[CarolineJ]

An unexpected opportunity has come along to buy another 18 acres with associated common grazings rights. 

I've currently got 14 North Country Cheviots and was planning to take my flock up to 75 over the next few years on my current 15 acres plus common grazings.  If I bought this, I could go to 150 ewes, but I'm trying to work out the economics of it.  It's good-quality land, but because our hill here is hard on ewes, we tend to sell them on to kinder ground in the autumn of the year they're 5.

150 ewes lambing at 115% (one neighbour gets 125%, but this is considered exceptional for the breed and ground) gives 172 lambs.  Say 50/50 split of sexes, gives 86 tups/wethers and 86 ewes.  50 ewe lambs retained for replacing ewes, c.10 tup lambs retained to grow on for sale.  Each year, 36 ewe lambs sold at mart @ £55 a head, 76 wether lambs sold at mart @ £45 a head, 10 tup shearlings sold @ £300 (or more if lucky - top price at Dingwall tup sale last year was £10,000), 50 5-year-old ewes sold @ £100 gives total livestock income of £13,400.

Shearing should be cost-neutral, possibly a small profit (NCC wool about £1.19 a kg).  I made over 400 small bales of hay this year off my current ground and the potential purchase includes nearly 10 acres of excellent hay fields, so say 80 x large round bales, giving 120 round bale equivalent - only costs would be someone to do large bales, I can cut, turn, row up and small bale myself.  Sale of 60 x round bales @ £20 each = £1,200. 

Take out costs of feed over tupping and lambing periods (the rest of the year they'll be out on the hill), Crystalyx, dosing, Heptavac, boluses, dipping, tags and transport to mart and I'm likely to be turning a small profit, as far as I can figure out...? 

[SallyintNorth]

You've asked for comments, so don't take this as discouragement!  Just helping you to think of factors you may have missed.

Are there any costs associated with the land?  Rental, fencing, etc?

With that many ewes you should budget some vet fees, I'd think.  And antibiotics, flystrike prevention, flukicide, minerals, foot spray, etc. 

I assume you don't have a day job?  So could manage the lambing yourself? 

You might need labour for shearing, if you're getting shearers in. 

Might you need an accountant, they cost a few hundred.

If you want to maintain your 150 breeders, and each lambs 3 times before being drafted, you'll need a few more than 50 retained ewe lambs each year, to allow for losses.

Dead cart / disposals are another cost.

Not all of your ewe lambs will be worth £55, and not all your draftees £100.

How much will you have to pay for the tups you buy in?  In general, anyone selling good tups for £300+ will be seen to be buying in good bloodlines - perhaps spending £1000 or more on a top tup every now and again, and probably £500 plus for the others?

Do you always get hay weather?  Or might you need to make silage some years?  Plastic and wrapping are expensive.

Have you got somewhere to store all the hay?  Enough buildings for lambing 150?  (I know you'll not be lambing indoors, but you'll inevitably need some pens for some ewes and their lambs.)

That's all that came to mind at first thought.  Others will think of other things, no doubt.

An exciting opportunity, I hope the numbers do stack up for you,

[Buttermilk]

I would go pessimistic and factor in 10% losses.  You should have nowhere near this rate but one dog attack could have this effect, one farm near here has lost 20% of this years lambs to Schmallenberg.  You may be too windy for the midges but what will be the next thing to come along?

If the land is close by go for it, you may never get another chance.

[CarolineJ]

Thanks Sally - tried to reply by quoting you so I could go through point by point and the formatting turned into weird columns, so here's try number two...

Are there any costs associated with the land?  Rental, fencing, etc? - £2 a year per share common grazings fee, so £10-£12 annually.  One fence needs some attention, but the other side is Billy and between us we can fix it up easily enough.

With that many ewes you should budget some vet fees, I'd think.  And antibiotics, flystrike prevention, flukicide, minerals, foot spray, etc. - good point.  I'd mentally covered flukicide under dosing and minerals under Crystalyx and boluses, but hadn't thought about antibiotics.  Flystrike very rare here due to altitude, but yes, they should get a fly and tick dose after shearing.

I assume you don't have a day job?  So could manage the lambing yourself? - correct, I freelance from home.

