Interest in intensive small-stock enterprises is increasing in South Africa. Intensive small-stock production is, however, a high-risk industry. While the turnover is higher than in extensive systems, the margins are smaller due to the relatively high input costs.

Price margin is the first profit driver of an intensive small-stock enterprise. In current market conditions, the price margin is often negative at the start of the finishing period but can be turned around by focusing on the other cost drivers during the 6 to 7 week finishing period.

Farm-produced lambs have a positive effect on the price margin, as they do not carry a transport or commission component. It is important, though, to assign the correct market value to these lambs when calculating the gross margin of the enterprise.

The time lambs spend on feed is important for profitability, making meticulous management of the feed margin critical, especially when the price margin is negative. The feed margin, which makes up the biggest portion of overall costs, is driven by two factors: The growth rate of lambs, expressed as average daily gain (ADG), and the efficiency at which lambs convert the feed into growth, expressed as the feed conversion ratio (FCR, kg of feed needed to gain 1kg of body mass). ADG should be in excess of 300g/animal/day for the enterprise to be profitable.

Budget and plan

A carefully planned budget must be drafted before making the decision to move to an intensive system. It should be updated during the feeding period. The components of such a budget are illustrated in Table 1. For the purpose of indicating the effect of growth rate on profitability, this calculation does not consider the cost of capital, although it is an important figure when calculating an accurate budget.

Table 1: Gross margin budget of intensively fed lambs. (Weaner lamb and meat price for December 2018.)

Costs   Per lamb Per lamb
280 g/d growth 330 g/d growth
Purchase price 31kg live at R36,67/kg R1 136,77 R1 136,77
Processing Estimate R28,00 R28,00
Overhead costs Labour, transport, etc. R62,40 R62,40
Feed intake 1,7kg/day avg. 103 88
Feed cost R4 128/t complete finisher feed R426,07 R361,51
Growth rate Kg/d 0,28 0,33
Standing day on feed Function of growth rate 61 52
FCR Kg intake/kg growth 6,1 5,2
Slaughtering costs Estimate R20,0 R20,0
Mortality 1% of purchase and processing R11,65 R11,65
Total cost per lamb R1 684,89 R1 620,33
Returns Per lamb Per lamb
Marketing weight Live, kg 48,00 48,00
Carcass mass 46,5% dressing percentage 22,32 22,32
Carcass value 22kg at R73,83/kg R1 647,89 R1 647,89
Wool/hide Meat type animal hide R30,56 R30,56
Total income per lamb R1 678,45 R1 678,45
Profit/-loss per lamb -R6,44 R58,12

 

It is evident that growth rate and efficiency of the lamb is critical. The selection of quality lambs for intensive systems, as well as the choice of quality feed is non-negotiable. It is also clear that the difference between profit and loss can be as little as 50g growth per day, if all other factors remain constant.

A balanced feedlot ration should supply sufficient protein and energy to optimise growth without causing metabolic or rumen disturbances. The balance of macro-minerals is critical to limit the occurrence of urinary calculi, while trace minerals and vitamins should be supplied according to the animal’s nutrient requirements. Sulphur should be included proportionally to nitrogen, especially when urea is used in the ration. The desired ratio of urea to sulphur is around 10:1.

Finally, the choice and inclusion level of roughage is important to ensure a healthy rumen environment. The fibre component should be effective to stimulate chewing and rumination for sufficient salivation and rumen motility. The total ration should contain a minimum of 30% neutral detergent fibre (NDF).

The availability of clean, fresh water also has a direct and substantial effect on feed intake, and therefore on performance.

Under current market conditions and as can be seen from the calculation, intensive finishing of lambs is under severe pressure. Producers must therefore consider alternatives. Backgrounding to reduce the costly fattening period can be considered, while still producing a desirable product according to consumer demands. – Dr Francois van de Vyver, national technical manager: ruminants, Nutri Feeds

 For further information on the intensive production of small stock, send an email to Dr Francois van de Vyver at fvandevyver@countrybird.co.za or phone 018 011 8888.

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