SIBI new on-farm technology economic case study: sheep handler
Case study:Scott Newbey of Kerang Vale, Broomehill
Owners:Scott and BecNewbey
Property location:Kerang Vale, Broomehill
Property size:2500 hectares (ha)
Stock:1500 Merino ewes and various terminal crossbreds and composites – the farm shears about 3500 sheep each year
Cropping:About 80 per cent – depending on the season
Technology: Combi Clamp sheep handler and Peak Hill Immobilizer
Scott and BecNewbeymanage a 2500ha property at Broomehill in Western Australia’s (WA) Great Southern region together with Scott’s brother Wayne and partner Abbey. The farm is 80% cropped with around 20% of the farm allocated to sheep. The flock consists of around 1500 commercial ewes, with equal numbers of merinos and composite ewesto produce faster growing prime lambs for meat. There is also a small Suffolk stud on the farm. Approximately 3500 sheep are shorn each year. Scott would be happy to increase the size of the sheep flock provided the economics stack up.
The merino ewe lambs are classed on wool at the hogget stage and the superior sheep are retained in the merino flock. Merino wether weaners are shorn the following April and generally sold as shippers or through the saleyards, depending on the season. Merino ewe lambs which are classed out of the merino flock are mated to a composite ram. The crossbred wether lambs are then sold to the abattoir on a weight and grade basis. Crossbred ewe lambs which hit 45 kilograms (kg) by joining time are joined to a terminal sire. Approximately 1/3 of the ewes are mated to a terminal ram and eventually the Newbeys are aiming for a 50:50 split between meat and wool with half the ewe flock as merinos mated to merinos and the other half as composites mated to a terminal ram.
The farm has three main workers; the two Newbey brothers and a full-time farm labourer. To manage the sheep flock more easily, Scott has been borrowing a sheep handler to see how it would fit into their operation. They have been using a manual sheep handler initially, but would like to use a handler with an incorporated magic eye to catch the sheep if they purchase a handler. The sheep handler includes three-way drafting and weighing. With a relatively small flock the economics of a V-type machine don’t stack up.
Scott is interested in the sheep handler for two reasons. First, the sheep handler makes working the sheep easier and less stressful on both himself and the animals, making it easier on staff as well as ensuring animal welfare issues don’t emerge in the future. The second reason is saving time and money by using the sheep handler instead of working in the race.
There are several functions on the farm that Scott is considering using the sheep handler for and these are given in table 1 below. An economic analysis has been done to determine whether the sheep handler was worth investing in.
Most people who have purchased a sheep handler talk about it being easier on the body than working through the drenching race; they can work longer in the day and feel fresher the next day and also can work until they are older. In this analysis we’ve factored the effort saving by saying the farmer gets a 5% effort saving the next day, the equivalent of about 25 extra minutes of effort saved for each of the tasks the handler is used for. In reality this might be higher or lower depending on your own situation.
Table 1Farm activities with and without the sheep handler
Activity / Manual (before sheep handler) / With sheep handlerWeaning (October) / Draft lambs from ewes and send the ewes back to paddock.
Lambs: Three needles, drench and CLIK® at 225/hour (hr) for two operators (going up and down the race four times).
Visually drafting the lambs at 600/hr into two lines.
Ewes:Additional muster, mouthing the ewes at 400/hr and then crutching the culls across the board at 70 per hour.
Total time: 35 hours
Labour units: 2 / The sheep handlerallows all the tasks to occur at once depending on the animal coming through the race. If a ewe appears, it’s mouthed, crutched if required then the culls drafted. Lambs are needled with three needles, drenched and have CLIK® applied to the breach. The lambsare then drafted into 3 lines based on weight (an additional line compared to manual).
Total time: 13 hours
Labour units: 2
Crutch and draft crossbred lambs (January) / Manually crutching at around 200/hr for two operators. Stock agent weighs and condition scores lambs and drafts out a sale line to the abattoir
Total time: 8 hours
Labour units: 2 / Crutching and weighing within the sheep handler at 400/hr.
Total time: 4 hours
Labour units: 2
Drench and vaccinate ewes (April) / Drench and vaccinate at 240/hr for one person
Total time: 6 hours
Labour units: 1 / Drench and vaccinate through the sheep handler at 350/hr
Total time 4 hours
Labour units : 2
Human efficiency improvement / Nil / Using the sheep handler is easier on the body than working the yards, with a 5% efficiency improvement of staff the following day (equivalent to 25 mins/day)
Time saved: 1 hour across all activities
Improved weaner management and genetic gain / Lighter lambs drafted from heavier lambs visually and provided with extra feed. / Using the sheep handler makes it easier for improved management and genetic gain. Potential for a 1% productivity improvement through greater precision.
