Profitable production and

marketing of meat goats and sheep

SUSAN SCHOENIANSheep & Goat Specialist

www.sheepandgoat.comsschoen@umd.edu

What is PROFIT?

INCOMEMINUS OPERATING COSTSMINUS FIXED COSTS (OVERHEAD)

EQUALS NET FARM INCOME OR PROFIT

REDUCE COSTS• Reducing operating costs by

spending less money on feed, supplies, veterinary medicine and services, and capital improvements.

• Reduce costs by utilizing resources more efficiently.

Increase reproductive efficiency: pounds of quality offspring weaned per female exposed for breeding

INCREASE INCOME• More animals to sell• Better quality animals to sell

(e.g. higher grade).• Heavier lambs and kids• Lower marketing costs• Higher prices

Two ways to increase profit

Current situation in sheep and goat marketing

• RECORD HIGH PRICES

– Insufficient supply of lamb and goat in U.S.• Esp. regional supply

– Strong demand• Esp. regional demand• Esp. ethnic demand

– Low value of U.S. dollar makes imports more expensive.

112-lb. lamb sold for $232 in July.

BUT…

• Prices won’t always be this high.

• You don’t always get the prices you see posted in the newspaper or on the internet.

• It’s hard to know what goats are selling for since they are often not weighed and grading is very subjective and not always consistent.

AND…

• There are many costs associated with selling lambs and goats at a public auction.

• Transportation costs• Shrinkage• Yardage• Sales commission

• Selling price ≠ net price

Who eats sheep and goat meat?

• The per capita consumption of lamb and mutton is low, less than 1 lb. per person.

• Per capita consumption is much higher among people of certain ethnicities.

• The ethnic populations that eat lamb and goat are increasing.

Who are our primary consumers?

Chevon (cabrito)• Hispanics (Latinos)• Muslims• Arabs• East Asians• South and Central Asians• Africans• Caribbean Islanders

Lamb and mutton• Muslim

• African Americans• Arabs• South Asians• Others

• Christian– Esp. Orthodox

• Greeks• Russians• Eastern Europeans• Ethiopians

• Jewish

On average, Muslim-Americans are younger, better-educated, and more affluent than the average American.

What is an ethnic market?

• An ethnic market is a group of consumers that share a common cultural background: race, color, national origin, religion or language.

• There are many different ethnic markets for goat and lamb.

Ethnic marketing: sheep and goats

• Different ethnic groups and individual customers have preferences for different kinds of animals.

• Species• Sex• Age• Weight• ConditionKnow what your customers want.

Ethnic marketing: sheep and goats

• The demand for lamb and goat in advance of certain holidays.

• Religious– Muslim– Christian– Jewish– Hindu

• Non-religiousKnow the holidays in which lamb

and goat are in high demand.

Major Muslim holidays EID is the Arabic word for festival.

• RamadanMonth of fasting

• Eid ul FitrFestival of Fast-Breaking “Little Eid”

• Eid ul AdhaFestival of the Sacrifice“Big Eid”

• AqeeqahBaby-naming ceremony

Muslim holidays are based on the sighting of the moon and move

back ~11 days each year.

Ethnic holidayshttp://www.interfaithcalendar.org

Holiday 2011 2012 2013 2014 2015Eid ul-AdhaFestival of the Sacrifice Nov 6 Oct 26 Oct 15 Oct 4 Sept 23

