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Optimal Herd Size for Commercial Viability

The KAL and BKB projections show that small herds are unlikely to provide a sustainable economic return for commercial operations. This is supported by a broader analysis on optimal herd size for commercial viability.

The analysis indicated that the internal rate of return (IRR) rose sharply from 4% to 12%, as herd size increased from 100 to 600 breeders, and then remained flat until herd size approached 2,000 breeders and IRR reached 13%. Net present value (NPV) at year 10 increased in a linear fashion from 100 breeders to 1,500 breeders, but then increased sharply at 2,000 head.

The efficiency gains that are achieved by larger herds particularly impact NPV, a major factor to be considered by investors committing significant funds. This would not surprise Australian producers, where commercial herds are generally over 5,000 head.

IACCB is managed by Tetra Tech International Development, and is funded by the Australian Department of Foreign Affairs and Trade.

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Last updated - 17 October 2022
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