Management
Improvements are not cumulative. Include benefits such as hitting the higher priced grid in the abattoir weight and grade more consistently, increased lambing percentage by improved conception and improved weaner survival through differential management.
Breeding
Improvements are cumulative. Use weights of ewe weaners at weaning and post-weaning to identify superior ewe weaners to breed with. Greater selection pressure can be imparted from higher lambing percentage as a result of improved management.
A Net Present Value (NPV) analysis of the handlers was undertaken. A NPV looks at all benefits of the handler across its life after deducting the costs. A dollar today is worth more than a dollar in the future, so everything is converted into today’s dollars. One way to think of this is if a friend asked to borrow $100. If they pay you back tomorrow you might say just pay me back the $100, but what if they couldn’t pay you back for a year, meaning you couldn’t use it for the full time? You might still lend the money but say need to be paid interest as a form of compensation. That’s the concept behind a NPV calculation, money saved or spent today is worth more than money in the future. Because the NPV factors in a time value of money calculation, if the result is greater than zero, then the investment is worth making. If it’s negative or below $0, then you’d be better off not buying the handler as you could put your money to better use elsewhere.
Based on Scott’s figures, the NPV of the sheep handler costing $17250 across ten years isminus $6600, meaning it doesn’t return enough across the ten years to pay off the initial investment. The sheep handler generates $10200 in benefits, but that’s below the $17250 purchase price.
Another way to look at the return is through a benefit cost ratio (BCR). The BCR works the same way as an NPV calculation but produces a result showing how much return you would get for investing a dollar. If Scott were to purchase a sheep handler, the BCR would be 0.60, meaning for each dollar invested it pays back $0.60.
To look at how investing in a sheep handler might impact on a farm with more sheep, table 2 also shows how Scott’s sheep handler would perform over different flock sizes. If a farmer is considering purchasing a handler but does not value one of the components Scott is using, they can simply remove this and recalculate. All the values are in current value terms and the breakeven flock size is 2500 ewes.
Table 2Influence of changing flock size on the savings in labour and return on investment over ten years
Ten year lifeEwe numbers / 1500 / 2000 / 2500 / 3000 / 4000
Weaning / $7900 / $10,500 / $13,100 / $15,700 / $20,900
Crossbred lambs / $1500 / $2000 / $2500 / $3000 / $4000
Drench and vaccinate ewes / $800 / $1100 / $1300 / $1600 / $2100
Total savings / $10,200 / $13,600 / $16,900 / $20,300 / $27,000
Purchase price / $17,250 / $17,250 / $17,250 / $17,250 / $17,250
Net present value / -$6600 / -$3500 / -$300 / $2900 / $9200
Benefit cost ratio / 0.6 / 0.8 / 1.0 / 1.2 / 1.5
Years to payback / >10 years / 10 years / 8 years / 7 years / 5 years
Previously, the Newbeys were able to apply separate management by manually drafting the ewe lambs into two weight classes and therefore obtain benefits from management and breeding as outlined in Table 1. Using the sheep handler makes this easier and more precise, allowing three weight classes. A key value return from the sheep handler is if the weight information that is collected results in an improved management and breeding benefit from a better understanding of the ewe flock. Scott believes this benefit could equate approximately to a 1% increase in the ewe productivity. Management benefits are not cumulative (e.g. more crossbred lambs in the higher priced grid at the abattoir) but genetic improvements are cumulative. Genetic improvements include using weaning and post-weaning weights of ewe weaners to select superior ewes and being able to apply a higher selection pressure to more ewes from an improved lambing percentage associated with improved management. Table 3 below shows the effect on changing the rate of improvement in management and breeding for the ewe flock. If the rate of genetic improvement falls below 0.5% per year, then it is not worth buying with a 1500 ewe flock.
Table 3Impact of changing the rate of management and breeding improvement
Rate of genetic gain / 0.0% / 0.5% / 1.0% / 1.5% / 2.0%Net present value ($) / -$6600 / $600 / $7900 / $15,100 / $22,400
Benefit cost ratio / 0.6 / 1.0 / 1.5 / 1.9 / 2.3
Years to payback / > 10 years / 8 years / 6 years / 5 years / 5 years
If Scott chooses to purchase the sheep handler, it will save around $1300 in labour each year with 1500 ewes. If the sheep handler is owned for longer than the 10 years proposed then the savings will accumulate. At 20 years life and 1500 ewes the handler would be break even (Table 4).
