Expert advice on what makes sheep producers more profit

Sheep farmers looking at whether finishing lambs is more profitable by getting more pence a kilo or extra kilos at a lower price need to instead focus on the kilos of lamb sold.

That is the advice from sheep consultant Lesley Stubbings, who says the critical figure is the profit margin earned by the kilos of lamb sold.

She says the underlying problem in the sheep industry is that producers do not have the in-flock information to make decisions about the type of lambs they should be producing to make the most profit.

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“If you ask a sheep producer how many kilos of lamb each ewe in the flock produced that year and then ask for the average price earned per kilo of lamb sold – as well as what those kilos actually cost to produce – I wonder how many could honestly give those figures?

“It is the number of kilos sold that determine a flock’s unit cost of production,” says Mrs Stubbings.

She believes only when sheep producers can make these calculations will they be able to evaluate what type of lambs they should be producing, and at what weight they should be selling, to make the optimum profit.

“Most sheep farmers generally don’t know their costs of production, but assume their profit is governed by getting more money for their lambs or more pence per kilo.”

Dispelling the myths

“There is an incorrect assumption that by keeping lambs through to hoggets and trying to hit the £100 mark in late spring means they are earning a good profit. That’s wrong. Lambs that grow quickly are twice as efficient as lambs that grow slowly.

“So asking the question about what is the most profitable lamb to produce has no easy answer, but costs of production have to be known and form the basis of any assessment of the flock’s profitability.”

While Mrs Stubbings acknowledges that premium prices can be earned for three-quarter-bred continental lambs, she says there are many large flocks running commercial ewe breeds making good margins.

“They are producing good numbers of lambs and selling them swiftly and efficiently. They are hitting marketing targets on a deadweight basis; it’s a no bells and whistles system, but these lambs are earning the right money.

“At the other end of the scale there are smaller flocks that prefer to produce fewer, but higher-value, lambs and they do the job very well.

“But whatever the system the producer chooses, it’s essential to know not only what it’s costing to produce each kilo of lamb but how many kilos are being produced. Armed with those figures it’s then time to look closely at the bottom line.

“For most commercial flocks the priority is about producing more kilos rather than getting an extra 5p or 10p/kg.”

Auctioneer’s view

Harrison and Hetherington auctioneer Mark Richardson says it is about when lambs are marketed rather than about the type of lambs being sold that is important.

“There never seems to be enough of the smarter, lighter-weight lambs for the export trade and that’s what keeps their price up. Weight doesn’t necessarily mean more value a head.

“We have seen a trade this spring where the 38-42kg hoggs have been making more than those at 45-48kg,” says Mr Richardson.

He says there are still finishers who want to breed lambs that will allow them to “chase weight” in an effort to try to increase the total value of the lamb.

“But often they end up with lambs that are out of spec, too heavy, overfat and bad to sell. Everyone has their own preference when it comes to producing a certain type of lamb, but it’s as much about knowing when to sell to get the best return as it is about the actual breed of sheep being farmed.”

Eblex view

Steve Powdrill, Eblex primestock selection specialist, says weight will only pay when it is flesh and not fat.

“The bigger lambs get, the fatter they get, so the risk is that as you chase weight, a percentage of lambs get too fat. No good for the consumer and no good for the long-term image of lamb,” he says.

“When a producer wants to sell at 42-43kg but has lambs that have not got the genetic potential to get there without becoming too fat, he’s putting on extra kilos that will only lead to the lamb earning a lower price than if it had been sold when it was ready at, say, 38kg.

“Although there are many variables it is broadly reckoned that it costs four times as much to gain a kilo of fat than it does to gain a kilo of flesh.”

Mr Powdrill says improving skills in selection of lambs, rather than simply looking at the income of lambs in terms of their overall value a head, should be a priority for finishers.

“This season we have seen 42-44kg hoggs making £84 and 55kg hoggs making £90. That’s just £5 more earned for an extra 10kg. It doesn’t make sense.”

He says too many producers wait until they can just feel the lamb’s backbone almost disappear before they sell.

“With a prime wether lamb bred out of a hill-type ewe you will always feel the spinous processes. If you can’t it means the lamb is too fat. These lambs will never get to E and U grades and will make O and R for conformation.

“For finishers trying to earn extra income by putting on more kilos there needs to be a much clearer understanding of what is flesh and what is fat across the back of a lamb.

“There needs to be just a touch on the transverse processes, a cover on the ribs and a bit of cover on the dock. That says a lamb is ready to go. Beyond that and the lamb will just pile on fat, not kilos of flesh.”

Producers’ view

Anglesey sheep producer Will Evans averaged £107 for his first batch of 70 early-January-born lambs sold in mid-April. They were sold liveweight and topped 295p/kg.

By Beltex and Suffolk tups and out of a range of cross-bred ewes, the lambs were the first to be sold from a system that relies on earning premium prices for quality lambs.

“Our first batch of lambs were sold liveweight, but we also sell deadweight. The aim is to try to get lambs away as soon as we can and earn a premium price per kilo,” says Mr Evans, who also runs a pedigree Beltex flock at Bodwrdin Farm, Bodorgan.

“The earliest-born lambs that reach the right weight quickly are sold live and then the main flock, which produces Beltex-sired lambs, are sold deadweight to earn a premium for a top-quality carcass at 19-21kg.”