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June 10, 2022

So, Tom, you're best known as the man behind LambPro. I'd be keen to hear about your background leading up to what is now probably Australia's biggest seed stock business. What happened before that?

I started breeding stud sheep as a 10 year old with Suffolks. We had 6000 wethers and how I started was actually skimming the ewes off the weather's that were misdrafted at shearing. I ended up with about 30 ewes after two years of multiplying them up. Then, Dad said you're only allowed 10 ewes. 

I worked out that stud ewes were going to be more profitable than commercial ewes. So I started a Suffolk stud that then merged to White Suffolks and Polled Dorsets and then eventually maternal composites and Hampshire Downs.  When I left school I didn't have the luxury of going back to a big farm. I love the lamb industry and wanted to get heavily involved. So, when I finished University I sent a CV to all the major lamb processors. Only one got back to me and that was an American company who had just come to Australia. They had a cadetship which basically involves learning every cut in the boning room before you could work your way up. So with my degree I started off at a full quarter table in a boning room and worked my way through and that was an extremely good experience.  After about eight months, that company decided they were going to exit Australia. They said, “You're more than welcome to stay here in the boning room, but we're going back to the States.” That was in 1998 when MLA was starting and I decided rather than go into production, I'd actually apply for the processing job.

I worked in the processing industry doing processing and product innovation with some very dynamic people who I learned a lot from. But really, what that allowed me to do was to have a bird's eye view of the industry and learn a lot about the processing side of things.

Probably the most notable project I managed was ViaScan. Viascan was a meat yield technology. When I started managing that, that was just a few ticks in the backstreets of Bailey in Queensland, playing around with some software. By 2000 that was a fully commercialized product and I then became the marketing manager for Australia and New Zealand for Viascan. It was a great, great role. My job was essentially to do a business plan for every major lamb processor in Australia or New Zealand, by understanding what their key focuses are and how meat yield could work and transform the business.

Certainly I suppose I had a lot of experience in the meat industry and was able to drag all that through into my current role as LambPro, which has bubbled long. In 2001, I decided I had to make a jump, and with the help of my father, bought a small place and really started to fire up my sheep and haven't looked back ever since.

So 2001- that was LambPro then or that was still pre LambPro?

No, we were Sorting Genetics. "Sorting's" the name of our place.

We were Sorting Genetics up until 2005. We decided we wanted a brand that was more prominent in the marketplace. Hence we went with LambPro. And in 2008 we launched and registered the Primeline maternal brand. We really see a need to try and break free of the composite brand. We just thought there's so many composite sheep representing so many different things. We just need a brand. And I suppose we've always had the theory that in the future, sheep would be known as brands, not breeds.

So we launched into that. And I think over time the Primeline maternal breed is slowly getting recognition in the marketplace.

So are all of your sheep brands not specific to any breed? They're whatever genes you need to add to them?

Yeah, certainly the Primeline. With the Primeline we have got a very distinctive type and a very distinctive job description of what we want those ewes to do. We've ewes with a number of different genetics from Australian to New Zealand to try and A. get that type and B. get that job description. We wanted to have good domestic lambs. The biggest markets for our lambs are domestic markets. What we wanted to do is to get certain carcass attributes into all of those sheep as well as obviously all the production attributes and have that repeatable in all the sheep that we sell.

And so just for those who aren't aware of LambPro, just explain the business as it stands today.

So this year we will join 7,200 performance tested ewes, plus about 800 from a progeny test program.

LambPro this year will sell about 2,900 rams, about 1,300 from auction, the rest privately. Those rams go from New England through to southern Tassie through to almost Adelaide. So it's a big eastern coastal spread.  We've got four different breeding programs. We’ve got the Primeline Maternal, we've got the Hampshire Down, which is a boutique terminal program, Poll Dorset and then a hybrid terminal which has Hampshire, Southdown and Dorset in it.

And the Primeline is by far the largest of those?

