Background information on sheep gross margin budgets

Sheep production in NSW is carried out in a wide range of environments from high rainfall tablelands country to arid country in the west. There are a range of production systems that producers have developed to meet  particular markets. The budgets provided represent the more common production systems available in NSW.

They are for theoretical flocks of 1000 ewes or wethers. Assumptions are made regarding weaning percentages, death rates and growth rates to determine sale numbers and costs. The majority of the budgets presented are based on improved country capable of running any of the enterprises. The production levels are achievable by most genuine producers, given good management practices and sufficient planning.

These budgets are not a complete list of all sheep production enterprises. The aim of these budgets is to provide producers with an additional planning tool to help evaluate options. The budgets presented are a statement of recent costs and prices. As we all know, it is extremely difficult to accurately predict future prices, growth rates and feeding costs, to name a few of the variables. However, by using the best available information, it is still better to evaluate your options by making your own projections and combining them into a business plan for your property. These budgets will help you in developing your own budgets.

On the second page of each budget there are a number of sensitivity tables. These tables allow you to assess the impact that changing prices and production levels will have on the gross margin.

The actual change in dollar terms, both positive and negative for each livestock category can be added together if there are a number of price or production changes you wish to consider. This will enable you to calculate a new gross margin made up of a number of variables.

However, the sensitivity table associated with ‘weaning percentage’ cannot be used in this way as varied price and production changes would need to be recalculated as the number of animals change. The table will however give you an idea of how your calculated gross margin will change with a change in weaning percentage.