Friday, March 29, 2024

Wool-less shears costs

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After running separate wool and non-wool flocks alongside each other Grant and Sandra McMillan are reasonably confident they could farm sheep viably without wool.
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To be sure, the King Country farmers asked local farm consultant Geoff Burton to look further into the two scenarios, comparing the key factors affecting farm surplus if they were farming non-wool or wool ewes.

Using information gathered by the McMillans while farming both flocks, Burton was able to demonstrate what the financial results were likely to be if they did decide to convert to Wiltshires.

The comparison indicated a non-wool sheep policy on the McMillans’ farm would:

  • reduce income by $16,900
  • reduce total expenses by $35,500, and
  • increase surplus by $18,600 or 7% ($7/su, $65/ha)

Burton concluded that because of less reliance on weather and critical timing factors, the non-wool scenario would increase management flexibility and reduce stress.

With no shearing or wool sales the policy would reduce community employment and trade. Income diversification would also be limited, relying solely on sheep meat markets.

Under this scenario, the non-wool sheep policy requires 61% fewer man hours – 29 days in total for sheep mustering and handling. 

The price of all wool sold would need to increase by $1.42 to $5.33 net per greasy kilogram for the two policies to break even.

Any increase in sheep meat prices would favour the non-wool option because of heavier lamb carcaseweights and more sheep available for sale owing to fewer sheep deaths. However, cashflow benefits of the non-wool policy are not significant until March.

These comparisons relate directly to the McMillans’ farm and their particular sheep see onfarm p66. The product prices and expenses used are based on current actuals as advised by the McMillans or fair budget assessments for the 2015-16 year.

Average lamb carcaseweights for the wool sheep are 16.5kg and for the non-wool sheep 18kg, based on actual current farm performance. 

Net lamb schedules are identical for both sheep policies – $5.50/kg in December and $5.20/kg thereafter. 

Ewe sale prices are identical – $75 for scanned dry ewes and $68 for cull ewes. Ram costs per head are current actuals – $1750 for wool rams and $900 for non-wool. Net greasy wool prices are $4/kg for ewe hoggets, $3.75/kg for second-shear ewes and $4.50/kg for lambs.

Animal health and shearing programmes are from actual farm figures and the sheep drenching policies are identical between the two scenarios.

Sheep breeding performance, wool and meat production and deaths, are based on actuals from the farm or fair budget assessments.

Sheep policies for wool and non-wool options are identical:

  • 2000 ewe flock
  • 650 (32.5%) ewe replacements retained with 500 (77%) of these scanned in-lamb
  • ewes dock 140%, in-lamb ewe hoggets dock 90%
  • lamb sales pattern (lambs sold each month), and
  • a stocking rate of 2850 sheep on 285ha = 10su/ha.

Sheep deaths are provisional actuals:

Non-wool, Wool

  • Ewes: 3.5%,7.0%
  • In-lamb ewe hoggets: 2.0%,3.5%
  • Dry hoggets: 2.0%,2.5%
  • Lambs from docking: 2.0%,3.0%
  • Labour is based on actual man hours required on the McMillans’ farm for each sheep handling activity and costed at $25/hr.
  • Burton said some factors that were not allowed for in this comparison but might require further investigation include:
  • differences in grazing-feed conversion efficiencies, particularly on typical average quality North Island hill-country pastures
  • tolerance to climatic temperature extremes, both hot and cold
  • variation in net nutrient (fertiliser) input requirements with particular consideration to the relatively high sulphur and nitrogen components of wool
  • variations in carcase yield, longevity and in parasite control requirements and resistance
  • the cost, including capital requirement and depreciation of buildings, structures and plant required for dagging, crutching, shearing and dipping for fly – required only for the wool option, and
  • the opportunity for cost-of-labour savings of the non-wool option – at $25/hour the benefit of the non-wool option for the 232 hours labour saved is $5800.
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