THE key message of Dave and Deb Tarca's Veron Park property is that you get what you pay for, and they have learnt this the hard way from personal experience.
Veron Park is a 405-hectare family farming property at Frances in the South East, where the Tarcas run irrigated lucerne and clover for hay, small seeds and stock finishing, in conjunction with prime lamb production.
They have 170 hectares of irrigation, plus 1500 first-cross ewes mated to Poll Dorsets for prime lamb production. Finishing bought-in lambs is now an opportunity enterprise, whereas it used to be their main sheep enterprise.
With the assistance and advice from former Southern Australian Livestock agent, the late Darcy Nolan, the Tarcas changed from buying-in and finishing as many as 4500 lambs a year to now primarily breeding their own lambs.
They have increased their breeding ewes from 600 of variable quality up to 1500 good-quality Border Leicester-Merino ewes.
"We got severely burnt a few years ago when we purchased lambs contracted in summer at $130 based on major buyer and processor predictions of good and rising values in the medium to longer term,'' Mr Tarca said. "After purchase, paying the freight, commission, bank interest and animal health costs, we sold them at $108 when the price dropped significantly. That was a big loss.
"We started our lamb trading by purchasing cheap little ones as these had a much lower purchase price, offering a bigger potential price gain. However, we did not factor-in the time difference in getting these lambs up to processor-grid specifications and the increased costs to do so. Consequently we made very little and our turnover time was too long to get the throughput numbers we needed to make it a consistently profitable exercise."
So they changed from lamb trading as the principal enterprise to breeding more prime lambs and increased their irrigation up to 170ha.
One-quarter of their irrigation is for clover seed production and the rest is in lucerne circles. Forty hectares are for lucerne hay production only, while the balance is cut for hay, or grazed and then shut up for seed production.
Mr Tarca anticipates that they will get five hay cuts this season compared with the normal average of two or three.
While their principal enterprise was lamb trading, their 600-ewe breeding flock, and the rams to service them suffered the same setbacks.
Initially, a low purchase price was an important consideration.
With a relatively small holding the Tarcas have always considered breeding their own first-cross ewes to be a waste of limited resources - and besides, there were plentiful supplies of very good ewes in the area. It was just that historically they had taken the cheaper option and got performance to match with lambing troubles, plus a haphazard and very spread-out lambing.
"In order to get enough lambs we were lambing right through to November, which brought extra problems with flies during summer lamb marking," Mr Tarca said. "Basically we learnt quickly that breeding requires the same principals as trading if you want to be profitable and successful."
He said that to make money by trading, lambs must be well-bred and in good order and have the genetic capacity to finish quickly.
The objective is to have a maximum eight to 12-week finishing period on the irrigation blocks. If they suffer a setback it is a real cost, especially in time needed to recover.
"You need to gross $50 extra above purchase price to cover costs and to give a margin worth pursuing,'' he said. "It cost us about $26 to finish the last lot. Any death does-in $120 to $180 in actual costs and lost income. In breeding we realised we needed better-quality ewes and rams to get a higher quality prime lamb product, so we basically cleaned out and started again."
The Tarcas now mate their 1500 higher-quality ewes in December, lambing in May, their objective being to have their homebred lambs gone before December.
