Evaluate the Economics of Your Flock - Sheep & Goats [Skip to Content]

Sheep & Goats
Illinois Livestock Trail
Evaluate the Economics of Your Flock
by Gary Ricketts & Richard Cobb

Volatility in lamb prices has been a major problem in the U.S. Sheep Industry for many years and was evident again in 1998. Lamb prices often drop very quickly but work back up very slowly, which makes for difficult marketing decisions. However, in spite of price volatility, it is important that we know our costs and determine how we can cut costs, improve management, and improve productivity, so our operation remains profitable. While there are many factors that affect profitability, the single most important factor is ewe productivity. The more lambs raised per ewe per year, the greater the chance of making a profit even when prices are low. If a ewe raises only one lamb, then that lamb must cover all of the ewe's expenses. However, with two lambs the ewe's expenses each lamb must carry are nearly cut in half. Ewe productivity takes into account at least three factors:

  1. Pregnancy Rate percentage of the ewes in the breeding flock that actually lamb;
  2. Prolificacy - the number of lambs born per ewe lambing; and
  3. Mortality - lamb losses from birth to marketing.

Some people are able to market a 200% lamb crop while others are fortunate to market one lamb per ewe. An old "rule of thumb" is that it usually takes at least 1.2 lambs marketed per ewe to cover your costs and some years it has been as high as 1.4. We need to evaluate the productivity of the flock and determine if we need to improve our genetics and management in order to market more lambs per ewe. Production records help in this process. Some producers consistently keep their lamb mortality under 10% while others may exceed 30%. Here is a key area where great improvement can be made to increase income and insure profitability. This is also a good time to cull harder than normal and eliminate the bottom end of the flock from a production standpoint. Do not carry over ewes that offer potential problems during the lambing season. Half uddered ewes and ewes that consistently have singles should be on the cull list. This is also a good time to evaluate ewes that are very old and ewes that stay thin. If you are going to cull harder, this is a good time to keep back more replacement ewe lambs from your best producing ewes. If lamb prices are low, then these replacements are costing you less than when prices are high and have much higher production potential than the ewes you culled. Again, good production records are the key. In evaluating the costs of a sheep operation, the highest single item is usually feed costs, which often make up 60-70% of total costs. This then should be one of the first areas to evaluate in an attempt to reduce costs. One way that some producers have cut costs is by lambing later and making maximum use of pasture and minimizing the use of harvested feeds such as hay, silage, and grain. This is often done by following an intensive grazing program that couples rotational grazing with excellent management. A good rotational grazing program can greatly reduce internal parasite problems which improves performance and reduces medication costs. Another approach is to make shifts in hay: grain ratio depending on the costs of these two items. For example, when hay is high priced compared to grain, one can feed more grain and less hay than normal, as long as the ration is balanced. If you have considerable variability in hay quality, be sure to feed your best hay during lactation. This is when the greatest nutritional demands are placed on the ewe.

Evaluate the costs of the feeds you are using. Can you put together good rations that are cheaper than the ones you are now using? If so, then do it. Alternative grain and roughage sources should also be considered. After a corn field is harvested, the refuse left behind makes good sheep feed and is a low cost product. How much feed are you using for your ewes? Are you feeding them too much, not enough, or just right? Except for good milking ewes nursing triplets and sometimes twins, ewes will usually eat more than they need. Overfeeding is both costly and unproductive. If you want some good feeding guidelines, then check in Circular NCR 240 entitled "Management Guidelines for Efficient Sheep Production." If you do not have a copy, then check with your local Extension Unit Office or your nearest Extension Center Office.

Marketing is an area where many producers loose potential income. There is a difference between marketing and just selling. Check your options and then sell your lambs or wool where you have the best competitive advantage. Some producers have developed their own niche markets for lamb and/or wool and have increased their profit by doing so. Market the lambs when they are ready. Don't put on excess fat that greatly decreases feed efficiency. Even though the sheep industry has some problems including volatile lamb prices, wellmanaged, highly-productive ewe flocks have always been profitable. Look for ways to improve ewe productivity and lower feed costs. Also, remember that sheep production fits well into a sustainable agriculture program and is a good alternative enterprise for many farms.

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