You might need labour for shearing, if you're getting shearers in. - should be okay, we have a communal shearing in the village fanks, so all I need to do is gather them and then we all help out with pushing the sheep through and rolling fleeces.

Might you need an accountant, they cost a few hundred. - already got one

If you want to maintain your 150 breeders, and each lambs 3 times before being drafted, you'll need a few more than 50 retained ewe lambs each year, to allow for losses. - very good point, black loss on the hill can be high in a hard winter.

Dead cart / disposals are another cost. - I'm classed as a remote area, so it's all on-farm burials.

Not all of your ewe lambs will be worth £55, and not all your draftees £100. - true, but calculating on mart averages is the best estimate I can make.  Some years it'll be up, some it'll be down.

How much will you have to pay for the tups you buy in?  In general, anyone selling good tups for £300+ will be seen to be buying in good bloodlines - perhaps spending £1000 or more on a top tup every now and again, and probably £500 plus for the others? - my plan is to go to the big tup sale in the autumn and look for an aged tup with great bloodlines for around the £750-£1,000 mark to use for two years.  As the flock size increases, I'll buy younger - at the full 150 ewes I'd be looking at 3 tups for around £1,500-£2,000 each, so budget for one or two newcomers each year less whatever I get for the outgoing ones.

Do you always get hay weather?  Or might you need to make silage some years?  Plastic and wrapping are expensive. - pretty much.  I've lived here 9 years now and there hasn't been a year yet that my neighbours haven't managed to get hay in, though some years it's been a case of holding your nerve until the end of August.

Have you got somewhere to store all the hay?  Enough buildings for lambing 150?  (I know you'll not be lambing indoors, but you'll inevitably need some pens for some ewes and their lambs.) - ah, I probably should have mentioned that the 18 acres also comes with a house, barn, four stables, dog kennels, lambing pens, small fanks and outdoor school.  It's next door to us and their sale fell through yesterday, so we thought since we were looking at spending the sharp end of £40,000 this summer on putting up a barn in the big field we own on the other side of it, why not see if we can get a mortgage and buy that instead?  The plan is to move into it, give ours a makeover and then our house becomes our second holiday let.

[Backinwellies]

Can't see how you can lose if you have a ' spare' house to sell if necessary.      No knowing what your freelance activity is I do wonder if it is flexible enough for increased sheep workload. (I'm very behind on mine post lambing and it's not something I can get behind on!

[Womble]

If there's a house involved too, and adding to your rental business, won't the profit or loss from the sheep be insignificant in the scheme of things? My goal for our wee flock is to break even on the direct running costs, but that's more because it will hopefully help me to make the right management decisions than the actual financial impact.

My gut feel is that things like the outlay to buy the property, and the income from renting your current place are going to have a much bigger impact than the sheep. You know the sheep aren't going to make you rich. So, as long as you know they're not going to make you poor either, can that part of it remain solely a 'heart' decision?

[Backinwellies]

Agree with Womble.    Sheep wont pay the mortgage.     Going back to my previous post I suddenly thought you need to cost in any loss in income from spending more time on sheep and less on the day job!  Think my lambing (only 20 sheep!) has cost me about £200 in lost earnings !

[CarolineJ]

Can't see how you can lose if you have a ' spare' house to sell if necessary.      No knowing what your freelance activity is I do wonder if it is flexible enough for increased sheep workload. (I'm very behind on mine post lambing and it's not something I can get behind on!

It'll be two spare houses, but the market up here is pretty slow.  I'm a transcriber, so work ebbs and flows - at the moment the client list is about 6 journalists who provide me with sporadic work, one 1-person agency who'll send me as much as I want each week and one very large agency who could keep me occupied 50 hours a week if I wanted, but don't pay as well!  I also do some VA work for an IFA, but thankfully he's getting himself an office-based PA, because it was getting much too like a normal job  

If there's a house involved too, and adding to your rental business, won't the profit or loss from the sheep be insignificant in the scheme of things? My goal for our wee flock is to break even on the direct running costs, but that's more because it will hopefully help me to make the right management decisions than the actual financial impact.

My gut feel is that things like the outlay to buy the property, and the income from renting your current place are going to have a much bigger impact than the sheep. You know the sheep aren't going to make you rich. So, as long as you know they're not going to make you poor either, can that part of it remain solely a 'heart' decision?

