Young producers could explore share arrangements to enter the sheep business
Like other segments of the livestock business, the sheep industry is seeking out ways to get young producers interested in sheep. With lamb prices on an upward trend and the amount of capital needed to make a go of it, the business seems prohibitive to many young agricultural producers.
However, some young producers are seeking older producers nearing retirement as a resource to help them get started in the business, according to David Ollila, South Dakota State University Extension sheep field specialist.
“If the two can pair up and develop a suitable arrangement, many times the young producer can obtain a flock on shares,” Ollila says.
Interest in shares
“We are seeing more interest in sheep share arrangements as our producers are getting older and looking for someone to take over,” Ollila continues. “Many of them don’t have family members to take over, so they are looking for younger producers who want to be involved in the sheep business with the older generation serving as their mentors.”
The share arrangement can vary depending upon what each producer can bring to the table.
In a common scenario, the older producer is able to supply everything, except the labor. The question is what percentage of the lamb and wool crop should be given to the other producer for supplying the labor.
“I have figured that is worth a 15 to 25 percent return, but I encourage the producers to do some profit sharing on anything above that as a reward for better management and labor,” Ollila says.
It is also common to see situations where the older producer supplies the livestock and the producer taking the sheep on shares provides everything else.
In that situation, the share arrangement would be closer to 60 to 70 percent for the person taking the sheep on shares, Ollila recommends.
Considering options
“There are two sides to these arrangements. When considering a share arrangement, the owner of the sheep typically has a good, solid, uniform group of highly productive ewes, and they didn’t get that way by accident,” Ollila explains. “He will want to make sure that if he puts those ewes out on shares, that when the arrangement ends, he gets those sheep back.”
Older producers worry about finding someone who won’t hurt the flock they have developed.
“If we know what our ewes can do, we should also have an expectation of what another producer should be able to do with those ewes based on his facilities, education and management,” Ollila says.
Evaluating partnerships
If a producer is considering a share arrangement, they should evaluate the background, knowledge of and experience with sheep, the support system, availability of mentors, facilities and sheep health program of anyone they are considering leasing the flock to.
On the other hand, someone who is interested in taking sheep on shares needs to look at the producer, how he has previously managed the flock, the genetic potential of the ewes and their lambing history.
“A young producer needs to be looking for a good, healthy herd from a producer with good records of what those ewes are able to do,” he says.
Both sides will have to evaluate the facilities and land available to determine what type of share arrangement will work best. No matter what type of arrangement producers agree upon, Ollila encourages both sides to do their research and be prepared.
“Any time we enter into those agreements, a lot of research will cost us very little,” he says. “I also tell producers to make sure everything is in writing.”
Ollila adds, “There are Extension personnel very familiar with sheep and how these arrangements work who are available to help producers work out share agreements.”
Gayle Smith is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
