Welcome to 2022 and another busy season. I asked in December if there would be interest in the cost of production data from 2021 and deep-dive on that. The response was a resounding YES. So here we go with what it cost in 2021 to produce lambs. This is based on actual monetary transactions, as in cash we actually spent during the year.
This cost of production is based on lambs that survived and we raised to be sold or kept as replacements. It is not based on the number of lambs born as that number matters very little. The number that matters to me is the number of lambs sold or that could have been sold. By that definition, this farm produced 526 lambs this year. There’s a decent number of market lambs still on hand at year-end, please see this blog (fall lambing) for more details.
Costs to Consider
I will be basing this cost of production on the following expenses:
Feed purchases including grain, minerals, supplements, etc.
Costs associated with hay production includes fertilizer, twine, net wrap, fuel and repairs
Veterinary costs
Breeding ram purchases
Custom work such as manure spreading
Selling costs including tags, transportation and commission
I am not including fixed costs like mortgage interest, utilities, insurance, vehicle expenses, and property taxes in the initial calculation. These remain fairly consistent year-over-year and would be incurred regardless of what we produce. I kept my cost calculations to costs directly associated with producing lambs.
Feed Costs
Before I mention the costs, I thought I’d share what it took to feed the flock and their lambs this past year:
582 bales of hay
21 tonnes of barley
1.5 tonnes of corn
5.4 tonnes of creep feed, pelleted feed and supplements
We do not graze or grow grain, our land is strictly used for forage production (Class 4 farmland with no drainage, zone 4b) meaning we buy in most of our feed. As a result of the 2020 drought, we did have to buy in some hay, which pushed the purchased feed costs up significantly. We did purchase hay insurance and the proceeds did offset some of the increased cost. The proceeds from the hay insurance were not factored into the cost.
The costs for the feed came out to $59.65 per lamb for purchased feed and $29.91 per lamb for homegrown feed for a total feed cost of $89.56 per lamb. The extra hay purchases work out to approximately $27 per lamb (included in the above figure). This is a cost that we are working on reducing but land improvements take time.
Selling costs
Tags, transportation and commission add up fast in a year. For this year, we spent an average of $25 per animal that left the farm. Tags are $1.80 per lamb. We do not haul the lambs in ourselves, we hire a trucker to come and pick them up at the farm. At this point, the costs of trucking do not justify hitting the road ourselves. It’s been considered but more due to the issues with logistics and access than the actual cost.
Total Variable Production Costs
At the end of the year, the actual cost to produce a lamb either for market or replacement came to $118.64 in expenses incurred. Most of this cost consists of feed which was higher than in previous years due to droughts and other supply issues. Buying hay had a major impact on the feed cost. We can produce hay for a fraction of what we can buy it for, $43 compared to $75 per bale as long as it rains.
The CECPA production cost for the equivalent expense categories per lamb adds up to $189.44 for the latest information (2020). Their total cost with fixed expense items matching mine is $240.41 per lamb. This information is indexed to a cost of production study done in Quebec in 2016 and based on a farm with 529 ewes.
Other Costs
As mentioned fixed costs are not included in the above calculation. Mortgage interest, property taxes, utilities, insurance and vehicle costs as well as other one-time costs totalled $55.56/lamb for a combined total of $174.20 per marketable lamb. This amount does not include amortization or labour, only actual monetary transactions. I also did not include any ewe lamb purchase as they are technically a biological asset and not a cost of production.
In terms of infrastructure, we use a barn all year. That barn initially cost $450 per ewe space to construct. It’s difficult to assign direct cost on a per lamb basis but using a standard building amortization calculation, it would be approximately $13 per lamb. Our equipment is older than we are for the most part and has been completely amortized.
Summary
To sum up all of these calculations:
We produced 526 marketable lambs in 2021 from 220 ewes
Feed costs came to $89.56/lamb
Other variable costs were $29.08/lamb
The total monetary cost to produce the lambs was $174.20 per marketable lamb
Thanks for reading! If you’ve been following other social channels, you’ll have seen that my writing is now in the latest issue of the Sheep Canada magazine. Keep an eye out for more in-depth writing there!