Muharramm/HajraIslamic New Year Nov 26 Nov 15 Nov 4 Oct 25 Oct 24

Mawlid al-NabiProphet’s birthday Feb 15 Feb 4 Jan 24 Jan 13 Dec 23

Start of Ramadan Aug 1 Jul 20 Jul 9 Jun 28 Jun 18

Eid ul-FitrFestival of Fast Breaking Aug 31 Aug 19 Aug 8 Jul 29 Jul 18

Passover / Pesch Apr 19-26 Apr 7-14 Mar 26-Apr 2 Mar 15-22 Apr 4-11

Rosh Hashanah Sep 29-30 Sep 17-18 Sep 5-6 Sep 24-25 Sep 4-5

Chanukkah Dec 21-28 Dec 9-16 Nov 28-Dec 5 Dec 17-24 Dec 7-14

Western (Roman) Easter Apr 24 Apr 8 Mar 31 Apr 20 Apr 5

Eastern Orthodox Easter Apr 24 Apr 15 May 5 Apr 20 Apr 12

Christmas Dec 25 Dec 25 Dec 25 Dec 25 Dec 25

Orthodox Christmas Jan 7 Jan 7 Jan 7 Jan 7 Jan 7

Chinese New Year Feb 3 Jan 23 Feb 10 Jan 31 Feb 19

Ethnic slaughter

• Some ethnic customers require animals to be slaughtered in a certain way.

• Halal (Muslim)• Kosher (Jewish)• African/Caribbean• Other

There is an exemption for religious (no stun) slaughter.

Slaughter options for sheep and goats

On-farm

No inspection

For own consumption

Open to interpretation

State inspection

Federal-state cooperation

“At least equal to” federal inspection

New policy allows interstate sales

Purpose of inspection is to ensure wholesomeness of products.

Includes inspection of facility and animals (ante and post-mortem).

Two general ways to market agricultural products

Wholesale (commodity)• Usually a price-taker• Loss of product identity• Raw product (commodity)• Easy and convenient• Probably more profitable when

prices are high.Retail (direct)• Usually a price-setter• Product identity/differentiation• Value-added• Usually requires a lot more

time and expense• More profit potential when prices are

low or fluctuate widely.

Marketing sheep and goats

Wholesale (commodity)

• Live animal– Public auction

• Local sale barn• Terminal market

– Middlemen• Buying station• Live market• Broker or dealer• Direct marketer

– Abattoir

Retail (direct)

• Live animal– On-farm sales

• Freezer trade• Ethnic customers

• Carcass or meat – Farmer’s market– CSA– Farm store– Via Internet– Restaurant– Retail store– Event

Three ways to price animals

1. Market price + premium

2. Breakeven price + profit margin

3. What the market will bear.

The key is repeat customers.

Know what your animals are worth?

• Sale barns are a place of price discovery.

• Learn how to read a market report.– Prices– Terminology– Grades

Understanding USDA goat grades

• Selection 1Superior meat type

• Selection 2Average meat type

• Selection 3Inferior meat type

Grades do not consider fat cover, weight, age, sex, or breed.

Understanding USDA sheep and lamb grades

Conformation and quality• Prime• Choice • Good• Utility • Cull (sheep only)

Yield (cutability)• 1 - 0.15 in. and less• 2 - 0.16 to 0.25 in.• 3 - 0.26 to 0.35 in.• 4 - 0.36 to 0.45 in.• 5 - 0.46 in. and greater.

Ninety percent of lambs grade USDA Choice or Prime. Yield grading is voluntary.

Some tips for selling sheep and goats through a sale barn

• Put livestock into market at least one week before holiday.

• Sell when prices are low prices supply supply prices prices supply supply prices

• Mark your animals according to how you want them sold.

Some tips for selling sheep and goats through a sale barn

• Do not dock, castrate, or disbud unless you have to.

• Do not sell animals with dirty butts or hocks.

• Sell lambs and kids directly off their dams (unless you plan to feed them to heavier weights).

• Sell colored goats.

• Make sure you livestock are put in a clean, uncrowded pen with food and water.

Some tips for selling sheep and goats to a middleman

• Know what your livestock are worth.– Know weight– Know grade

• Points of negotiation– Transportation– Shrink– Payment

Direct marketing tips

• Direct marketing shouldn’t be a way to make a profit in agriculture, it should be a way to increase profitability.

• Market your products honestly.

• It may take a while to build a loyal customer base.

American Lamb Check-off www.lambcheckoff.com

• No matter how you sell your sheep, you are obligated to pay the lamb check-off.

1. One-half cent per lb. of live sheep

2. 30 cents per head of lambs purchased for slaughter

No check-off for goats.

Profitable production and marketing of meat goats and sheep

Thank you for your attention.

Any questions?

www.sheepandgoat.com