Weaner sales versus feedlot finishing for a communal goat flock
Mrs H. runs a goat enterprise on 600 ha of communal rangeland. She has 120 does and 5 bucks. Last year 140% of does kidded, 15% of kids died before weaning, and 5% of the remaining goats died before sale. She keeps 20 weaned does as replacements each year. Weaners are sold at 22 kg live weight for N$38/kg. A local feedlot offers N$55/kg for goats finished to 38 kg, but finishing requires 120 days of supplement costing N$12/goat/day, plus N$25/goat transport and N$10/goat veterinary cost. The current enterprise variable costs are N$70/doe/year for health, supplement and herding; the feedlot option adds the finishing costs only to animals sold finished. She is considering finishing all sale animals instead of selling weaners.
1. Calculate the number of sale animals, the weaner gross margin and the finished gross margin. Show your steps.
Read the worked answer
Kids born = 120 × 1.40 = 168. After 15% pre-weaning loss: 168 × 0.85 = 142.8. After 5% post-weaning loss: 142.8 × 0.95 = 135.7, i.e. about 136 survivors. Retain 20 does, so 116 animals are sold.
Weaner option: revenue = 116 × 22 kg × N$38 = N$96,976. Variable costs = 120 does × N$70 = N$8,400. Gross margin = N$88,576.
Finishing option: revenue = 116 × 38 kg × N$55 = N$242,440. Finishing cost = 116 × (120 × N$12 + N$25 + N$10) = 116 × N$1,475 = N$171,100. Total variable costs = N$8,400 + N$171,100 = N$179,500. Gross margin = N$62,940.
The weaner option is about N$25,636 better, or about N$221 per animal sold.
2. Based on the figures, advise Mrs H. What non-financial factors might change the decision?
Read the worked answer
On these figures, sell weaners rather than finish. The finished goat gains 16 kg, worth 16 × N$55 = N$880, but the supplement and extra costs are N$1,475 per goat, so each finished animal loses about N$595 relative to selling it as a weaner, before the shared flock costs. Finishing also ties up cash for four months and adds market and feed-price risk. However, check the assumptions: if the farmer can use cheaper home-grown feed, if feedlot prices are higher, or if the weaner market is unreliable, finishing may become worthwhile. Non-financial factors include labour, water, manure, drought risk and the need for cash. A partial budget on a small trial group is safer than committing all animals.
3. She can retain 30 instead of 20 replacements to expand. Recalculate sale animals and the weaner gross margin, and comment on the trade-off.
Read the worked answer
Survivors are about 136. Retaining 30 replacements leaves 106 for sale. Revenue = 106 × 22 × N$38 = N$88,616. Variable costs remain N$8,400, so gross margin = N$80,216. That is N$8,360 less than retaining 20, because 10 more animals are kept rather than sold. The flock is larger for future years, but the farmer must feed and manage the extra does and accept lower current income. If feed and grazing are adequate and the goal is to build the herd, the sacrifice may be justified; if cash flow is tight, retain 20.