Forecasting Stocking Rate back to Optimal

Two game changing grazing management methods

In grazing management, the two most valuable processes increase control of variables and use feedback loops for better decision making. They 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. Providing a greater understanding of how to meter out feed in non-growing seasons or achieve better recovery periods.
• Forecasting our stocking rate puts numbers to scenarios with property specific rules and assumptions. 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 making.

Ideally graziers don’t end up overstocked or understocked to the same extent thereafter because 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 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 the rate carried to allow comparison within and between seasons equitably. Seasonal precipitation causes changes in stocking rates. This gives us a metric for the property that describes the conversion of rainfall into dry matter consumed over time. Which then leads to comparing what the stocking rate is to what it should be, that is the…
• Carrying capacity, which is the property specific optimal stocking rate per 100mm. It identifies the variance between where it is and where it should 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. The concept is referred to as forecast stocking rate to carrying capacity. Flowing through what it will it be versus what it should be under various assumptions.

The game changing value lies in recording your stock numbers. It 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 out from there. Grazing history and rainfall 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. A production business is built on performance which is built on conversion. Our probable predictable future is available to us using the records of the past. Predictions can be made using the same conversions but with current assumptions about the variables that drive conversion performance.In an IT business, performance probably means conversion of marketing efforts, to leads, to sales. 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 have 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 can see this occur most years. Overall, when our current rolling stocking rate is under or over where it should be, there will be an impact in the coming months.In simple terms, when overstocked we are eating future grass. When understocked we are potentially wasting production if we don’t harvest it before perishing. Both these outcomes are evident in the result of forecasting.We cannot set todays stocking rate independently of the last few months decisions (or lack of!). If 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 be a rolling forward of the current position plus or minus assumptions.The further we look into the future, 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 three or six months. Changes dramatically depend 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.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 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 along the way.MaiaGrazing can calculate the benchmark carrying capacity for you. We can also help you calculate it based on approximations of principle. As management improves the performance (aka conversion) of paddocks and property, the benchmark can change.

What Problem Is This Solving… The Why

Planned grazing solves the problem of allocation of stock to feed on hand for the next period. If the property’s graze plans are always up to date, there is a strong feedback loop that helps refine stocking rate to optimal. However, if a portion of the property is not included in the graze planning or planning lapses for a while, the feedback loop breaks. 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 and ascertain the extent to which changing stocking rate is needed.Completing a forecast will allow you to quantify the gap between where stocking rate is and your future goals.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.Using gut instinct or guessing cannot quantify how much variables need to change to achieve the desired outcome. For example,

• How much rain is needed to get back to where we recall was a comfortable stocking rate for keeping optimal ground cover, quality and stock condition.
• How many animals will it take to get back to benchmark is a common method used to correct an overstocked situation. By working out the time it takes to unwind over grazing in the past that is affecting current and short-term capacity.

Experience suggests doing this in your head is likely to compound past decisions that got you into trouble in the first place.A completed forecast takes the property variables and turns it into a scenario everyone can review objectively. This can be a game changer when confronting the stress and angst of feeding animals in drought or pressure to restock early. I can also 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. Example scenarios would be:

• If we need to quantify how to get back to where we are comfortable running if we are under or overstocked.
• 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. However, 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 assumptions.
• 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. Another option is taking on more or less total area in production to address a current problem.

The DataThe process is straight forward. We will decide how long the forecast time period is based on the scenario we are wanting to test. This could be 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 when it results in the stocking rate returning to optimal, regardless of time.Pick a rationale for rainfall per month. Will the current conditions continue, i.e wetter/drier than average or will it continue and return to average? What if it doesn’t rain for two or three months in our growing season worst case scenario? These are the kind of questions we can and should ask and see the implications forThen roll up stocking rate to monthly animal units (DSE, LSU, SAU etc) for the coming months based on deviations from ‘now’ or last year. This is 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.

Spreadsheets (with some complexity) can assist with the often-tricky maths and calculations with multiple dependencies. Provided your numbers are up to date with some history MaiaGrazing can do the calculations for you.

When?:

The Benefits of Forecasting Stocking RateThe benefits of having a plan and a set of numbers cannot be understated. Particularly in testing times of drought, 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’. In turn realistically returning to carrying capacity. 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 drought.
• It takes time to undo past mistakes and the forecast tool reflects that in the results is the reality. Recognising this, changes the mental outlook of stress when you are overstocked. It provides an end in sight from taking action instead of the dilemma of procrastinating.
• The single most common experience is that forecasting like this removes the angst and stress when making business decisions when there is understandable emotional investment in the past. By charting the predictable probable future under agreed assumptions, we deflect the focus from being about emotions to being about numbers … which makes 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. Rather than allowing ourselves to roll with the weather and hope while options disappear.

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.