Well, hopefully.  Basically if I'm not losing money on them I'm okay with that, if they make enough for me to get a croft sitter in for a couple of weeks and have a nice holiday in the Indian Ocean, I'm very happy with that!  Our plan is to build up a 'lifestyle' business of around 5 holiday cottages yielding 10-15% plus our own house and the flock, and then as I head towards retirement age in about 20 years I've got a package to sell to fund my old age (other half has three very good defined benefit pension schemes and is sorted, as long as they stay out of the PPF!)

Agree with Womble.    Sheep wont pay the mortgage.     Going back to my previous post I suddenly thought you need to cost in any loss in income from spending more time on sheep and less on the day job!  Think my lambing (only 20 sheep!) has cost me about £200 in lost earnings !

I don't spend a huge amount of time on the day job as it is   Maybe four or five hours a day at the moment, and that's being generous.  Currently doing a lot of plastering in the other house and a few maintenance jobs round the croft.

I also can't do maths - 150 ewes is not 50 retained ewe lambs a year, it's 30!  Ewes would lamb at 2, 3, 4 and 5 and be sold at 5-and-a-half.

[Marches Farmer]

Are you going to breed from your existing flock or buy in new breeding stock?  High auction prices for tups often go hand-in-hand with showing success - do you intend to go down this route? 

Five holiday lets is a LOT of work unless you employ cleaning and laundry staff - be sure to factor in the rates, which have just risen 100%+ in some cases, and the cost of kitting out - auction buys and the contents of Granny's attic just don't hack it any more.  If you let through an agency they will cream off up to 40% of the rental amount.  Do you have enough of a USP to let all year?  If not 50% occupancy is probably a realistic amount.

[CarolineJ]

Are you going to breed from your existing flock or buy in new breeding stock?  High auction prices for tups often go hand-in-hand with showing success - do you intend to go down this route? 

Five holiday lets is a LOT of work unless you employ cleaning and laundry staff - be sure to factor in the rates, which have just risen 100%+ in some cases, and the cost of kitting out - auction buys and the contents of Granny's attic just don't hack it any more.  If you let through an agency they will cream off up to 40% of the rental amount.  Do you have enough of a USP to let all year?  If not 50% occupancy is probably a realistic amount.

Depending on how much cash I have left in August, I may buy another 10-20 ewe lambs this year to add in, otherwise I'll be building up slowly from my existing flock.  Tup prices up here tend to go more with what your lambs make in the ring, a lot of the time the tups winning in the show rings don't even make the top 5 highest priced, as so few people show up here - maybe 10 different breeders I can think of for NCCs. 

There's a wonderful cleaning company based in the next village up to mine, they're my cleaners for home and they started off just doing holiday lets and one-offs, it's their core business.  £60 for a changeover, including laundry and a guest welcome pack of local goodies.  A friend's niece upcycles old furniture and produces some beautiful, beautiful stuff, so I'm borrowing her for a bit after she finishes her exams and anything we can't find at the sales for her to work on, I'll buy new (sofas and mattresses will obviously be bought fresh). 

We're on the North Coast 500 route, which is becoming hugely popular, but my figures are based on 23 weeks at the moment, 8 high season (6 for summer, Christmas and New Year - lots of people want a Highlands Hogmanay!), 12 mid season and 3 low season.  The neighbour whose house we're wanting to buy used to have a second house at the other end of the village which she did as a holiday let.  2 bedrooms, she would only take guests between May and September, £750 a week peak season, and she was booked solid.  We're going to use the same agency

[shep53]

I would say go for it you might not get a second chance .   I think some of your figures are optamisstic  150 sheep is way different to 14  . 150 ewes  no barrens to sell ?  is the 115% based on lambs weaned /ewes to ram  ?     10 rams @ £300  ?  you do realise that you have to feed them as lambs to get growth  to be able to compete for size  and then keep them a second year on good grass and have some where to house them near sale time to keep them looking their best  .  Not all your lambs will be top draw and some will be smaller and make less .     I  would be thinking 30% ewe lambs  so 40 -45 per year to cover deaths and barrens sold .   Out of 150 ewes  I think you might sell  20 -25 as correct at less than £100   and maybe 5-10 as feeders  £50