Framing an Appropriate Research Question 6b9b26d93da94caf993c038d9efcdedb.pdf
Making a profit with small ruminants (sheep/goats)
1. Making a profit with small ruminants
SUSAN SCHOENIAN | Sheep & Goat Specialist Emeritus | University of Maryland Extension
2. What is profit?
INCOME
Minus OPERATING COSTS
Minus FIXED COSTS
Equals PROFIT
Operating costs (cash or variable)
(Feed, medicine, supplies, bedding, breeding, labor, etc.)
Fixed costs “DIRTI”
(Depreciation, interest, repairs/rent, taxes, insurance)
3. You’re not going
to be (very)
profitable if
you’re average.
US Baseline lamb cost of production analysis
https://www.sheepusa.org/wp-content/uploads/2019/12/2018-ASI-Budget-Project.pdf
University budgets are similar.
50 ewes
4. How to make a profit
increase your profit
or reduce your losses
R E DUC E E X P E N S E S
1. Cut costs without affecting productivity
2. Increase productivity without substantially
increasing costs.
3. Increase productivity to reduce overhead
(fixed costs).
I N C R E A S E I N C OME
1) Have more product to sell
2) Sell products for higher price
5. What are the primary
factors driving
profitability?
1) Feed costs
2) Reproductive efficiency
3) Market prices
6. Feed is usually the single largest cost
associated with raising sheep/goats.
7. Feed Basics
• Up to 75% of the costs in a sheep/goat
enterprise are feed.
• The cost of feeding livestock has gone up in
recent years, especially for commercial
(bagged) feeds and supplements.
• Pasture is not free.
• All feed resources have alternative uses:
opportunity costs.
8. General recommendations for
feeding small ruminants
Feed least cost rations
Compare nutrient costs
Never cut corners on nutrition
Don’t underfeed or overfeed
Balance rations
Maximize pasture resource
Invest in feed storage
9. Maximize your pasture
and browse resource
• Pasture/browse is the most
natural diet for sheep and
goats.
• Soil test and lime and
fertilize according to
recommendations.
• Subdivide pastures for
rotational grazing and
parasite control.
• Strive to have a diversity of
plant species in your
pastures.
• Consider planting tannin-rich
forages such as sericea
lespedeza.
• Consider planting annuals to
improve nutrition and extend
grazing season.
• Provide browse for goats.
• Provide adequate shade and
water in summer.
• Provide trace mineral salt year-
round to grazing animals.
10. Test your forages
• Hay varies considerably in its nutritive content.
• Only by knowing the nutritive value of your hay
and how much your animals are consuming, will
you know how much, if anything, to supplement
them.
• By-product feeds also vary considerably in their
nutritive content and should be tested.
• Test anything you’re unsure of regarding its
nutrient content.
11. Store hay properly
• Make sure hay is dry before storing.
• Ideally store hay inside
• Store hay on pallets
• Cover hay that is stored outside and
stack it off the ground.
• Invest in hay storage.
*http://extension.msstate.edu/publications/publications/hay
-storage-dry-matter-losses-and-quality-changes
2/8/20XX 11
In Mississippi, unprotected round bales stored
outside could lose 50 to 60 percent of their feed
value due to longer microbial activity (mild winter
temperatures) and high precipitation.*
12. Hay feeding losses
• The largest input cost for a small ruminant enterprise
is feed costs.
• A lot of these costs occur when feeding hay.
• Hay loss can range from 2 to 60%.
• Hay loss of 3 to 6% is considered normal.
• Hay feeding losses result from trampling, forage
quality or maturity issues, and fecal contamination.
13. Reducing hay feeding losses
• Feed hay off the ground
• Feed hay in feeders
• Use hay feeders that are designed to reduce wastage.
• Only feed what the animals need
• Feed hay frequently
• Feed high quality forage
• Consider chopping forage
• Store hay properly
• Clean up spilled hay
• Use leftover hay
14. Buy and feed hay
by the weight
• Nutritional requirements of sheep/goats are based on
weight not volume.
