Working Budgets for Meat Goat and Sheep Production

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Working Budgets for Meat Goat and Sheep
Production

• 75
• 225

100
100
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Can you make money raising meat goats and/or
sheep?
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Why do you want to raise goats and/or sheep?

• Economic
• Tax advantages
• Investment
• Produce an income
• Environmental
• Control vegetation
• Multi-species grazing
• Quality of life
• Produce own food, fiber
• 4-H/FFA project
• Retirement activity
• Hobby/lifestyle

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Tax Advantages

• Ag land transfer tax
• Ag land assessment
• Sales and Use Tax Exemption
• Tax write-off
• Deduct expenses from ordinary income
• Depreciation/section 179 deduction (IRS
  112,000 in 2007)

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Farming for a Profit

• To qualify for favorable tax treatment as a sheep
  or goat producer, you must establish that you are
  in business to make a profit.
• You must file a schedule F with your tax return.
• You must make a profit in 3 out of the last 5 tax
  years.
• You may still qualify as a for-profit farm if
  your intention is to make a profit.
• 9-point test

Goat eating chicory
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Enterprise BudgetsPlanning for a Profit
Scott County, VA

• Includes estimates of income, expenses, and
  profit.
• Useful for performing breakeven analysis for
  profits and yields.
• Part of a business plan.
• Compare enterprises and appropriate determine
  mix of enterprises on a farm.
• Support credit and grant applications.

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Production parameters and key assumptions

• List the inputs and production practices required
  by the enterprise
• Flock/herd composition
• Reproductive rate
• Replacement rate

Image by Jeff Semler
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Percent kid (or lamb) crop raised is not the
percentage born or raised, but the percentage
available to market or keep as a replacement.
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Income Receipts

• Include receipts for every product and by-product
  you sell
• Sale of market animals
• Breeding stock sales
• Resales of livestock
• Sale of breeding animals
• Sale of cull animals
• By-product sales (e.g. wool)
• Government payments LDPs, EQIP etc.
• Other income

Image by Jeff Semler
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A 70 lb. goat that brings 70 nets only 93 cents
a lb. if it costs 5 to sell the goat. Livestock
will also lose weight (shrink) on the way to
market (3-10).
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Variable Operating Cash (out-of-pocket)
CostsThese costs vary according to the level of
production.

• FEED
• Health program
• Bedding
• Supplies
• Hired/custom laborField work, manure hauling,
  shearing
• Ram and buck replacement
• Marketingtransportation, hauling, meals, time
• Other (registration fees, memberships,
  advertising, education)

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• If you produce your own feed, use market values
  for feed costs.

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Fixed costs indirect costs non-cash
overheadThese costs are the same regardless of
the level of production

• DIRTI-5
• Depreciation
• Interest on investment
• Repairs
• Taxes
• Insurance
• Land charge
• Labor
• Management fee

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Profit Analysis

• Returns above variable costs
• Returns above all costs (variable fixed)
• Fixed costs must be covered in the long term
• Return to labor and management
• Breakeven price
• Breakeven yield

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Major factors affecting profitability

• Percent lamb/kid crop marketed
• Litter size
• Survival to marketpredators, diseases
• Feed costs
• Pasture maintenance
• Hay, grain, minerals
• Net market prices
• Price per lb. or head
• Less shrink, commission, check-off, and
  transportation costs
• Quality affects prices

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Percent lamb or kid crop sold
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Feed Costs
Doubling the amount of grain fed will reduce
profit per doe by 14.00.
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Market Prices
Dont forget selling commissions, shrink, and
transportation costs. The highest price isnt
always the highest net price. Know what your
goats weigh!
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What about breeding stock and wethers?

• Greater profit potential?
• Higher feed costs?
• Higher health costs
• Additional costs.
• Higher value breeding stock.
• Faster turnover of breeding stock.
• Not all sheep and goats can be sold as seedstock
  or project animals

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Keys to making a profit

• Manage like a business make decisions on the
  basis of economics
• Maximize the use of pasture or other low-cost
  feeds.
• Shop around for feed ingredients
• Be your own vet.
• Strive to produce at a 200 kid/lamb crop.
• Eliminate as many middlemen as possible.
• Keep good records (financial and animal).
• Be realistic about breeding stock.

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Questions, comments . . .
Western Maryland Pasture-Based Meat Goat
Performance Test Begins June 9, 2007
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Web Resources on Goats and Sheep

• Maryland Small Ruminant Pagehttp//www.sheepandgo
  at.com
• Maryland Sheep and Goat Producer (quarterly
  newsletter)http//www.sheepandgoat.com/news/index
  .html
• Shepherds Notebook Bloghttp//mdsheepgoat.blogsp
  ot.com
• Western Maryland Pasture-Based Meat Goat
  Performance Testhttp//mdgoattest.blogspot.com
• Sheep 101 and 201http//www.sheep101.info and
  /201
• National Resource on Sheep Goat
  Marketinghttp//www.sheepgoatmarketing.info