Introduction
This is a short synopsis of the presentation “Current State of the Ontario Sheep Industry” that was given at the Ontario Sheep Marketing Agency’s Annual General Meeting, so only deals with key points rather than the complete presentation.
Flock size:
- As of January 1, 2008, the total Canadian flock is 6.1 percent lower than a year ago; the breeding flock (rams, ewes & replacement lambs) is 5 percent lower at 532,500 head.
- The national flock size has decreased each of the past 4 years.
- Compared to most other provinces, Ontario’s total flock has declined slightly from 2007 & the breeding flock has stayed virtually the same at 198.9 head (ewes, rams & replacement lambs) see figure 2.
Slaughter data
- Total Canadian sheep & lamb slaughter in 2007 declined for the second year in a row– at 540,646 head, is 2% lower than 2006.
- Ontario’s 2007 slaughter at 269 thousand head is 6% lower than in 2006.
- Although total slaughter in Ontario has declined, federal slaughter has nearly doubled over 2006 at 16,418 head. See Figure 6.
- Western Canada showed a 12% increase in slaughter to 111,626 head.
- Ontario accounts for 49.8 % of total Canadian sheep & lamb slaughter – the LOWEST share in 15 years. Generally has been 52 to 55% since 1992. Quebec accounts for 27.5%; Western Canada 20.7% & Atlantic 2%.
- Looking at major North American sheep and lamb slaughter regions, Ontario continues to rank 3rd (269 thousand head), behind Colorado (1,047 thousand head) and Iowa (395 thousand head). Quebec and Alberta also rank in the top 10 slaughter regions.
- Average warm carcass weight in 2007 for Ontario was 46 pounds, while nationally it was 51.3 pounds.
Market Prices
- Price for lambs sold through the auction marts in the 80 to 94 pound category in 2007 was pennies lower than 2006’s high price of $160.78 per hundredweight.
- However, price for 1st 6 months of 2008 at $165.49 is lower than 1st 6 months of 2007 of $167.07 & 1st 6 months 2006 of $173.21.
- Traditionally, we have used the 80 to 94 lb category as representing Ontario lamb prices – is this still valid? Should we be using the heavier weight categories as indicator of lamb market price? Over the past 10 years, we have seen the following changes:
- Lambs less than 79 pounds has decreased from 59 to 53%.
- Lambs 95 to 109 pounds has increase from 10 to 12%.
- Lambs +110 pounds has increase from 4 to 6%.
- Lambs 80 to 95 pounds has remained unchanged at 23%.
Industry Issues and Challenges
1. C. Ovis (Sheep Measles)
- Late 2007 and early 2008 has seen increase incidence of carcass condemnations from sheep measles, both nationally and provincially.
- Although not a food safety concern, condemnations are an added cost to processors and producers alike.
- Sheep measles are the larval stage of the dog tapeworm Taenia ovis (sheep are one of the intermediary hosts) and result from sheep eating feed contaminated with feces from infected dogs.
- Dogs become infected from eating infected sheep muscle tissue (eg. sheep carcasses, access to on-farm deadstock).
- All sheep producers should understand the risk factors and make every effort to eliminate the risk.
- Canadian Sheep Federation has an excellent information brochure on sheep measles.
2. Rising input costs
- During 2008 we saw increased prices for farm diesel, fertilizer, grain, protein supplements and mineral.
- Recent world market activity suggests these will be lower in 2009, however to maintain profit margins producers will need to continue to find efficiencies wherever they can. With feed representing the largest share of production costs, targeting fewer days on stored feeds (rule of thumb: grazed forages equals ½ the cost of stored forages) is one means of attempting to achieve that.
3. Profitability
- Farm cash receipts for Ontario sheep, lamb & wool was 43.3 million dollars, down 11.4 percent from 2006’s 48.8 million.
- This graph depicts how contribution margin changes (on a per lamb basis – y axis) with 4 different lamb prices & four contribution margins 20% in blue to 35% in green.
- With the current 5 year average price ($ per lamb) just below $120 as shown with the red oval, you would be looking at contribution margins per lamb of approximately $21, $28, $34 and $40.
- Target CM is what you need to cover your living expenses and capital costs etc, or what is left after direct production expenses, and will be different for different operations.
- Contribution margin per lamb marketed is impacted by input costs, number of lambs marketed (therefore ewe conception rate, fertility & lamb death loss) plus other production and management factors.
- Take home message – to achieve a contribution margin of $50,000, a producer needs to market at least 1000 lambs and up to 2100 lambs, based on the contribution margins per lamb marketed shown in the accompanying table.
Author: Anita O’Brien, Sheep & Goat Specialist, OMAFRA