• You need to know how much your hay weighs (per
ton, cwt, or pound) to know how much it is costing
you and how much you need to feed.
• To get the true cost of your hay, you need to calculate
the cost per nutrient (TDN or CP) and factor in waste.
• Hay bales (small square, round, and large square)
vary considerably in weight and quality.
15. My hay example
H AY F R O M N E I G H B O R
Orchardgrass 1st cutting
32 lb. avg. small square bales
58% TDN (energy)
$7 per bale (delivery included)
2000 lbs. ÷ 32 lbs. = 63 bales per ton
63 x $7 = $441 per ton
$7 ÷ 32 lbs. = $0.22 per lb.
$0.22 ÷ 58% TDN = $0.38 per lb. of TDN
$0.38 ÷ 0.90 (10% wastage) = $0.42 per lb. of TDN
H AY F R O M C O M M E R C I A L H AY G R O W E R
Orchardgrass 2nd cutting
55 lb. avg. small square bales
64% TDN (energy)
$11.50 per bale (delivery included)
2000 lbs. ÷ 55 lbs. = 36 bales per ton
36 x $11.50 = $418 per ton
$11.50 ÷ 55 lbs. = $0.21 per lb.
$0.21 ÷ 64% TDN = $0.33 per lb. of TDN
$0.33 ÷ 0.95 (5% wastage) = $0.34 per lb. of TDN
20% LESS EXPENSIVE
My hay example
17. My feed example
LOCAL FEED COOP
20% creep ration
30% soybean meal + 70% cracked corn
$0.32 x 30% = $0.096
$0.16/lb. (bag) x 70% = $0.11
$0.096 + $0.11 = $0.21/lb.
36% less expensive than lamb starter
16% ration
15% blender pellet (36%) + 85% whole corn
$0.40 x 15% = $0.06
$0.084 (bulk) x 85% = $0.07
$0.06 + $0.07 = $0.13/lb.
58% less expensive
20% lamb starter textured
$33/cwt.
16% Sheep Developer textured
for growing and breeding sheep
$31/cwt
MY FARM MIXED RATIONS
18. How to mix your own simple rations
• By hand, in buckets
• Use a cement mixer
• Mixer wagon - they make mini ones.
• Have feed custom mixed (buy in bags or have
delivered to a feed bin on your farm).
• If making an investment in equipment, do the
math to see if/how long it will pay for itself.
2/8/20XX 18
19. It paid me to invest in feed bins.
$ 2 5 0 0 I N V E S T M E N T I N 2 0 1 6 W A S P A I D F O R I N A F E W Y E A R S .
20. Compare the cost of nutrients?
Which is a cheaper source of energy (TDN)?
G R A S S H A Y
• 40-lb. bales
• $5.00 per bale
• 54% TDN
• $0.125 per lb.
• $0.19 ÷ 54% = $0.23/lb.
• Not factoring in waste
S H E L L C O R N
• 56 lb. bushel
• $5.00 per bushel
• 88% TDN
• $0.09 per lb.
• $0.09 ÷ 88% = $0.10/lb.
S O Y H U L L P E L L E TS
• $180 per ton
• 72% TDN
• $0.09 per lb.
• $0.09 ÷ 72% = $0.125 per lb.
21. What about lick tubs and
blocks: good idea or not?
• It is usually less expensive to provide supplemental feed than to use
lick tubs or blocks (often considerably less expensive).
• Loose minerals are usually less expensive than lick tubs or blocks.
• No need for lick tubs when animals are being fed hay/grain or
similar diets: it is less expensive to add needed nutrients to ration.
• Not all nutritional tubs are created equal: do your homework!
(They vary in nutrient density and source).
• There can be issues with over and underconsumption of tubs.
• Primary benefit to lick tubs: LABOR SAVINGS
• Lick tubs are most suitable for pasture, especially low quality.
