Wool Income Only Contributing
Seven Percent To Bottom Line

By Colleen Schreiber

SAN ANGELO — Without trying to be pessimistic about the status of today's sheep industry, Extension sheep and goat specialist Dr. Frank Craddock, encouraged sheep producers attending the recent annual sheep and goat field day here to be conscious of where their income is coming in from.

Since the loss of the Wool Act, he noted, it's been painfully evident just how little wool income contributes today to the bottom line.

"For many years we've selected for wool production, and we've done a good job at that. Our wool is as fine as there is; we have high yielding wool and we have ewes that will shear a lot of wool. We've made a lot of progress over the years.

"But while we were focusing on wool, many of us forgot about the lamb. Many of us were happy with a 70 pound lamb coming off its mama and a 90 percent lamb crop. We made money when we had the incentive program. That loss now has to be made up on the lamb side, and a lot of us don’t have the lambs that will do that.

"I am a wool person," Craddock reminded listeners. "I love wool as much as anyone in this room, but this is reality."

To better depict the current situation, Craddock presented a graph showing expected income from lamb, wool and cull ewes using various pricing levels.

Assumptions made included a 100 percent lamb crop, eight pounds of wool per ewe per year, a 20 percent replacement rate, 125 pound cull ewes at $35 cwt. and a three percent death loss in cull ewes.

Though weaning weights are highly variable, Craddock chose to use a 70 pound weaning weight because, he said, it is generally considered to be about the state average. The pricing variables used were 60 cents, 80 cents and $1 for lamb and 50 cents, $1 and $2 for wool.

"What’s real right now? We have 70 pound lamb bringing 80 cents and wool about 50 cents," Craddock reminded producers. "That means the lamb is making up about 80 percent of the income while the cull ewes are bringing in 13 percent and the wool a mere seven percent.

"If we get wool back up to $1 a pound, that jumps wool somewhere around 10 to 15 percent of your income," he continued. "If we ever get wool back up to $2 a pound, then we'll see wool income up around 20 to 30 percent."

Given the current state of affairs in the wool industry, however, the latter two scenarios are not likely to happen anytime in the near future, which further indicates the importance of producing high quality lamb.

Craddock talked briefly on the Pasture to Packer program initiated in 1993. Data gathered from the program, he said, indicates that lambs need to gain better than half a pound a day to be profitable enough to feed.

This year 560 lambs are on test.

"We had one producer who put 12 head on feed. Those animals lost a third of a pound per head per day for the first 30 days."

He attributed some of the weight loss to heat and dust.

"We had two producers whose lambs gained .66 pound a day. My point is that there are a lot of differences in sheep genetically and how they will grow. Some will and some won’t."

Craddock mentioned the new grid system that Ranchers' Lamb of Texas is in the process of incorporating. This system is set up to offer premiums for yield grade 1 and 2 lambs, discounts for YG 4s and 5s, and market price for YG 3s.

"When they get that system in place, you will be paid what your lambs are worth," Craddock told the group. "When that happens, it will be worth your time to produce those lambs that will gain and grow and make you some money."
He encouraged producers to consider preconditioning their lambs so that when they come to the feedyard they already know how to eat.

Research geneticist Dr. Dan Waldron closely mirrored some of the comments made by Craddock. A great deal of Waldron's work the last couple of years has focused on selection indexes for multiple traits in sheep.

"Sheep, as we all know, are not single-purpose animals. My job is to try to help producers be better able to select parents of the next generation so that the industry as a whole can have more productive sheep or goats," Waldron explained.

More productive, he added, is the undefined term and is different for each individual.

"For one person, more productive might be bigger lambs or bigger goats," Waldron said. "For another it might be finer wool. A producer can affect the income he obtains from his animal by changing quality, quantity or both.

"Unfortunately, there is generally a tradeoff between quality and quantity, and also between lamb and wool. But the tradeoffs among those should be determined by economics. More productive ultimately means more profit."

In evaluation of a selection index for multiple traits, the tradeoffs between quantity and quality have to be considered, Waldron told listeners.

"Ideally, I would like to know what the market situation is going to be in 2005 so that I know which rams to turn out with my ewes this year."

How to balance those tradeoffs is up to each individual, but like other experts in the industry, Waldron said he believes the quality of lamb will become increasingly important in terms of economics in the next decade.

"I think the growing importance of quality will have a profound impact on how we select breeding stock," he remarked.

He admitted that to date there have not been significant financial incentives for producers to produce higher quality lambs. Waldron said, however, that he was optimistic about changes promised by Ranchers' Lamb.

Quantity can also significantly impact the bottom line, and one way to add quantity is by producing heavier lambs. But to do so, Waldron told listeners, they must know the genetic potential of their sheep.

"Feeding lambs to heavier weights that don’t have the genetics to do so will be detrimental," he stressed.

That will particularly be the case if a value-based system is put into place.

"The extra fat will not go out the packer's back door, it will be on their floor, and that will be an incentive to reward producers who deliver the right kind of lamb to their door."

Another way to increase quantity of lambs is through the reproductive rate of the female. Getting the very most out of the female population, Waldron said, is so important because maintaining those females accounts for such a large portion of the cost of a sheep enterprise.

"To accomplish this, in order to select daughters that produce higher lamb crops, you need production records on the female relatives of the rams you buy," the geneticist said. "The management will also have to change. You can't expect those ewes to raise 150 percent lamb crops without a strategically planned nutrition program. It won’t do any good if you get those lambs born and then can’t keep them alive and growing."

Waldron concluded by telling listeners that he is not optimistic about "average" sheep being profitable in the future.

"I do believe there are good possibilities for genetically improved sheep — those that are growing faster, that are producing the carcass that is desirable as well as the finer wool.

"Make sure you are asking the right questions," he continued, "and remember that there are tradeoffs — quantity versus quality, lamb versus wool. Look at those things using performance information and pedigree information to select your rams."