Other sheep business studies
Further economic research and analysis into broader aspects of the WA sheep industry was commissioned. Each study summary below has a link to the complete study report.
Out-of-season lamb price signals
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 a price increase from $0.15 to $0.51/kilogram dressed weight/month. This is greater than the five-year average of $0.16/month.
For more information refer to Out-of-season lamb price signals study summary.
Vertical integration - an alternative business model for the WA sheep industry
Agribusinesses looking to increase the profitability of sheep production may look to novel business structures. Options that were modelled include joint venture finance, vertically-integrated companies, livestock leasing and pasture development.
A vertically-integrated model that used joint venture finance was found to meet objectives of economies of scale, productivity, capital attraction and the development of new value chains.
For more information refer to Business models study summary.
Prices, patterns and profitability of feedlots: investor-ready sheep feedlot report
Confined feeding of sheep in commercial feedlots could benefit WA producers and processors. The WA lamb supply is seasonal, with a strong supply of lambs finished on green feed during spring. If profitable, finishing sheep in feedlots could be an alternative to even out supply to processors and to increase liveweight of lighter animals when there is limited green feed available.
Analysis indicated that feedlotting profitability is generally negative or low, based on the input values analysed and regardless of feedlot size or throughput. Small profits were possible when the restocker/feeder price in cents per kilogram (c/kg) was 86% or less of the trade price eight weeks later. Changes in ration cost have a smaller impact on profitability than the lamb purchase and sale prices.
For more information refer to Sheep feedlots study summary.
Lamb backgrounding report
Currently in WA there is a large supply of finished lambs in the spring, and a much reduced supply during summer, autumn and winter. While prices vary on a seasonal basis to reflect the seasonal supply of lamb, they currently do not allow producers to profitably background and finish lamb in their own location, mainly in the Great Southern using grain or cereal stubble to background lambs. This is a similar position to that of the Victorian industry 20 years ago; lamb backgrounding is now established in that state.
Comparison with the Victorian industry suggests that there is some potential for the high rainfall south-west region in WA to background lambs. This could significantly grow the lamb industry in WA due to better supply management through the year but also make the industry much bigger in total and more profitable. Forward contracts would have a role in profitable lamb backgrounding.
For more information refer to Lamb backgrounding study summary.