22. What about feeding BioWorma®?
Economics of feeding BioWorma®
Per 100 lbs. body weight Larvae reduction
Product Cost Amount per oz oz/day $/day $/month $/90 days on pasture
Livamol® $ 89.50 15-lb. pail $ 0.37 1.6 $ 0.60 $ 17.90 $ 53.70
68-84%
Livamol® $ 149.50 30-lb. pail $ 0.31 1.6 $ 0.50 $ 14.95 $ 44.85
BioWorma® $ 355.00 10-lb. pail $ 2.22 0.1 $ 0.22 $ 6.66 $ 19.97
Feed 2 weeks/month $ 355.00 10-lb. pail $ 2.22 0.1 $ 0.22 $ 3.33 $ 9.98
Management Cost Unit per lb. lb/day $/day $/month $/90
100%
Feed hay in drylot $ 100.00 ton $ 0.05 2.2 $ 0.11 $ 3.30 $ 9.90
Feed hay in drylot $ 200.00 ton $ 0.10 2.2 $ 0.22 $ 6.60 $ 19.80
Feed hay in drylot $ 400.00 ton $ 0.20 2.2 $ 0.44 $ 13.20 $ 39.60
Other considerations
• BioWorma® prices do not include shipping.
• There may be longer term benefits to feeding BioWorma®.
• Added cost to feeding in drylot (or barn) is manure handling.
The fungus (Dunningtonia flagrans)
in BioWorma® traps and kills worm
larvae in manure; thereby, reducing
parasite infectivity.
24. Calculating lambing/kidding percentage
60 Number of does exposed for breeding
98% Percent does kidding
59 Number of does kidding
200% Percent kids born live (# live kids ÷ # does kidding)
118 Number of kids born live
5.0% Percent pre-weaning death loss
112 Number of kids weaned
5.0% Percent post-weaning death loss
106 Total number kids produced
97 Number of kids sold for market
9 Number of doe kids kept for replacement (15%)
177% PERCENT KID CROP RAISED
1.6 KIDS MARKETED PER DOE
25. Effect of different lambing/kidding
percentages on profitability
($100)
($50)
$0
$50
$100
$150
$200
$250
75% 100% 125% 150% 175% 200% 225%
Profit per ewe, $ Percent
Profit per
ewe, $
Expenses:
Income (%)
Rate of return on
investment (%)
75 $ (57) 139 -6
100 $ (14) 107 -1
125 $ 25 90 3
150 $ 66 78 7
175 $ 105 70 11
200 $ 146 65 15
225 $ 190 59 19
For demonstration purposes, your input data is
specific to your farm and will vary.
Does not include fixed costs: DIRTI
(depreciation, interest, repairs, taxes, and insurance)
www.sheepandgoat/spreadsheets
26. The national average lambing and
kidding rates are below 105 percent.
That’s only 105 lambs/kids per 100 ewes/does.
27. Best Practices to
increase lamb crop
Optimal
nutrition
Breed at 7 to 9
months
Select for
prolific genetics
Use
crossbreeding
Cull
underperforming
ewes
Reduce
lamb loss
Test for pregnancy
status
Disease
prevention and
management
Match
reproduction to
environment
Testing rams
for breeding
soundness
Manage for
seasonal changes
in reproduction
Accelerated
lambing cycles.
https://lambboard.com/productivity
Similar for
goats
28. Some suggested
benchmarks
BENCHMARK MINIMUM PREFERRED
Pregnancy rate 95% 100%
Lambing/kidding percent 150% 200%
Abortions <5% <2%
Mortality, 0-30 days <10% <5%
Mortality, 30 days to weaning <5% <2%
Culling rate 20% 15%
Adult mortality <5% <2%
Assisted births <10% <5%
Body condition score at breeding 3 - 3.5
Body condition score at birthing 3 - 3.5
Efficiency (litter wt. ÷ ewe/doe wt.) 75% 100%
29. Making
money
from
surplus
lambs
and kids
“On average, a lamb will
consume about 18 pounds of
milk replacer (~$50 worth)
from birth to weaning, which
is about 30 days of age.
About 10 pounds of the milk
will be consumed in the last
10 days before weaning, “If
you feed milk replacer
beyond 30 days, you are just
wasting your money. Lambs
can be weaned earlier than
30 days, but make sure they
weigh at least 30 pounds
when they are weaned.”
