Developing long term relationships between parties of breeders and finishers has been problematic in the livestock industry for years, and this arrangement between Orange and Orbell is worth considering. It endeavours to remove the "winners and losers"issues that have plagued previous relationships in the past, and made many deals more short term, than long term.
The first and important ingredient in such an arrangement is mutual trust by both parties to achieving excellence in the production goals, so a good profit is avaliable to the parties. The Orange and Orbell families have had a good knowledge of each others farming operations for many years, and probably have similar deer farming goals.
This allows each party to concentrate on improving their part of the operation to the benefit of both, and allow them to invest medium to long term in aiming to achieve their goals.
They believe this deal could also be applied to the sheep and cattle industry with similar success. Have you had any experience with breeder/finisher arrangements that you would be keen to share? Your views.
Strengthening the relationship between breeders and finishers of deer would lead to more stable profits for all parties, a South Canterbury deer farmer says. Geraldine deer finisher Kris Orange says improving this relationship could also help remove some of the price volatility around the weaner deer market. He has just finished a 10-month study as part of a Kellogg rural leadership programme where he studied ways this relationship could be strengthened.
The relationship between the two was symbiotic, he said. "Basically it's no good if one link in the chain doesn't make any money reports the Central Farmer. The whole supply chain is at risk if that's the case." The venison price over the past four years had only moved 7 per cent. However the weaner market had seen more price variation. The finisher margin ranged from $150 per animal to $300, and $150-$250 per animal for breeders.
His study saw him design a contract between himself and his breeder, Fairlie farmer Hamish Orbell, that aimed to be as fair as possible between the two parties. Mr Orange has purchased his weaners from Mr Orbell for the past six years. He finishes about 1500 weaners on his 260ha farm near Geraldine and finishes the progeny from his mob of 750 breeding hinds on a separate block near Palmerston.
The difference in his contract is that the payment for the weaner is linked to what is received through the venison schedule. The breeder gets paid by multiplying the venison schedule price when the weaners are bought by 50 per cent and then multiplying the result by the deer's liveweight. The killing date of those weaners is then agreed upon between the two parties and the schedule price at the time of killing is then multiplied by 54 per cent, which is the average carcass yield in the deer industry. The resulting sum is then multiplied by the deer's liveweight. This is what is paid to the finisher.
However, this figure is then subtracted from the original sum paid to the breeder set out in the first equation and the result is added as a top up payment to the breeder in recognition of the schedule lifting between the time the weaners are bought and the time they are killed. If the schedule dropped between the time the weaners were bought and slaughtered a credit would be given to the breeder for the following season.
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