To sell or not to sell?
7th July 2014
By Katie Brian, Eblex BRP Project Manager
Every year there is a debate on whether to sell lambs as stores, or to feed them and market them finished.
It does not have to be one decision; some can be sold now, some can be retained and finished or sold later. The key is to handle every lamb, even if they are destined for the store market, to ensure any that are finished can be pulled out to maximise their value. However, make sure you check the withdrawal times for any treatment given to lambs before you market them.
Whether to keep or retain lambs should be a flexible decision based on the resources available on the farm, such as cash flow, grass, forage, feed, labour and shed space. This will change from year to year. Remember a finishing lamb will eat nearly as much as a dry ewe, which should probably be given priority when it comes to feed allocation in the autumn.
Work out some figures
A partial budget is one way to compare the margins between selling lambs as stores or finishing them.
If stores are sold in September at £1.50/kg liveweight, a 30kg lamb is worth roughly £45. Alternatively, the same lamb at 42kg (19kg carcase weight) may be worth £72.20, if the price is £3.80/kg deadweight. The difference is £27.20.
The lamb needs to gain 12kg and it may have an 8:1 conversion, meaning it needs to eat 8kg of feed to put on 1kg of liveweight gain. For example, it will need 96kg of concentrates at £23.04 (at £240 per tonne or 24p/kg).
Other costs need to be added in, such as treatments and straw. In the example in the table below, the margin (before labour and fixed costs) is £0.58 per lamb.
|
| Selling stores in September | Selling as finished lambs |
| Weight | £30kg liveweight | 19kg deadweight |
| Price achieved | £1.50/kg liveweight | 320p/kg deadweight |
| Gross output | £45.00 with haulage/commission | £72.20 |
| Inputs to finish stores
|
|
|
| 2% losses |
| -£1.44 |
| Total | £45.00 | £45.58 |
| Difference |
| +58p per head |
What happens if the lamb price goes up or the concentrate prices goes down, but the need to gain 12kg at 8:1 remains? The table below shows that, unsurprisingly, the margin increases, e.g. a lamb price of £4/kg deadweight and a concentrate price of £200/t gives a margin of £8.22 per lamb.
| Concentrate price (£/t) | Lamb price (p/kg deadweight) | |||||
| 340 | 360 | 380 | 400 | 420 | 440 | |
| 200 | -6.98 | 0.62 | 4.42 | 8.22 | 12.02 | 15.82 |
| 220 | -8.90 | -1.30 | 2.50 | 5.30 | 10.10 | 13.90 |
| 240 | -10.82 | -3.22 | 0.58 | 4.38 | 8.18 | 11.98 |
| 260 | -12.74 | -5.14 | -1.34 | 2.46 | 6.26 | 10.06 |
| 280 | -14.65 | -7.06 | -3.25 | 0.54 | 4.34 | 8.14 |
| 300 | -16.58 | -8.98 | -5.18 | -1.38 | 2.42 | 6.22 |
What happens if the concentrate price goes up and the feed conversion efficiency (FCE) goes down (so it takes more concentrate to gain 12kg), but the lamb price stays the same? The margin then decreases, e.g. a concentrate price of £280/t and a FCE of 10:1 gives a margin of -£9.98 per lamb.
| Concentrate price (£/t) | FCE (kg gain:kg concentrate) | |||||
| 5:1 | 6:1 | 7:1 | 8:1 | 9:1 | 10:1 | |
| 200 | 11.62 | 9.22 | 6.82 | 4.42 | 2.02 | -0.38 |
| 220 | 10.42 | 7.78 | 5.14 | 2.50 | -0.14 | -2.78 |
| 240 | 9.22 | 6.34 | 3.46 | 0.58 | -2.30 | -5.18 |
| 260 | 8.02 | 4.90 | 1.78 | -1.34 | -4.46 | -7.58 |
| 280 | 6.82 | 3.46 | 0.10 | -3.26 | -6.62 | -9.98 |
| 300 | 5.62 | 2.02 | -1.58 | -5.18 | -8.78 | -12.38 |
Doing partial budgets and sensitivity analyses like those shown in the tables allows decisions to be thought through and the risk of prices moving up and down assessed. The same principal can be applied if feeding forages or selling lambs earlier or heavier.
Impact on spring grass
The impact of keeping stores lambs through autumn and the winter on the availability of grass around lambing needs to be assessed. If specialist lamb finishing crops are grown, the impact will be lower.
It’s advisable to assess the situation and the options available at the beginning of November, as this is likely that this is the highest point of grass availability until spring starts. If spring growth has been a struggle in the past, it may be worth trying to save more autumn grass by either selling animals earlier than normal or applying nitrogen in early autumn to build up a wedge.