Rusty Burgett
National Sheep Improvement Program
30. Tips for rearing surplus
lambs/kids
• Adequate colostrum intake (feed artificial, if necessary)
• Select a good milk replacer, one that mimics sheep or goat milk
(w/milk proteins).
• Can feed cow (including store-bought milk) or goat milk to
reduce cost of feeding (add fat when feeding lambs).
•
• Use a feeding rack, bucket, lamb bar, or automatic feeder to
reduce labor requirements.
• Good hygiene is critical.
• Vaccinate for clostridial diseases.
• Ad lib creep feed and water, little bit of forage
• WEAN EARLY, < 6 weeks if not sooner
Cost per 25-lb. bag $45 $50 $60 $70 $80
Cost per gallon of milk $3.60 $4.00 $4.80 $5.60 $6.40
Walmart sells milk for
~$2.50 per gallon.
31. Economics of surplus lambs/kids
Variables: cost of milk replacer and amount fed, cost of feeding, what you can get for lambs/kids as
orphans and at market size (+ labor).
32. Automatic
feeding of orphans
• L a k - Te k f e e d e r f o r 4 0 - 6 0 l a m b s / k i d s
$ 1 4 9 5 ( P r e m i e r 1 )
• I f y o u m a k e a p r o f i t o f $ 5 0 p e r
l a m b / k i d , i t w o u l d b e p a i d f o r w i t h 3 0
l a m b s / k i d s o r 3 y e a r s o f 1 0 l a m b s / k i d s .
• F e e d i n g o r p h a n s c o u l d b e a p r o f i t a b l e
s i d e e n t e r p r i s e f o r l a r g e p r o l i f i c
f l o c k s / h e r d s o r f o r a n y o n e w h o c a n
p u r c h a s e o r p h a n s f o r l e s s t h a n ~ $ 7 5 .
• G r e a t p r o j e c t f o r y o u n g s h e p h e r d s .
34. Two general options for marketing
COMMODITY
• Sell a “generic” product; identity is
lost in marketing process.
• Usually a “price taker.”
• Favors larger producers, low-cost
producers, and those close to
terminal markets and/or
processors.
• Favors “popular” meat-type
breeds.
• Favors “economies of scale”
• Most sheep and goats are sold this
way.
DIRECT MARKETING
• Goal is to eliminate middlemen and retain a larger portion
of the consumer dollar.
• Sell a branded product
• Takes many forms
• Greater income potential
• Greater opportunity to set or negotiate prices
• Substantially higher marketing costs
• Requires more “people skills.”
• Favors smaller producers and those close to population
centers.
• May be the only way for some small producers and/or those
with high input costs to make a profit.
35. Marketing tips
DO YOU HAVE A MARKETING PLAN?
• Establish target market(s) for your animals and/or products and
produce what those markets want (demand) and/or will pay a
premium for.
• Most producers use more than one marketing option.
• Always important to know what your animals are worth
• Understand the USDA grading system and know how to read
market reports.
• Consider pros and cons of different marketing options.
• Account for all marketing costs: hauling, shrink, selling fees,
processing costs, licensing, advertising, check-off, labor (time)
and more.
• Aim for the highest “NET” price not necessarily the highest price.
37. At what weight should you
sell your lambs and kids to
make the most profit?
• What does your market want and when?
• Light weight lambs/kids bring more per pound,
whereas heavier ones bring more per head.
• Fleshier lambs/kids usually bring more money
(according to USDA grading).
• Need to know how much does it costs you to
grow out your lambs/kids to heavier weights.
• Sometimes, it pays to hold lambs/kids to take
advantage of holiday/ethnic demand.
38. Factors affecting your decision
• Price of feed
• Feed efficiency
• Breed and genetics
• Market prices
• Price differences between different
weight classes. $110.00
$115.00
$120.00
$125.00
$130.00
$135.00
$140.00
$145.00
$150.00
$155.00
40 50 60 70 80 90 100 110 120 130 140
Net income at different selling weights
39. Selling breeding stock
or show animals
• Another way to increase income
• Customer service is important, especially for youth buyers
(support 4-H/FFA).
