# SHEEP FARMING: How to make a small fortune!



## The Old Ram-Australia (Jan 28, 2011)

G'day and welcome,I do hope we will have a little fun with this topic,although I hope some of the stuff will be of value in the successful running of your farm................................

SO !" How do your make a small fortune ".

 "You start with a large one and you buy a farm".

What I would like to explore is ,do you know what that pound of lamb costs you to produce?..How do members set out to find out?..Is running more stock than the land can Sustain ably carry, false economy?.............So what do you classify as a cost?..........Do you value the product you eat at the same cost as it does at  the supermarket?..........Do you offset this income against your costs?.......

 If we go blindly ahead not knowing what our costs v/s returns are,where is the "incentive "to keep going when the going gets tough.

 We will en-devour to answer every question asked ,ours is a commercial operation and we have to answer to the TAX MAN,so we have to be able to "justify" every claim we make.

 I for one am looking forward to this topic and the information it produces.I hope it will provide an interesting distraction to the "day to day "chores we all have to undertake................................T.O.R.


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## SDGsoap&dairy (Jan 28, 2011)

The Old Ram-Australia said:
			
		

> SO !" How do your make a small fortune ".
> 
> "You start with a large one and you buy a farm".


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## jodief100 (Jan 28, 2011)

The Old Ram-Australia said:
			
		

> G'day and welcome,I do hope we will have a little fun with this topic,although I hope some of the stuff will be of value in the successful running of your farm................................
> 
> SO !" How do your make a small fortune ".
> 
> ...


I do not have sheep, I have goats but I think the concept is the same.

I put everything I buy for the farm into a spreadsheet, seperated into categories.  What is classified costs is everthing we buy for the farm we woudl not have purchased anyways.  We do not include property or taxes because we would have bought that without the goats.  Nor do we consider the tractor, same thing. Fuel for the tractor, gas for the truck when on farm business, food and vet for the LGD's, fencing costs, animal meds and food, tools for the livestock, tools for the farm used for farm use (post hole driver, chain saw for example)  etc are all counted.  Hubby is working on a way to calculate increased utilities.  

I amortize breeding stock, fencing, large equipment costs over a certain period of years.  Any retained breeding stock counts as a cost of what I could have sold them for.  

End of the year I have a total cost.  That is divided by the number of breeding does to a per doe cost.  Weaning rates are calculated by deviding the number of kids weaned by number of breeding does total (not just those who kidded).  Average sale price of an animal is multiplied by the kidding rate.  That is how annual income per doe is calculated.  

If average costs per doe exceed annual income per doe, we lost money.

That is the Cliff Notes version.....


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## The Old Ram-Australia (Jan 29, 2011)

G'day,Hey NS,I thought you would appreciate that !!!!!

Hi Jodief,thank you for your reply,I am sure others will appreciate the method you are using .It is much the same as we do .

Each 3 months we have to submit our BAS(Business Activity Statement),this is tax we collect for the Govt when we sell stock,we also claim back from the tax office any  GST we have paid on Farm purchases.We take this opportunity to do a "running P/L" just to get a grip on how we are going.

  We are also able to claim  our land rates(after deducting Private usage %) same with power ,phone ,internet charges.like you we separate Capital costs (lge machinery etc)and it is written off over a period of years................We also separate our other costs into Fixed and Variable...........The area of Variable is where we have to look for savings each year.

At the end of each year we count the stock on hand and assign each group a value,We also divide the total farm costs by the number of Breeders to arrive at a cost per ewe,over the last years when we have been in drought we have managed to turn off around 100%and currently our lambs are returning twice the operating cost of the ewes which is our wages for our labour.

  With the ending of the drought we may be able to lift our stocking rate by as much as 50%which will reduce our cost per ewe by about 20% and this will go to our bottom line.

 Does the IRS allow you to offset tax liability from off farm income against on farm losses?

I am of the opinion the inside every "small farmer"there is a person that would love to go "full time farming",if you take the trouble to set up a Costs v/s Returns system at the start you have a good idea when you can make the "leap".

I hope we will have others who will talk about the way they do it,as we can "all" learn from others experiences.


............................................................T.O.R......................................


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## jodief100 (Jan 29, 2011)

Farming needs to be approached as a business, just like any other.  If you do not have a handle on costs, you will never make any money.  

What I do in my "real" job is a Developmental Manufacturing and Process Engineer.  Officially what I do is develop manufacturing processes for complex electro-mechanical assemblies.  In reality what I do is figure out the least expensive way to manufacture and assemble, from the design of parts all the way down to how final product is shipped out the door.  I tend to utilize the same tools and approaches to farming that I do at work.  It surprises me how much of it applies.  

I woudl love to farm full time but I also love my job.  I know hubby would quit his in a minute to farm full time if he could.  

I am not really sure about the taxes, hubby takes care of that portion of things- well his accountant does.  The Tax code here in the US is so complicated we just track all our expenses and let the accountant sort it out.  Hubby checks it but we do not know all the complexities of the tax code.  

I wish you well and hope the weather is better for you this year.  We had floods in the spring and no rain after the 4th of July so I feel your pain.


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