Latest NSW sheep gross margin analysis is encouraging

Sheep Central, June 17, 2019

A Merino ewe with twin lambs. Picture – AWI.

A SELF-REPLACING 18 micron Merino operation has come out on top in the latest gross margin analysis of sheep operations in New South Wales.

New figures from NSW Department of Primary Industries have highlighted the underlying profitability in sheep enterprises and show they are getting stronger, despite the dry conditions.

Sheep enterprise performance has steadily improved in the last 10 years and the analysis was very positive for wool-based enterprises and positive for most sheep meat enterprises, NSW DPI said.

The addition of an eight-month period of full drought feeding to the analysis showed the majority of sheep enterprises weathered the initial onslaught of the drought.

DPI sheep development officer, Geoff Casburn, said the analysis of 10 typical sheep enterprises revealed an average rise of $5.50 per dry sheep equivalent (DSE) to around $50/DSE or $500 per hectare at a stocking rate of 10 DSE/hectare.

“Wool enterprises increased by $9.50, on average, with the 18 micron self-replacing Merino enterprise delivering the highest gross margin of $63/DSE, breaking the $600 per hectare barrier at 10 DSE/ha,” Mr Casburn said.

“This result is primarily due to wool income gains, with the enterprise also receiving a 21 per cent increase in the dollar value of four-month-old wether lambs sold to fill demand from wether enterprises.

“The 20 micron wether enterprise saw the largest gain, with gross margin up $13.07 to $49/DSE, or $130/ha at a stocking rate of 10 DSE/ha,” he said.

“Despite paying more for wether lamb replacements, wether enterprises performed exceptionally well, with the 18 micron wethers achieving $59/DSE.”

DPI said while drought has been very challenging for sheep producers during the past 18 months, the strong underlying profitability of sheep enterprises has cushioned the impact, even when supplementary feeding was taken into account.

The impacts of this drought are being felt across the state, so to see the underlying profitability of these enterprises reaffirmed is very good news for sheep meat and wool producers, the department said.

Enterprises which performed well in good times were in a better position to weather difficult times and will be more likely to recover sooner, when conditions improve. Lower production outputs, which would be expected during drought, were not included in this analysis as production changes between enterprises were difficult to accurately represent, DPI said.

Sheep enterprise gross margins use sensitivity tables to reflect impacts, changes to key production, income and cost indicators. DPI advised producers to develop their own gross margins using actual costs and income.

Click here for more details on the gross margin results.

The full details of the gross margin outputs for 10 typical sheep enterprises, including an eight-month drought feeding analysis, can be found here on the DPI website.


Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


Get Sheep Central's news headlines emailed to you -