• Should have a higher bar for health.
• Consider testing for diseases: OPP, CAE, Johne’s, CL,
scrapie resistance.
• Keep good on-farm records
• Consider participating in genetic evaluation programs.
1. Central ram/buck tests (Mississippi has buck test!).
2. NSIP (EBVs)
• Be honest about what you’re selling
• Don’t overprice, especially for youth.
40. L I V E A N I MA L S
• Consider on-farm slaughter (by
customer) if legal where you live.
• Know your local, state, and federal laws
pertaining to slaughter.
• Educate yourself about ethnic holidays
and traditions.
• Build relationships with ethnic community.
• Time sales appropriately
• Don’t sell CRAP; be honest about the
quality of your animals.
• Use social media (be careful about
wording) and web sites for marketing.
• Do the most cost-effective advertising.
M E A T
• Know your local, state, and federal
laws pertaining to meat sales.
• Market your story
• Brand your product
• Provide point of sale materials:
recipes, nutritional information.
• Consider appropriate certifications
• Don’t sell inferior product
• Use social media and web sites for
marketing.
• Market more (or everything) from
the animal.
O T H E R P R OD UC TS
( S O A P , P E L T S , F L E E C E S , C H E E S E )
• Tell your story
• Try different products
• Attractive packaging
• Use social media and web sites for
marketing
• Participate in festivals and similar events.
• Seek opportunities to sell both retail and
wholesale
Direct marketing tips for sheep and goats
41. Don’t overlook other income
opportunities with sheep/goats
Grazing
• Targeted grazing
• Solar grazing
(especially sheep)
Biomedical
• Live animals
• Blood
• Milk
Agritourism
• Goat cuddling
• Goat yoga
• Petting farms
• Birthdays
42. Importance of biosecurity and animal health
• Healthy animals are more profitable.
• Disease outbreaks can be costly
• Many diseases are introduced.
• Resistant worms can be introduced.
• Foot rot usually walks onto a farm in
the hooves of infected sheep/goats.
• Showing is a risk.
• Important to buy disease-free animals
from reputable breeders/sales.
43. Can you afford a disease
outbreak?
• For assurances, have animals tested for
diseases before purchasing them.
• Quarantine all new animals for ~30 days,
including those returning from a show.
• Only share animals (e.g., bucks/rams) with
farms with similar (or better) biosecurity.
• Have and follow a biosecurity plan
(ideally have it written down).
• Have a flock/herd health program (SOPs).
44. Importance of having a
veterinarian-client-patient-
relationship (VCPR)
• Basis for interaction with veterinarians.
• Required to purchase antibiotics and other
important animal health products.
• Set up an initial visit with a vet so they can learn
your operation and practices.
• Consult your vet about preventative health care
practices.
• Call your vet in a timely manner.
• Share information with your vet.
• Your vet should be part of your TEAM!
45. Invest in proven genetics
• Why feed and take care of low-performing animals?
Invest in good genetics. Proven genetics.
• It makes much more sense to put dollars into superior rams/bucks than
to buy expensive females.
• Use performance-tested rams/bucks to improve the performance and
profitability of your flock/herd.
1. National Sheep Improvement Program (NSIP)
For sheep, especially Katahdins: EBVs and GEBVs
2. Central performance tests for rams and bucks (MSU has buck test!)
3. On-farm performance records from individual farms
• For seedstock and club lamb/kid producers, artificial insemination (AI)
can be a way to gain access to top sires without breaking the bank.
46. Example:
Investing in a superior ram with proven genetics
Post-weaning weight (PWWT) EBV of +7.4 kg
+7.4 kg x 2.2 kg/lb. = +16.3 lbs. genetic potential
Lamb receives 50% of its genetics from each parent
16.3 lbs. ÷ 2 parents = +8.1 lbs. genetic potential
Breed ram to 20 ewes (lambing % of 150).
8.1 lbs. x 30 lambs = +243 lbs.