Table 4Increasing the life of the handler justifies a higher investment
Handler life (years) / 10 / 15 / 20Net present value ($) / -$6600 / -$3000 / $0
Benefit cost ratio / 0.6 / 0.8 / 1.0
Years to payback / > 10 years / 13 years / 13 years
The number of sheep going through the handler and the rate of improvement in management and genetics are the two largest factors that would impact the return from owning a sheep handler. Increasing flock size spreads the initial purchase across more animals while genetic improvements are cumulative and build over time. Table 5 shows the interaction between ewe numbers and rate of improvement and how this impacts on the BCR. If the ewe flock is greater than 2500 then the handler has a positive return without any gain, while at 1500 ewes the rate of improvement needs to be higher than 0.5% per year to justify the investment.
Table 5Interaction between the change in management and breeding and flock size on the benefit cost ratio. Percentages represent rate of change in management and breeding
Number of ewes / 1500 / 2000 / 3000 / 40000% / 0.6 / 0.8 / 1.2 / 1.5
0.5% / 1.0 / 1.4 / 2.0 / 2.7
1.0% / 1.5 / 1.9 / 2.8 / 3.8
1.5% / 1.9 / 2.5 / 3.7 / 4.9
2.0% / 2.3 / 3.0 / 4.5 / 6.0
Potential to reduce the number of labour units
One of the biggest costs in a sheep enterprise is the cost of labour. With a well-trained dog, a well-designed lead-up race and use of a handler with a magic eye, there may be a potential to reduce the number of labour units. When considering whether to buy a sheep handler with a magic eye, it is important to consider the potential labour saved. Table 6 below considers the implications of reducing the number labour units from two to one.
Table 6Influence of changing the number of labour units on the return on investment
Labour units / 2.0 / 1.5 / 1.0Net present value ($) / -$6600 / -$4800 / -$3000
Benefit cost ratio / 0.6 / 0.7 / 0.8
Years to payback / > 10 years / > 10 years / 10 years
Type of sheep handler
The type of sheep handler that Scott used in this case study was a foot-operated manual sheep handler. This type of handler is well suited to an even line of sheep as it can be adjusted for the size of sheep going through the handler. However, in the weaning scenario outlined in Table 1, the handler was adjusted to suit a weaner so the husbandry tasks could be performed with ease. When a large composite ewe came through sometimes they couldn’t fit and had to be exited out of the handler through a back gate. Scott’s next trial will involve testing a sheep handler with a magic eye to see if it can be used in a weaning scenario when different size sheep are coming through.
Human benefits
A key benefit of the sheep handler is the reduced physical toll on the operator’s body. This includes reduced back pain, lower risk of injury and it is easier for non-skilled staff to learn husbandry tasks without the added stress of handling sheep. Other benefits include feeling less fatigued at the end of the day. While it’s difficult to determine the value of these benefits in an economic sense, they are real and need to be considered when making a purchase decision.
Conclusions
Sheep handlers can improve the management of sheep, both in terms of labour and animal welfare. The sheep handler provides a useful tool to immobilise sheep allowing the farmer to work with the animal with less stress to both themselves and the sheep. Handlers can also reduce the time spent with some activities and allow the farmer to reduce the labour required within the sheep enterprise.
Scott Newbey is considering buying a sheep handler for his 1500 ewe enterprise and believes it will provide benefits in weaning, crutching crossbred lambs, drenching and vaccinating the ewes as well as genetic gains through better breeding management. With a proposed sheep handler costing $17250 the Newbey’s will would lose $6600 across ten years or return $0.60 for each dollar invested. If Scott were to manage 2500 ewes then the investment is breakeven and worth considering.
If the sheep handler helps with the management and breeding on the farm and can increase the rate of productivity improvement above 0.5% then the investment is breakeven at 1500 ewes. If the improvement in management and breeding lifted to 1% the NPV lifts to $7900 and BCR is 1.5 with a payback period of six years.
As the number of labour units reduces from two down to one then the savings are higher and the loss reduces from $6600 to $3000 over ten years. With only 1500 ewes the sheep don’t spend enough time in the yards even with one operator to make the investment pay.