM LEE: Once, sheep breeders relied largely on the appearance of a sheep and the feel of its wool. Looks are still important, but veteran auctioneer, Kevin Norris, has seen in recent years a rapid adoption of scientific measurements.

KEVIN NORRIS, LIVESTOCK AUCTIONEER: I think this applies to all stud breeding, be it cattle or sheep. The technology behind the breeding today is being taken into account at a lot greater rate and for a lot greater reasons than it did in the past. Specifics are starting to come into the breeding of rams and in beef cattle. It's another management tool that these stud masters are using to finetune the top quality they're producing.

MICHAEL ELMS, SHEEP CLASSER: You can't deny using science. I use it, visual, subjective and objective; you've got to use the both. You know, whatever tools you can get.

But also, with Paraway being a company ownership, the people in head office, they have to know where we started and where are we now and where will we be in five years time.

TIM LEE: Paraway's approach, naturally enough, has its critics and its sceptics.

JOCK WHITTLE: There's always strong opinions in the wool industry. What we can control and what we focus on is doing the right thing by our clients, improving our performance and improving the performance of our sheep. And we think if we continue to focus on that, then that will serve our pathway forward in the industry.

TIM LEE: But most see Paraway's huge investment as a strong vote of confidence in the future of Merino production.

TONY INDER: When David sold to Macquarie Bank, I was a bit uncertain about its future. One huge thing in its favour, Macquarie Bank generally don't back losers. So the fact that they're in the industry is a huge plus for us, I think it is. I think if they've got that much confidence to invest the money they've invested, it's good for - they're not in it for the short term.

TIM LEE: And that's quite true. The financial analysts and corporate bean counters believe that the bigger picture is a rosy one.

JOCK WHITTLE: I think they're looking at all the demand for these products, the rising affluence of the Asian consumer, there's a general view that they will want to acquire all these products, whether they be animal protein, wool, grains. So a lot of investors want to have exposure to that major structural change that's happening in the global economy.

TIM LEE: All the while, at Pooginook and across Paraway's vast spread of holdings, the quest to produce a better sheep continues apace.

At neighbouring Cooinbil station, Paraway's largest property in NSW, it's shearing time.

(Sound of sheep being sheared)

These stud ewes are some of the 35,000 sheep that run on this 89,000 hectare spread.

JOHN SUTHERLAND: I've tried to concentrate on the things that I can control and the two things I can control are my genetics and the way I actually manage the animals and look after the landscape. It's always going to be up and down with seasons. I think what the trick is to make sure that you make best use of the grass in the good season and minimise your costs in the poorer season. But actually looking after the animal health to me is a key to remaining profitable.

The three things for us that is the most important is fertility, growth and wool production, and I think those three things together are going to be an exciting future for our Merino sheep. They'll be very competitive with other enterprises, with cropping, and with the other terminal and crossbreeding enterprises. So really, for me, it's about breeding a sheep that actually is the most profitable you can do.