Cost Analysis and Expected Profitability of the Small Sheep Ranch

Cost Analysis and Expected Profitability of the Small Sheep Ranch

Starting a small sheep ranch seems like it should be easy enough. Put up fence, erect a barn for hay and a barn for sheep in the Winter and plant lots of grass…simple! (Or so I thought 5 years ago)
in the first year I learned a couple of hard lessons. 1. It REALLY matters who you buy your sheep from. 2. You NEED to know how to physically examine the sheep before loading them on your trailer.
I was so excited to find a small flock all at one location with the rare breed sheep I had settled on that I forgot to ask important questions…and require paperwork up front. Over the phone the seller said they averaged 3-4 years old…when I got the registrations in the mail it looked more like 5-9 years old. His prices were a bit higher than everyone else’s but he was closer.
My fit of impatience cost me $1900.00. Don’t get me wrong..I am breeding them and will come out okay in the long run but I took the word of the seller without verifying and doing a physical exam. Always a mistake.
My second foray into the wonderful world of registered sheep went much better! We traveled 700 miles to Wyoming and met the nicest people you could ever wish to meet. They sat us down and went through the breeding records, history and genetics and encouraged a physical exam of each sheep before loading. The sheep were STUNNING! I had never seen a more beautiful example of the species than these sheep! This second purchase became my current pure bred breeding stock. We are going back this Summer to pick up two more rams and a ewe!
We had prepared for this before hand and talked long and hard about the costs and requirements. There are tools of the trade that you need before the sheep ever arrive. Shears, tagging equipment, auto injectors, medications, vaccines, dedicated refrigerator/freezer, dry lot handling equipment, hoof trimmers, on call vet, milk replacer, etc. etc. etc. this all very quickly consumed the better part of $18,000. And that was only the beginning. Sheep are prey animals. So the fencing needed around your entire acreage must be stout enough to keep the predators at bay. $15,000. Once the pasture is settled you want to to produce the right kind of grasses and legumes for the sheep..overseeding is a must: $1,400. Animal shelters in every pasture, main animal barn for Wintering and lambing, lambing pens, hay barn, hay harvesting equipment, storage for equipment: This will depend on what you already have. For us, $160,000. Farm truck, tractors hay handling equipment:$92,000
there’s more…so much more…it keeps adding on and we keep wondering if we will reach a point of ‘enough’…but things wear out, medications go out of date or run out, more lambs born mean more…well…everything!
So when do we expect to start making a profit? We’ve been at it for 5 years and the ranch is still a cost center but we see light at the end in another 2 years! (and if not…2 more years after that…and if not…..etc)
Finding reliable suppliers is a long and difficult process but once you do you will save LOTS of money! Hay, grain, vet services, slaughter/butchers ect. You will expect to pay them a fair price because without them you cannot succeed.
Auctions- this is a great resource and the only way to sell the very best of your breeding stock is to take them to an auction specific to your sheep. finding a country fair auction and finding a good breeding stock auction will mean the difference between $1.80lb and ‘The Sky’s the Limit’…I mean that it makes a lot of difference. $200 for lamb meat when you have a genetically perfect breeding animal would be disappointing. At a breeding stock auction if you get the right bidders you can realize over $1,000 per animal…much more for the rare or highly desireable breeds.
Finally, you need to have an outlet for your meat. Not every lamb is genetically perfect and bound for auction. Contacting small business owners like restaurants and custom meat producers are perfect outlets. Also consider local groups of new immigrants and Established ethnic groups. Lamb is extremely desirable on certain holidays. Do your research, find out what those days are and where you can find the people celebrating them. They will often be willing to come out to your farm, slaughter the animal themselves and take the carcass leaving cash in hand (and a mess to clean up which you should charge for!). Finally, be prepared for the unexpected. Animals are a HUGE responsibility. This is not a venture you can go into on a shoestring. The operation I have described is just 10 acres and a start of just 5 sheep…It has grown…we expect to support almost a hundred sheep at peak and we are looking a buying the property next door to add 16 acres of alfalfa fields to support out Winter feed needs. Another thing to consider is your age. How long do you have to make this thing pay off? I was 55 when i started. I’m 60 now and hope to be profitable (after spending all of my early retirement) in another 2 years. I will probably sell out as a functioning sheep ranch when I am 75. Until then I eat lots of lamb, garden vegetables, pumpkins, home made goodies and look at lots of nice things to buy….and say “I can do without”.
update: equipment, feed, and medical costs have risen, on average, 264% in 2021-22. This means that the annual costs of feed, fuel, seed and maint. have gone from $14,600 to a record 34,950 this Summer in preparation for Winter. our plans for building a new barn have more than doubled. On the other hand our heavy equipment for sale for $16,000 has also risen in price (for quick sale) to almost $40,000! So in a time when thing are more challenging you can look around at what is sitting and doing nothing….it might have gone up in value!
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