It is, I think it represents about 68% of our income. We do see a maternal:terminal ratio change with ewe prices. So certainly we've seen a big swing to maternals. But as the maternal carcass traits are improving and the growth has improved, there isn't as much of a compromise as there probably was ten years ago between a terminal and maternal animal. So we really see a maternal becoming an increasingly bigger part. And so our terminals need to do something different. And that's where the Hampshire program came in. It’s really trying to have a high growth terminal sire that offers a point of difference to just our Primeline Maternal Lambs.

And so their point of difference is through eating quality?

Yep. So they have marbling. It's really an extremely high marbling program. We've seen the need… or we saw the opportunity, I suppose, to have a specialist program that was focused on eating quality. And that program's going from strength to strength. We're getting the growth rates now, but we're also able to produce lambs off grass at 6 or 7 IMF by using +2 IMF flock rams, which certainly opens up some opportunities in the marketplace.

And to get that level of accuracy, you've done a fair bit of your own in-house progeny testing?

Yeah, so what we originally tried to do is, work out in our terminal and maternal programs, where they're at. I think the one big thing in our maternal program, 80% of maternal composites that were tested were in the bottom 20% for marbling. We really saw a risk for the whole self replacing meat industry that they were becoming the Brahman of the sheep industry. They were some of the toughest, lowest marbling animals. So from the maternal side, we've made some big inroads in marbling. Actually, we had some really high animals. A lot of that was to be luck more than anything. We’re really trying to calculate carcass data in our maternal lines.

We also have a Dorset's hybrid program with our Hampshires. It's just an annualised program collecting 8 to 10 carcass records per sire. Last year we tested 38 or 40 young rams and tried to generate between 5 to 10 carcass records which all got fed into sheep genetics. So yeah, people say, you don't get paid for IMF. I suppose I take that as a pretty naive approach. Growing up, this district was covered in Hereford cattle. If you have a look inside the cattle industry, there's plenty of breeds who took that approach and said, “we don't get paid for those traits” and they’re now very insignificant breeds in the beef industry. So I thought there was enough background in the beef industry to show what could happen in lamb. And we've certainly not only rectified that, but getting some pretty good results in the actual data.

So does LambPro go beyond seed stock sales? Is there a marketing arm into consumers?

Yeah, there is. So Kinross Station Hampshire Down program... It's almost still in a research phase. We have got an indoor feedlot now which is nearly complete and we have got some partners in the meat retail business. Most of the genetics we're feeding are by known rams. So for us it's actually about collecting huge amounts of carcass data. No one in the sheep industry has been able to guarantee a product with high marbling year in, year out, and I think as we can. I've not seen a product with 6/7/8 IMF that's been able to be delivered 52 weeks a year. The aim of the Kinross Station program is using genetics and nutrition to be able to just do that at a small scale. We're not talking big numbers, we're talking 200 to 300 lambs a week. Once we can get to that weekly, once we can understand the economics, the consumer will certainly look to expand. And I think given our clients produced nearly a million lambs it offers some scale to be able to really up and improve that. We've got some export partners and we've got some domestic partners. Certainly demand is not the problem. There is no shortage of export and domestic markets chasing a high end point of difference. Being able to deliver it week in week out is a challenge and we're well on the way to doing that. Genetics are the backbone of that.

So, by getting genetics and nutrition right, we're very confident we can start to do that on a small scale and then really start to increase that as time goes on.

So the right side versus the wrong side as an extra 2% IMF?

2% IMF. Yeah. And that's the difference. MLA did some really good data looking at IMF and linking that to MSA Score and then linking that to 'willingness to pay data' from consumers. Why do I go to Sydney now and the butcher shops we deal with, well they've got ten beef products over $100 a kilo. There's no lamb in Sydney over $70. Why is that? Why can't we have $140 a kilo cutlets? 

On a 2 to 3 kilo loin that's $210 a carcass from 7% of the carcass.

So we see an extremely exciting ability to add value to a carcass, if we can get that IMF up. We've seen plenty of good evidence in the beef industry with the Angus and Wagyu being able to manipulate price point and I think the sheep industry has got a long way to go. By March or April this year, we hope to be the first product in Australia to retail over $100 a kilo.

