Finch-Hatton compared the economics of cattle station vs sheep stations. Raising sheep was much riskier, but potentially far more profitable. Grass-seed, cattle station costs, sheep stations, case study 1, case study 2, case study 3.
Grass-seed was a great nuisance, especially to sheep:
The whole of the coast country of Queensland is unsuited for sheep, chiefly owing to the prevalence of grass-seed, but it fattens cattle admirably, and it is along the coast-range that most of the cattle-stations in the Colony are situated. Grass-seed is an abomination which appears in Autumn in all the grass on the coast. It forms in bundles of hundreds of seeds, each of which is a hard, black, little weapon, about a third of an inch long, with a sharp barbed point at the business end. When ripe, they shake off the instant anything touches them, and attach themselves to it, and, the point being as fine as a needle, they work their way into any soft substance in a marvellous way, the barb preventing them from ever going backwards. Anyone walking or riding through the long grass in seed-time is certain to get his clothes full of them, and the sharp pricks from their points are most irritating. Life for a sheep in such a country is an impossibility. Their wool becomes so full of seeds that it is perfectly worthless, and eventually the seeds work their way right into the flesh of the sheep, and, of course, when they reach the vital organs, destroy its life. I have seen the unfortunate wretches with their fleeces stuffed so full of grass-seed that they are absolutely incapable of moving, and can only stand still, with their legs wide apart, looking more like a hedgehog on stilts than a sheep. Of course, grass-seed does not affect cattle, which do very well on the coast runs.
The economics of a cattle station:
Cattle-growing is not nearly so profitable as sheep, but, on the other hand, it requires far less capital to start with, and is attended with much less risk. The vast difference between a cattle-station and a sheep-station is this, that whereas the former can be made to pay its own way from the first, the latter requires a heavy outlay before it can be safely stocked at all.
Of course, in proportion as a man lays out money in improving a cattle-station at the first start, so his returns will be quicker, heavier, and more certain. But, if he is unable to do so, he will find that the expenses absolutely necessary to keep the place going are by no means heavy. We will suppose that a squatter puts 5000 head of cattle on to a piece of entirely unimproved country. He ought to get the cattle, and sufficient country to carry 10,000 head, for £20,000. For about £400 he can put up yards, and a weaning-paddock for working the cattle, horseyard, and paddock, and comfortable houses for himself and his men. Another £150 will start him with sufficient horses, and, if he is at all inclined to work himself, two stockmen and a black boy will be quite enough hands to work the cattle. The wages of the two former, at £75 a year, and the black boy at 10s. a week, come to £176 per year, and another £100 a year ought to find them all in rations.
We will suppose that the increase is allowed to accumulate, nothing but fat cattle being sold off the run for the first five years.
During that time the proceeds from sales of fat cattle should be amply sufficient to cover all working expenses, and to enable the squatter to keep on improving his run by fencing, etc., to meet the increasing requirements of his herd.
At the end of five years he should have at least 10,000 head of cattle, and have completed all the improvements necessary for working them.
Allowing a liberal percentage for deaths, his annual increase from 10,000 head would be fully 2500, of which about 800 would be fat cattle.
Supposing him, for the future, to keep his herd at 10,000, and sell the whole of his annual increase, his yearly profits would be as follows:--
|By sale of 800 fat cattle, at £4||£3200|
|By sale of 1500 store cattle, at £1:10s.||2550|
|To working expenses||£1700|
In the above calculation the price of fat cattle is taken at the average price in Queensland for some years past, and the price of store cattle at the lowest possible figure, which is called "boiling-down" price; for when store cattle are perfectly unsaleable, as they sometimes are, it is always possible to clear £1:10s. a head on them by boiling them down for tallow and hides.
The working expenses have been put rather high, and the increase below the average of fair seasons.
Thus, in five years the squatter's original capital of £20,000 will have increased to £40,000, for which he will get a return of £4,000.
