Increasing income
Sheep enterprise type
A farmer might wonder whether he is producing the right sort of sheep for the market. Comparison between Merino, prime lamb, Merino 30% crossbred and non-shearing were made.
The 2016 gross margins of four different sheep enterprises in the high rainfall zone of Western Australia were found to have only small differences in profitability. Management was found to have a greater influence on profitability than choice of enterprise. The biggest driver of profitability was found to be stocking rate.
Enterprise size
Farmers have to make land choices, and consider returns on sheep, and compare that to other potential enterprises to use the land resource. While historical prices have favoured cropping as the dominant land use, increasing returns for sheep and wool have made the sheep enterprise more attractive and caused farmers to consider expanding their sheep enterprise.
In the low rainfall cereal-sheep zone, comparisons of key performance indicators with wool belt producers indicated that they could improve their KPIs. Expansion of the sheep enterprise could be achieved by increasing production and/or increasing land area by converting low-productivity cropping paddocks back to pasture paddocks.
The difference in average gross margin between sheep and crop was found to be less than the difference in individual farm productivity. This highlights the importance of informed management choices throughout the year regardless of whether an area of land is used for sheep or crop.
Time of marketing
While the seasonality of pasture production in WA favours lambing to occur before the spring flush, making this the cheapest way to produce lambs, consumers want to have access to sheepmeat year-round. However farmers need to be able to achieve higher prices for carryover lambs to cover the associated extra costs and still maintain profitability.
Carryover lambs incur costs associated with increased death rates (due to a longer time retained on-farm), feeding and management including shearing and husbandry treatments. Longer wool can be a source of income from carryover lambs.
Modelling found that in order to maintain profitability from turning off lambs one month later, farmers needed to receive from $0.15-$0.51/kg DW/month.