Cattle Baron Master Business Plan — Sensitivity and Scenarios

How the plan responds to weaner price, calving percentage, mortality and grazing cost moving against it, with downside cases.

Sensitivity and Scenarios

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17.1 Single-variable sensitivity
17.2 Scenarios
17.3 What management can do inside a bad year

17.1 Single-variable sensitivity

Figure 20. Sensitivity of Year 5 cash EBITDA.

Driver	Effect on Year 5 cash EBITDA	Comment
Weaner price ±10%	±R305’000	The dominant exposure, and outside the farmer’s control
Weaning percentage ±4 points	±R211’000	The most valuable variable within the farmer’s control
Grazing cost ±15%	±R161’000	Scales with large stock units carried, not with animals sold
Licks and supplement ±20%	±R118’000	Rises with herd size and with drought
Fixed cost base ±10%	±R180’000	Barely moves with the herd; the reason scale matters
Cull cow price ±10%	±R102’000	A quarter of Year 5 cash revenue and often unmanaged
Weaner weight ±10 kg	±R126’000	Cow condition and grazing quality through the growing season
Year 5 cash EBITDA, base case	R112’000

Every single line in that table exceeds the Year 5 cash EBITDA of R112 000. That is the honest characterisation of the position at Year 5: the enterprise has just crossed cash break-even, and any adverse movement of the magnitudes shown takes it back below. Weaner price dominates at R305 000 for a ten per cent movement — nearly three times the base cash EBITDA — and it is the variable the farmer does not control.

Figure 21. Year 5 cash EBITDA across weaner price and weaning percentage.

The grid shows the interaction that matters. At the planned 79.8 per cent weaning percentage the enterprise needs roughly R54 a kilogram to hold positive cash EBITDA; at 87.8 per cent it holds at R49, which is close to the current market. Weaning percentage is the defence against price, and it is the only defence available.

17.2 Scenarios

Figure 22. Year 5 EBITDA and cash EBITDA across scenarios.

Scenario	Definition	Year 5 cash revenue	EBITDA	Cash EBITDA
Base	The plan as presented: 450 cows, 79.8% weaning, R54.51 a kilogram.	R4.07m	R2.52m	R0.11m
Weaning shortfall	Weaning four points below plan — a dry season or an untested bull.	R3.86m	R2.24m	(R0.10m)
Input cost pressure	Grazing 15% and supplement 20% above plan in a poor season.	R4.07m	R2.24m	(R0.17m)
Price normalisation	Weaner price 15% below plan as FMD control succeeds and supply recovers.	R3.46m	R1.91m	(R0.19m)
Price and weaning	Price 15% below plan and weaning four points down in the same year.	R3.28m	R1.63m	(R0.40m)

Reported EBITDA survives every scenario; cash EBITDA survives none of them

In the price normalisation case — a fifteen per cent fall, which is roughly what successful national disease control would produce — reported EBITDA is still R1.91 million, which reads as a comfortably profitable year. Cash EBITDA is minus R190 000 and the enterprise cannot service its debt from operations. In the compound case it is minus R400 000. This is the single most important thing a funder should take from the sensitivity analysis: a cattle enterprise under stress reports profit and runs out of money, because the herd growth that flatters the earnings line is the very thing that cannot be used to make a payment. Every covenant on this transaction should be written against cash EBITDA, and the facilities should carry capital moratoria long enough that a bad season defers amortisation rather than triggering a default.

17.3 What management can do inside a bad year

Lever	Available within	Value	Comment
Defer the next expansion	One season	R1.4m to R2.1m of capital and its service	The gates in Section 11 make this automatic
Hold weaning percentage	One season	R52 766 a percentage point	Bull testing and condition scoring; no capital required
Cull harder on age and condition	One season	Cull revenue plus a reduced grazing bill	Improves the herd and generates cash simultaneously
Sell weaners earlier at lighter weights	Immediately	Cash sooner at a lower price per head	A drought and cash-flow lever, not a margin one
Reduce the supplement programme	One season	R118 000 on a twenty per cent cut	Costs condition, and condition costs next year’s calf. A last resort
Defer owner remuneration	Immediately	R432 000 a year at Year 5	Available, unpleasant, and the reason it is budgeted rather than assumed away

The first three are the ones that work. Deferring an expansion removes both the capital and the debt service it would have carried; holding weaning percentage costs nothing; and culling harder generates cash while improving the herd. The last two are visible in the model but each borrows from a future year, and an operator who reaches for them repeatedly is managing a decline rather than a season.

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