Direct Marketing > Economics
Selling lamb and goat products starts with pricing. Setting a price that covers cost and makes a profit is key to your success.
Production Tips for Lamb, Goat and Wool Production for Direct Marketing
Dr. Don Ely, University of Kentucky, and Kelley Yates, Kentucky Sheep and Goat Development Office provide tips for the production of lamb and goat for traditional and non-traditional markets.
Sarabeth Parido, Kentucky Sheep and Goat Development Office, provides tips for wool production.
Local, Kentucky Proud products demand a price premium, due to economies of scale. A Cooperative Extension Agriculture Economist and/or your meat processor can help determining a price for your retail cuts. However, the first question they are going to ask is “what is your breakeven price”. Most farmers have not thought about this aspect of the farm. And when thinking/calculating a breakeven price, remember to include all animal and other costs, including the cost of your time, processing costs, transportation, etc.
Calculating Value of Live Animals
Example budgets are an excellent way to help you determine the value of your live animal up to the point it is ready to slaughter. Here are budget examples for goat and sheep operations:
Economics of Goat Farming from Kentucky State University
Example Sheep Budget from University of Kentucky
Enterprise Budgeting from Susan Schoenian
Maryland Small Ruminant Spreadsheets
Goat Enterprise Budget from Purdue University
Budget Considerations for Various Size Goat Herds from University of Tennessee
Calculating Value of Meat
Once you have established the value of your live animal that is ready for slaughter, you can begin to determine the value of the meat your are going to sell. To the right is a downloadable calculator designed for you to enter expenses and depreciation of your direct marketing operation. The calculator will then generate the value of the live weight, carcass, and meat. Use the value that best fits your marketing goals.
Note: There are some limitations with this calculator:
1) The calculator assumes you have determined the live animal value prior to entering any other data.
2) Calculator does not determine the sale price for individual cuts; it determines whole carcass value. However, you can use the generated meat price to give you a basis in breaking down the value for all the cuts you will be selling.
Once you have a price, realize that consumers may be willing to pay a premium for the more desirable cuts from the loin and rack, but may not want to pay a premium for roasts and ground product. Other direct marketers have had success selling bundles, rather than individual cuts. For example, a $50 bundle may have a few loin chops, a couple roasts, and some ground product. This will help prevent a surplus of less desirable cuts.
Thank You to Our Partners
Special thanks to Dr. Gregg Rentfrow, University of Kentucky College of Agriculture Associate Extension Professor in Meat Sciences, Dr. Kenneth Burdine, University of Kentucky Associate Professor in Agriculture Economics, and Kati Bowman, Marketing Specialist for the Kentucky Center for Agriculture and Rural Development, for developing the content of this page.