How to build a cattle budget and cashflow

A cattle budget answers two questions. Does the business make money over a normal year? And will the overdraft carry you until the cattle are sold? Most budgets I saw as a banker answered the first one and skipped the second.

Here is the method I use for breeding and trading cattle in the Central West and Orana.

Step 1: Count the herd before you count the money

Start with stock numbers, because every dollar follows from them. For a breeding herd, write down cows joined, your weaning rate and how many heifers you keep as replacements. Then add the cull cows you'll sell and any bulls you'll buy.

Weaning rate means calves weaned per cow joined. Use your own figure from the last three years if you have it. The NSW DPIRD inland weaner budget for June 2026 assumes 84%, with a 90% conception rate and 2% adult deaths. DPIRD works out that each extra 5% in weaning rate adds about $60 of gross margin per cow.

For trade cattle, write down how many head you'll buy, the weight in, the weight out and the time on hand. Allow for deaths, which the DPIRD steer growout budget puts at 2%.

Step 2: Put a weight and a price on everything you sell

Income is head sold, times liveweight, times price in c/kg. Ask your stock agent for the price view, then use a figure a bit below it. The bank will trust a budget that doesn't need record prices to work.

Prices move fast. MLA's restocker yearling steer indicator fell more than 50c/kg during September 2026, to 481c/kg. Rabobank's May 2026 outlook expected weaners around $4.00 to $4.50/kg liveweight, with the risk on the downside.

Sale weight needs the same care. MLA's More Beef from Pastures tables show a calf growing 0.9 kg a day reaches about 214 kg at 200 days. At 0.7 kg a day it's about 171 kg. That gap is worth a lot of money at weaner prices.

Step 3: Work out the gross margin for each enterprise

A gross margin is income less the costs that rise and fall with the enterprise. For cattle that means bulls, animal health, supplementary feed, pasture maintenance and selling costs. Selling costs include commission, yard dues, the MLA levy, freight and NLIS tags.

Overheads, interest and permanent wages stay out of it. That is how NSW DPIRD sets its budgets, and it lets you compare enterprises fairly.

Then divide by the feed each enterprise uses, measured in DSE. A DSE is the feed a 50 kg wether needs to hold its weight. DPIRD rates an average inland breeding cow at 15.25 DSE and a growout steer at 8.9 DSE. In its June 2026 budgets the inland weaner gross margin was $62.92 per DSE and the steer growout $76.89 per DSE.

Step 4: Add overheads, interest and drawings

The whole business has to carry rates, insurance, fuel, repairs, wages, accounting fees and the interest bill. It also has to feed the family. I list these once for the whole place, then split them across enterprises by their share of the DSE or the land.

Step 5: Work out your cost of production per kg

MLA's method divides the total cost of the beef enterprise by the kilos of liveweight it produces. Total cost here includes the enterprise's share of overheads and labour. Comparing that figure with your average sale price per kg tells you if the herd pays its way.

The 2026 Australian Beef Report by Bush Agribusiness puts the southern top 25% at $2.35/kg liveweight. The southern average was $3.40/kg.

Step 6: Spread it across the months

This is the cashflow, and it's where cattle businesses get caught. Put every receipt and payment in the month it will actually happen. Weaners might sell in February, cull cows in May and trade steers whenever they reach weight. Bills like overheads and interest come every month regardless.

Start from the overdraft balance today and run it forward. The lowest closing balance is the number the bank cares about most.

Worked example: a breeding and trading place near Forbes

This is an example business with 250 cows and 150 trade steers. The figures are illustrative and don't come from a real client.

Breeding

At an 86% weaning rate, the 250 cows wean 215 calves. The owners keep 45 heifers as replacements and sell 108 steer weaners and 62 heifer weaners. They also sell 40 cull cows.

The breeding gross margin is $256,840 less $86,832, which is $170,008. That's $680 per cow. At 15 DSE a cow, it's about $45 per DSE.

Trading

They buy 150 steers at 260 kg and 450c/kg, which costs $175,500. Three die. The other 147 gain 180 kg in 300 days, which is 0.6 kg a day. They sell at 440 kg and 420c/kg for $271,656.

The trading gross margin is $271,656 less the $175,500 purchase and $27,660 in costs. That leaves $68,496, or about $457 per steer bought. The steers need to make 314c/kg just to cover the purchase and direct costs.

The whole business

Profit before interest covers the interest bill about 2.2 times. If every sale price drops 15%, profit before interest falls to $41,156. That covers interest only 0.75 times, and the business would be about $73,844 short after drawings.

Their breeding cost of production is about $3.00/kg. That counts the breeding costs plus 60% of overheads and interest, spread over the 63,940 kg sold. Their average breeding sale price is about $4.02/kg.

The cashflow

The overdraft starts July at $150,000. This assumes they buy and sell about the same number of steers each year.

Money in is shown after selling costs. The year finishes $3,504 better than it started, which matches the budget. But the overdraft reaches $335,375 in December before a single weaner is sold. A $300,000 limit wouldn't be enough, even though the year makes money. A monthly cashflow would show the true peak, which could be higher still.

What the bank will ask about

A credit team reading a cattle budget will usually test three things. The first is whether the stocking rate holds up in a dry year, and what you'll sell first. The second is how far prices can fall before interest cover drops below one. The third is whether the limit covers the low point with room to spare.

Rabobank's May 2026 outlook noted that dry conditions in parts of NSW could force selling into an oversupplied market. So I put a dry-year case in every cattle budget. The NSW Government's dry times guide puts hand-feeding a cow at about $5 a day in its example. Six months of that for 250 cows is about $228,000. That's why the plan to sell matters as much as the plan to feed.

When to get help

If you'd like a second pair of eyes before the review, the Bank Review Pack is $1,850 plus GST ($2,035 incl. GST). It includes a budget for each enterprise, a monthly cashflow and a price-drop test. I don't do tax or BAS, so your accountant keeps that work, and I'll build from their figures.