So that number you just sort of glazed over… a million lambs. That's quite a significant impact on even an industry as large as Australia's sheep industry. A million lambs is a fair chunk of that. Was that kind of accidental get to that scale or was that always been the plan?

I have a simple view and I'll have the same next year. I'll breed another 5 to 700 rams more than what I did this year, and try to find a home for them. And that's all I've ever done. We just try and make sure our clients are happy, keep those clients and get a few new ones each year and keep growing. Certainly there's no magic number. It's all about breeding a few more and finding a home for them all every year and all of a sudden the numbers can add up over time.

It is difficult to scale seed stock, obviously, because you need significant effort. Running 6000 seed stock sheep is completely different to running 6000 commercial sheep. 

I actually find it easier with 7000 ewes than what I did when I had 800 because I didn't have a system then. I didn't have a lot of the systems. If you're going to get ewes in to draft up into mating groups, doing two and a half thousand isn't that much different to doing 800. So it's very scalable. Really the challenge is actually not the production end, it's actually a client end. Keeping the relationships, keeping the information flowing and really trying to get our clients good information and address their needs as they go. So from a production standpoint. We are finding it easier, if anything.

So I guess one of the things we've chatted about before is you've made a very deliberate focus on not going fine and not taking wool off them, could you just talk us through that?

I am big into specialization and I know there's plenty of people going into dual purpose and I don't necessarily don't think there's an opportunity for them. But we've maintained our specialist meat sheep approach from time to time when wool's not great. You could argue that's not the right option. But what we've seen is by selecting higher muscle, higher fat sheep that don't grow a lot of wool, our stocking rates of our clients are going up significantly. We're probably looking at a sheep that, even though our ewes are heavier than what they were a decade ago, we're confident we can run another two ewes per hectare than what we did ten years ago. Really what our ewes do is in the spring, when feed’s there, they put it on their back so they can lamb in low covers. I look at that focus and I look at the gross margins and, well, let's say we try and put six ewes to the hectare. We’ve got 30 bucks of wool which is $180 hectare running 2 ewes a hectare having three lambs a hectare in this market, you know, that’s $450+. The other thing, by putting wool on the sheep, you have to look at compromises. What are we compromising on, in terms of growth, muscle and everything else. So where we see our clients evolving is to a semi intensive system.

We're seeing more and more people locking ewes up during the autumn and feeding them straw. We're seeing more and more people, I suppose we like to call it systemizing the lamb industry. Our nutritional inputs and clients are becoming very consistent and the way we manage our ewes is becoming very consistent among 300 clients. A lot of what we're doing is videos to try and highlight what good systems and how they operate. Where I see the opportunity is, more ewes per hectare, there are more lambs per hectare and actually higher value lambs going into a branded market that we see is going to be a juggernaut in the next ten years I think the thing with LambPro is that we've been at the front of every wave. I spend a lot of time trying to look at where our client is.

In the last three or four years plenty of people said marbling is a waste of time, we don't get paid for it and we're starting to see some changes. You have to remember, the Wagyu industry in Australia is nearly a $1,000,000,000 industry. The Angus industry is probably a 3 to $4 billion industry. The Lamb industry you know, we just haven't got that brand sophistication and I think with provenance, with the world markets, it’s where they're going. We see that's where it's going to be.

I do feel once we do see one high end branded product into the mainstream marketplace, you'll see a catalyst for change, like we saw in beef and you'll see plenty of people start to control genetics and feed to produce large amounts of lambs.

Yeah exactly. And I guess just quickly covering off why haven't gone the other options and no wool?

