Sustainable Economics: A High Return Model

Over at Thoughtful Food’s farm blog, there’s been an interesting discussion about types of farms and various paths to earning a profit with farm income.

I made a couple of comments offering an example of a high return model that would yield enough farm income to pay off even a 400k house and barn on 5-7 acres in under a decade.  The model was specialty wool and meat production from sheep.  There are several breeds of sheep whose wool is highly valued in the specialty wool (handspinning, felting, crafts, etc) market.  The meat can often be sold at a modest premium compared to regular lamb, and there’s also the breeding stock/pet fiber animal possibilities for further income.

With specialty wool, the top end is currently right around 90/lb for finished yarn in skeins and the bottom end is around 10/lb for raw fleece, usually skirted (trimmed of the worst poop bits and leaves/etc).  An adult ewe yields 8-12lbs of wool annually after washing and skirting, depending on the various specialty breeds out there.  Twinning is usual, so those two lambs yield 2-4lbs combined of lamb’s fleece, added to the ewe’s total.

Lowballing, that’s 10lbs of wool per ewe per year.  That’s 100-900 dollars per ewe per year.  Not all ewes will have fleece that can go to the highest-value yarn.  So the midpoint there is 500 dollars per ewe in fleece sales to account for wool sales having such a wide range per pound.

At  500 in wool per ewe, the two lambs will yield 300 each at a modest premium as meat and 400 each as breeding stock.  So that is 600-800 in lamb sales per year per ewe.  Now we’re up to 1100 per ewe per year in wool plus lamb sales.

Five acres can stock  25-35 ewes, six 30-40 and seven acres can stock 35-50 ewes.  This gives 55k/yr at 50 ewes and 33k/yr at 30 ewes.  I am handwaving the ram issue for now, but there is room to grow into an aggressive program of getting 70-90/lb for wool sales and selling meat animals at breed stock prices.  And with hitting those aggressive targets, on five acres stocking 30 ewes, getting 1600/ewe is pretty close to 50k/yr off less than 3 dozen animals.

This is a labor intensive model, no sugar coating on that one.  Carding, picking and cleaning wool is challenging, as are the husbandry techniques to minimize skirting and dirt accumulation and the practices to get excellent quality wool production.  But the customer base exists and the sales are good enough that shepherds can come close to the higher-end numbers for pure fiber flocks, no meat sales.  That is nearly 1k/ewe just for wool alone annually.  And ewes live 15-20 years.

This is just one example of a high-labor, high-return model.

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3 thoughts on “Sustainable Economics: A High Return Model

  1. What stops you from doing this?

    Couple of points; you mention that breeding stock are sold at $400 each; to buy your 50 ewes you’d need to invest $20k. Mortality is an issue; predators and accidents, some ewes twin, but others don’t have any at all. Your likely replacement each year is going to be something like 1.2 or 1.3, not 2.0. The reproductive lifespan of a sheep is less than 10 years for most sheep operations, and the old sheep don’t sell for much. Fencing, veterinary costs, castration, tail docking, minerals, labor.
    50 sheep at 10lbs/sheep/year and $10/lb sale price gives you a gross revenue of $5k a year at the low end, which basically will never pay back your $20k investment given that at a stocking rate of more than 10 sheep an acre you’ll be buying hay every year. At your midrange, $50/lb you have a total revenue of $25k a year (10lbs/sheep * 50 sheep * $50/lb), and that assumes that you have a ready market for 100% of what you produce. It’s a lot easier to raise animals than to sell them, and if you’re selling to a retail store they’ll expect a 100% markup, which means your $50 fleece is actually sold to the retailer at $25. So you’ll have marketing costs, customer support, and you’ll lose some fleece because there’s always some loss in processing.

    Oh yea; hay costs. 50 ewes at 125lbs each is 6250 lbs of sheep, or 6.2 animal units. They’ll consume about 140lbs of hay daily for at least 5 months of the year. Medium quality hay is $250/ton, for 5 months your hay bill is ;$2625. Ignoring barn, property, mineral and feed costs, but you’ll need some of all of those. to get an idea of what you can spend on sheep, take a look at what michelle spends on her operation; quite a bit, and not much return. For her carefully cared for sheep, I’m going to guess her total gross sales are on the order of $8k a year.
    colliefarm.wordpress.com She just blew $300 on a vet visit for a 10 year old ewe, which basically eliminates any chance of profit for that animal for the rest of time, in my opinion.

    • I totally agree that this is an aggressive, high-labor (marketing is labor of course) model for direct marketing yarn, felt, raw fleeces and meat lambs and breeding lambs from a small hobby-sized flock. As far as I’ve seen and talked to, local shepherds have zero trouble finding enough buyers for 40-100 lambs per year, generally at 5-6/lb hanging weight. There are some who go full-on for the premium market and charge what is equivalent to 7 or more hanging (lot of different pricing models out there for lamb sales).

      I think your points are sound, those 20-50 ewes would certainly not be yielding 100% profit on those grosses. And expenses have to be considered in any approach no matter how aggressive.

      But this example is basically a mash-up of various shepherds who got those kinds of gross returns on a per-ewe basis.

      As for us, we’re just trying to get through a lambing season and a shearing. We’ll see if the ‘squeeze every dollar from a small acreage’ model is even an option. Could be we have to stick with ducks and a garden and firewood.

      I will, if I get the time this month, go ahead and revisit this model and work through the total picture including expenses and amortizing the barn/land/fencing/other infrastructure. That’s a reasonable adjunct to just listing out the potential gross income.

      My shepherding role model is a shepherdess who spent at least 4 hours every day marketing, marketing, marketing. Her flock never got very large (peaked around less than 200 and was under 100 most of the time she ran it, she was a very aggressive culler), but she completely supported her family on that flock’s income. She did just about sell it all, including the BAAAAs. Her untimely death led to dispersal though.

  2. 30 ewe with twin on 5 acres will beat that down over time, reseeding and moving the animals, … How much time does it take you to clean 10lbs of wool, labor costs? What is the learning curve going to cost a new shepherd/ess in lower quality wools? where are you drying and storing hundreds of pounds? Do you think that 1 person can manage 30 ewe and twins on a few hours a day? Twinning requires extra inputs to maintain good lactation from the ewe… As bruce said quality hay over the winter… If you can earn 55k/year for 50 head, why don’t you try it? Or offer the land and animals up to mentor someone else into a 55k/yr income?

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