Raising sheep was riskier than cattle, but there was the prospect of fabulous profits if all went well:
Sheep-farming in Australia is now a very different thing to what it was twenty or even ten years ago. In those days a man had nothing to do but to go far enough into the interior, and he could take up as much new country as he pleased, paying nothing for it beyond the annual rent to the Crown. He put his sheep on to it, and in a few years, if he had good seasons, he made an enormous fortune, partly from his annual profits, but chiefly from the extraordinary rise in value of his country and stock. But if in the meantime he had two bad seasons, he was probably ruined; for the early settlers did not comprehend the vital importance of laying out capital in storing water upon their runs, to guard against the possibility of a long drought.
... Hundreds of men were ruined by trusting to the natural water upon their runs, while others, of course, who were fortunate enough to have a run of good seasons, made tremendous profits. ... Wool is the staple product of the country, and represents an enormous proportion of the aggregate wealth of the community, and the bulk of the population are either directly or indirectly connected with its growth.
At the present time, there is not the same amount of money to be made at it as there was in the old days, because every mile of country that is worth anything in Victoria, New South Wales, Queensland, and the greater portion of South Australia and the Northern territory, has been taken up; so that instead of getting his country for nothing, the squatter has now to start by paying at least £10 a square mile, even in the back-blocks of Queensland, for, say, a twenty-one years' lease of perfectly bare country, without permanent water, stock, or improvements of any kind.
Case study 1: a sheep property in the Barcoo district of Queensland:
The following are the particulars of a station in the Barcoo district of Queensland, consisting of 800 square miles of country, of which only about 600 are available:--
Bought in 1882 for £200,000, with 135,000 sheep. Out of these there were 62,000 ewes in lamb, from which they got 54,000 lambs the first year.
Clip of wool 1882 (135,000 sheep), 1730 bales values at £35,000. Sold since purchase 30,000 sheep off the run, at £15,000.
In 1883 they shore 190,000 sheep, and including lambs there are now 210,000 sheep on the run. The value of this year's clip is £48,000, and the value of the increase is between £30,000 and £40,000.
Taking the expenses at £15,000 per annum, this leaves a nett profit in two years of at least £113,000, besides which the station has risen greatly in value.
Case study 2: a sheep-station in the Aramac district of Queensland:
The following shows the rise in value and returns of another sheep-station in the Aramac district of Queensland. It consists of about 1000 square miles of country, and was bought in June 1881 for £70,000, together with 41,703 sheep and 2230 cattle on the run.
|Original number of sheep||41,703|
|In all to date (Oct. 1883) they have had||77,327||lambs|
|Deaths and killed for rations to date||12,996|
|Lost travelling on road||216|
|Number at present on the station||157,002|
|Number of sheep at present on station||157,002|
|Number of cattle at present on station||5,610|
In 1882 they shore 93,204 sheep, producing 383,174 pounds of wool, which brought £21,000 in London. Improvements since June 1881 have cost about £18,000. This year, 1883, they will shear 157,000 sheep, the wool from which will be worth £33,000, and the station is now valued at £200,000.
Case study 3: starting a new sheep-station:
We will now consider the case of an outlying piece of country, which has never been stocked with anything but cattle, and which it is proposed to turn into a sheep station.
The following tables of expenditure, income added to paid-up capital, and approximate increase and numbers of sheep, refer to an estimate made by the manager of a leading firm in Melbourne, for forming and stocking a piece of country in thd Burke district of Queensland, about 250 miles from Normanton, a township on the Gulf of Carpentaria. The run consisted of 500 miles of the best description of sheep country, and there were on it 2000 head of cattle, and no improvements of any kind. It was proposed to form a company with a capital of £100,000 to purchase the run and stock it with sheep. The former owners agreed to take £5000 in cash, and £20,000 in paid-up shares for the property.