Certainly there's been some depressed markets. Yes, shearing is a $2 to $3 loss in the current market. But however, when you look at per hectare, some of these flocks are angling up to $1500 to $2000 a hectare. That small cost of shearing is then insignificant. You look at our ewe lamb sales, we've just offered 20,000 client ewe lambs that have averaged $300. That's big returns- that’s nearly $100 over the generic composite ewe lambs. So really I'm very comfortable with our breeding strategy, more importantly, I'm very comfortable about how the market for breeding ewes, store lambs and finished lambs is receiving the product. And I'm probably hesitant to change too much. We're on what I'd call a winning formula. We just want to get our clients further ahead and properly prepare them for a branded segmented market we see happening between now and say, 2030.  And as I keep saying to my clients, the rams they purchase this year will still have daughters in the system in 2029, 2030. We see that market being branded/segmented. We see objective measurement in eating quality and meat yield. So it's that constant positioning of our clients of saying where they're going to be in ten years.

I think that's a really great point about they're still there in 2030. We've got people who will “buy cheap rams from time to time” or just get rams to get your ewe pregnant. And thinking it just happened one year.

But the impact of that decision is such a long term imposition on a business. Without making good genetic decisions, it can hang around a long time. And that's why we keep talking about that ten year window, because that's the kind of window you are impacting every time you roll to a ram sale to get some new genetics.

Yeah, 100%. I think the other thing is within that client base, people are excited to be the change as well. People know farming's a great, great career and people like it. But I do find by offering new and interesting pathways for clients, it keeps them mentally fresh, keeps them passionate and keeps them inspired. Our client base aren't all like this, but a lot of them are happy to invest in genetics and position themselves. And a lot of them are getting some really good strategies to try and value add those genetics more and more. Having ewes with breeding indexes in sales now, you know, little things like that. We're seeing a total culture change in the way our clients buy genetics. We just love some of those blokes coming in the morning to chat about figures. 

These clients are very educated. We see that at our sale, we've seen a massive change in the culture and also I suppose in where their direction is- It is a buy in with our direction. Not every lamb producer has that same buy-in. It's just having that collective goal as a client base of where you want to be in ten years.

One of the most...not unique to you. but is unique at your scale I think… to offer ram lambs rather than the traditional 12 to 15 month old ram. Did that take a bit of getting over the line with the clients? Or that was just the way you've always done it?

We started doing that in 2008. We were the first people to have a ram lamb sale. Funnily enough, in the early years we actually offered old rams and young rams, the ram lambs are always making more money than the old rams because all of a sudden people were chasing genetics and once people understood, we started to see that resistance go away. And don't get me wrong, there's probably a lot of people who don't buy rams off us because they're ram lambs. But if you look at our data, we'll have less breakdowns in our ram lambs than we do at mature rams. What it also does, is it puts a lot of pressure on maturity patterns. You won't see a ram lamb in our sale ring at 4 to 5 months of age that lacks fat, lacks muscle. They just don't finish and people can see it. If we let that ram to 15 months of age, he'd probably fill out and look fine.

So what it's probably done is getting that characteristic carcass. Us selecting all our rams at four months of age has changed our sheep because we're not worried about how they look at 15 months. We're worried about 4 to 5 months. So I think it's been positive. My saying has always been the last ten years, “the market talks”.

Yeah, definitely. I think the first time we ever interacted was in 2006, I think, when I was doing my PhD. You were already very interested in positive fats in maternal sheep. How has that evolved over time? And is that still part of LambPro's focus?

Well, I think going back to some of the work with Nick Linden at Rutherglen in 2001, we started doing a lot of feed conversion testing. Really, what it came down to was that the super lean sheep converted better. There's that simple recipe that people say, that's the Holy Grail… “How many kilos of food does it takes for a kilogram of lamb?”

The Australian production system is different. The ewe consumes most of the dry matter in the lamb system. With extremely variable systems, the need to put down feed on their back when feed's abundant and draw off of that when feed isn't, is the most important thing a sheep can do. Our clients say our sheep require less grain than the traditional merino. Why? Because if they've packed it on and they can draw down on that. Now the biggest fault in our sheep, and I'm really happy to admit, is they can become obese. They actually store too much if you run our sheep understocked. Growth drives appetite and as we've driven up our growth, they're hungrier.

