Sheep enterprise margins analysed

Sheep enterprise margins analysed

Sheep
Sheep enterprise comparisons: NSW DPI sheep development officer Geoff Casburn discusses sheep industry flux with producers during an open day at Trangie. Photo: supplied.

Sheep enterprise comparisons: NSW DPI sheep development officer Geoff Casburn discusses sheep industry flux with producers during an open day at Trangie. Photo: supplied.

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The latest NSW Department of Primary Industries (DPI) report on sheep enterprise gross margins has delivered good news with gains across the industry.

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The latest NSW Department of Primary Industries (DPI) report on sheep enterprise gross margins has delivered good news with gains across the industry.

DPI sheep development officer, Geoff Casburn, said all breeding enterprises were performing well with high wool and sheepmeat values and demand for breeding ewes supporting strong performances across the board.

“Merino wool enterprises had the greatest growth with gross margins increasing up to nine dollars per dry sheep equivalent (DSE) compared with 2015 figures,” Mr Casburn said. 

“Of the 10 sheep enterprises analysed the highest gross margins were $38.45 per DSE for the 20 micron Merino self-replacing enterprise selling trade Merino wether lambs and the enterprise joining 20 micron ewes to maternal rams at $38.17 per DSE.

“Wool incomes have steadily increased in the last four years to reach levels close to, or greater than, the highs experienced in 2011 and 2012.”

Mr Casburn said this upward trend has increased confidence in the industry and reduced reliance on sales of lambs and surplus ewes.

“The value of breeding ewes remained high due to the strong performance of sheep enterprises, which increased demand for sheep,” he said.

“All of which was good news for enterprises with a focus on breeding ewes for sale, such as those breeding first cross Merino ewes, and enterprises with surplus ewes to sell, yet not so good for those buying replacement ewes.

“There was a bittersweet scenario for 20 micron first cross ewe breeding enterprises - they needed to purchase 220 replacements to benefit from selling 429 first cross ewe hoggets.

“The self-replacing Dorper enterprise had good income levels, the lowest overall costs and with no wool harvest, minimal replacement of rams only and the lowest animal health costs, was a good performer.”

Changes in price and production variables saw each enterprise perform differently and weaning rate variations had the greatest impact. 

A 10 per cent increase in weaning rate, where there were no extra costs to lift the rate, increased the gross margin by 10 per cent for enterprises which bred their replacements and 14 per cent where replacements were purchased. 

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