The accompanying tables show the position of the station at the end of four years. The run is capable, when fully improved, of carrying from 180,000 to 200,000 sheep and would be worth at the end of four years, with the sheep, at least £150,000. In computing the cost of management £100 per annum has been allowed for every thousand sheep, whereas £70 per thousand is allowed to be the average cost; but the country being new, and labouring therefore under some disadvantage for the time being, so much more has been allowed for the cost of management.
The cost of everything has been put at the highest, and the selling price of wool and sheep at the lowest. The calculations have only been made for four years, showing the position of affairs, value of the station and stock; and the returns, if the stock were allowed to increase, and improvements to carry the extra number of sheep were made, would increase wonderfully if allowed to go on. In computing the number of sheep at the end of four years, 2½ per cent, which is usually allowed per annum for losses, has not been taken into consideration, but at the same time the percentage of lambs has been put at only 70 per cent, which is much under the mark in anything like a favourable season; the expense of water to be made in the paddocks has been put at a very high figure, and the fact of there being a good deal of natural water on the run has not been taken into consideration. If sheep were placed on the run at once, and improvements commenced, there can be no doubt that within three years the cost of management, etc., would be at least 20 per cent less than that computed. In allowing for the cost of water to be made the second and third years, a great reduction has been made, as the cost of plant, etc., would not have to be calculated; and experience has shown that, after stocking a run, plenty of water that has not been permanent before becomes so, as the country is trodden in by the stock. Due allowance may therefore be made for a certain amount of natural water lasting permanently.
|ESTIMATE OF EXPENDITURE.|
|Cost of 40,000 ewes, and driving them to station||£40,000 0 0|
|Fencing four paddocks five miles square; fencing to consist of five wires, at £50 per mile||4,000 0 0|
|Dams to be constructed in each paddock||4,000 0 0|
|Woolsheds, hut and yards||3,000 0 0|
|Management, at £100 per 1000 sheep||4,000 0 0|
|Horses, plant and contingencies||2,000 0 0|
|Rams||1,200 0 0|
|£58,200 0 0|
|Cost of fencing paddocks for first year's lambs, say 70 per cent on 28,000 sheep; three paddocks as above||3,000 0 0|
|Dams made in paddocks||2,000 0 0|
|Management, £100 per 1000 sheep, on 68,000 sheep||6,800 0 0|
|£11,800 0 0|
|There would be 54,000 ewes to lamb, which at 70 per cent would be 37,800 lambs, for which fencing would have to be put up, say at a cost of||4,000 0 0|
|Expenditure for water||2,000 0 0|
|Management, 96,000 at £100 per 1000||9,600 0 0|
|£15,600 0 0|
|There would be in all 132,00 sheep on the run by this time, and if it were intended to keep the numbers at this, the cost of management with that amount of sheep at £100 per 1000 would be (though it certainly would not be more than £80 per 1000)||£13,200 0 0|
|CAPITAL AND INCOME during four years expended on the Property.|
|After paying the original owners in shares, it was proposed to call up two-thirds of the remaining capital, which, after deducting £5000 due to the original owners in cash, would leave £48,333:6:8 to commence operations with, the balance to be called up as agreed on.|
|Capital, two-thirds of £80,000, less £5000 paid to original owners||48,333 6 8|
|Clip of 1st year, 40,000 sheep at 4s. nett||8,000 0 0|
|Clip of 2nd year, 68,000 sheep at 4s. nett||13,600 0 0|
|Clip of 3rd year, 96,000 sheep at 4s. nett||19,200 0 0|
|Clip of 4th year, 132,000 sheep at 4s. nett||26,400 0 0|
|Sale of increase, 14,000 wethers, half of first year's increase, at 5s. per head||3,500 0 0|
|£119,033 6 8|
|First year||£58,200 0 0|
|Second year||11,800 0 0|
|Third year||15,600 0 0|
|Fourth year||13,200 0 0|
|£98,800 0 0|
At the end of four years, supposing the number of sheep to be kept at 132,000, the station would be worth at least £150,000, and should return an annual profit of fully £30,000.
Jim Foley || Email me