When we have a client that days, “Your ewes are getting too fat”, our simple answer is put one next to it. People continually come to us and say, your ewes are getting too fat, we just tell them to up the stocking rate. Our top 5% of profitable producers don't ever complain about ewes being too fat because their stocking rates are probably 1.2 ewes per hectare per 100 mils of rainfall. It's an interesting thing, the way we've evolved it, but it is a double edged sword. We build these high growth, early maturing sheep that will just eat at huge amounts when feed is there. They put on their back and then they can live on the smell of an oily rag by mobilizing energy in the form of fat and get through those autumns. That's a beautiful thing. Our feed costs are going down all the time, and it's nothing to do with weight.  People often talk about ewe weights. We talk about composition of weight. If there is one term we'd like to use, it’s lean body weight, not actual body weight, because a lot of the actual body weight measures actually take away what ewes are storing.

So, a big culture change, and big lessons for our clients and how to run them. But the optimum for the sheep is to be run hard, which goes with production per Ha. New Zealand land prices are going pretty hard. But Australia's land prices have doubled in the last four years and making a return on investment just becomes a lot harder. So, we see sheep that can be run at higher stocking rates and not have any compromise on growth rate and lambing percentage

Yeah, excellent. And that I agree wholeheartedly with. Finding those sheep that actually put it down fat when it's there and maintain when it's not is such an important thing for the systems that we need to run sheep in.

I think the biggest testament to our client base was in the New South Wales drought the last two years. Our clients didn’t lose their numbers. I'd say 80 to 90% of our clients didn't change their ewe numbers. Now they're coming out selling these $400 ewe lambs so they've come out of this drought swinging. There's real benefits and and we see so many of those areas were decimated with those traditional Merinos that need a lot of feed to produce not a lot. The numbers were decimated. Where as our clients weren't. They'd keep their numbers and have come out swinging and are back into full production.

Yeah I guess there's a trend in the beef industry, and it’s probably much stronger in New Zealand than Australia. But the mature weight thing is certainly bandied around a lot and I think as we have discussed before that you have to be really careful that we're not just inadvertently selecting for poor doing animals that are actually skinny and therefore have a low joining weight. It's a careful thing to manage, mature weight.

Yes, certainly lean body weight for us is really, really important. We've seen some sheep that it's high performing and the ASBV weights are down, but they're down because they're lean. We can run less of those. A ewe with -1.5 of fat, with 11 of ewe weight, is not much good to us we can't run enough of them. you know we'd rather a +17 Adult ewe weight asbv with 0.5 fat that we can run a lot more per hectare and feed less.

That's a really important distinction. So, Tom, what's the future of the LambPro? Is it just another 500 every year or..?

We always want to look to see where the next change is. We'll never stop evolving. There'll be a lot more focus on the meat industry in the next five years. We do see all our products aligning themselves with an eating quality focus and really probably maintaining that trajectory. We're not trying to take over the world. There's probably around 70,000 rams sold in Australia right now and we'll just keep breeding a few more.  The main thing is to try to keep clients happy and content and that'll allow us to grow and vice versa. 

So yeah, I think the future’s exciting. With some of the technologies coming out really coming home to roost. I think probably the biggest change we've seen in the sheep industry is a commercial evolution of ideas. We're seeing that traditionalist generation change. Those farms are getting swallowed up not only by corporates, but I'd probably say the rise of the family corporates.We're seeing the market becoming a lot more sophisticated in their genetics than what they were. 

So I can't see a change in the trajectory. All the things we have talked about for 15 years are just becoming more and more prominent. And I think the Lamb industry post-COVID will come out swinging.

We haven't got the competition worldwide. All those same things that make our lamb industry so good, increase access to the EU hopefully with Brexit and also some of the some of the market developments I reckon. Know I couldn't be more excited for the next 5 to 10 years.

And I couldn't agree more, we're in the right game. Agriculture and sheep specifically.

Dr Mark Ferguson
Article by:
Dr Mark Ferguson

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