243 lbs. x $2/lb. = +$546 more income
Use ram for 2 years
$546 x 2 years = +$1092 more income
How much can you afford
to spend for this ram?
47. Meat goat producers need to embrace
quantitative genetic evaluation (EBVs).
• Sheep have EBVs and genomic EBVs (GEBVs).
• Dairy goats have DHIA records.
• Not many meat goat herds use EBVs.
• EBVs are more accurate than ram and buck tests.
• The National Sheep Improvement Program (NSIP) can provide EBVs
for meat goats via Australia’s KIDPLAN.
• Meat goat producers can also directly enroll in KIDPLAN (probably).
• An alternative to NSIP (and EBVs) is an app called Livestocked,
which provides its own performance data to users.
48. Importance of record keeping
• If you don’t keep financial records, you won’t know if you’re making a
profit.
• If you don’t know what it costs you to raise a lamb or kid (or other
products), you won’t know what to charge or what is a profitable price.
• You need to keep records in order to file your taxes and apply for
grants or loans.
• If you don’t keep production records, you won’t know which of your
production practices are profitable
• If you don’t keep individual animal records, you may not know which
animals are making you a profit.
49. Record keeping options for small
ruminant producers
FINANCIAL
Handwritten
• Shoebox
• Record book
Ledger, Farm Credit, Extension, purchase
Computerized
• Spreadsheets
Excel, Google Sheets, open source
• Software
Quicken®, Quickbooks®, others
• Apps with built-in financial
Livestocked, others
PRODUCTION
Handwritten
• Pocket record keeping booklet
Shepherd Magazine, Sheepman Supply, others
• Record sheets
Computerized
• Speadsheets
Excel, Google Sheets, open source
• Software
FlockFiler, Shearwell FarmWorks, others
• Mobile apps
Livestocked, HerdBoss, HerdHelp, others
50. Should you invest in RFID?
Electronic ID: ear tags or microchips
PROS
• Can more easily monitor animals
• Eliminate tag or tattoo reading errors
• Facilitates better management decisions
• Can use for scrapie ID
• Integrate with other equipment/technology
• Improved animal traceability
CONS
• Tags are more expensive
• Need software to integrate with
• Cost of readers is still high ($400-$1400) for
small producers (need to be closer to animal
with the less expensive readers).
Will eventually be required
for disease traceability.
51. Paying taxes
• It’s good to pay taxes.
• It means you’re making a profit.
• However, you want to minimize your tax obligation as
best as you can (an accountant may help).
• Be sure to deduct everything you can; don’t forget
utilities, car and truck expenses, memberships,
guardian animals, education, supplies, etc.
• Be sure to take advantage of sales tax exemptions.
• IRS: you need to make a profit 3 out of 5 years or
show an intent to make a profit.
52. “Time is money.”
- Benjaman Franklin
Technology and automation
Automatic feeders, self feeders and lick feeders
Automatic waterers/tubes
Technology for record keeping (RFID)
Effective handling system for timely health checks
Efficient layout of pasture and barns for animal flow
Select for good mothering ability
Select for fitness traits (parasites, hooves)
Ways to save labor
Labor is one of the biggest
issues with sheep/goats.
53. “You have to
spend money to
make money.”
– Titus Maccius Plautus, 100-200s BC
BUT…”If you buy things you don't
need, soon you will have to sell
things you need .” – Warren Buffett.
55. Some other ways to
make (or save) money
• Having your land taxed at agricultural rates.
• Apply for NRCS cost share (EQIP) and FSA
funds (e.g., Covid).
• Apply for any state funds for small
ruminants.
• Participate in research and extension
programs.
• Consider applying for a Southern SARE,
USDA value-added or other grants to
conduct research or expand your operation
or marketing.
56. Some other ways to make
(or save) money
• Cooperate with industry when opportunities
arise.
• Seek free or low-cost feedstuffs (by-products).
• Buy used equipment.
• Share genetics (don’t forget biosecurity)
• Use scrapie tags as your flock/herd identification.
• Charge groups to visit your farm.