• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Table of Contents
 Foreword
 Summary and conclusions
 Main
 Appendix














Group Title: Virgin Islands of the United States. Agricultural Experiment Station report
Title: Potential returns from goat and sheep enterprises in the U.S. Virgin Islands
CITATION PDF VIEWER THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00096186/00001
 Material Information
Title: Potential returns from goat and sheep enterprises in the U.S. Virgin Islands
Series Title: Report - University of the Virgin Islands ; 7
Physical Description: v, 13 p. : ;
Language: English
Creator: Park, Robert L., 1932-
Donor: unknown ( endowment ) ( endowment )
Publisher: Virgin Islands Agricultural Experiment Station
Place of Publication: St. Croix, U.S.V.I.
Publication Date: 1974
Copyright Date: 1974
 Subjects
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
Spatial Coverage: United States Virgin Islands
 Record Information
Bibliographic ID: UF00096186
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of the Virgin Islands
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 02408759

Downloads

This item has the following downloads:

PDF ( 4 MBs ) ( PDF )


Table of Contents
    Front Cover
        Page i
    Title Page
        Page ii
    Table of Contents
        Page iii
    Foreword
        Page iv
    Summary and conclusions
        Page v
    Main
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
    Appendix
        Page 12
        Page 13
Full Text



















































"S.


. a- -


.4. ,


. . . . ..-


A
I.
*. *1
14 A
A...I


,,,, -. .. ..


2 ," *


", .4 I. '*.*' "
I ,"I

*


4 S. *


A'
p5 .

1.~.
.1-'


-'S


1-


*-.<>!.'..


& v"












Virgin Islands
Agricultural Experiment Station
Report No. 7
September 1974











Potential Returns from

GOAT AND SHEEP ENTERPRISES

in the U.S. Virgin Islands



















College of the Virgin Islands
Virgin Islands Agricultural Experiment Station
Fenton B. Sands, Director
St. Croix, U.S. Virgin Islands








CONTENTS


Page


F o rew o rd . . . . . .. . . . .. . . . . . . . . . . . . . . . . . . .
Sum m ary and Conclusions ......................................
P ro ced u res . .. .. . .. . . .. . . .. . . .. .. .. .. . . . . . . . . ... .
R source B ase ............ ...............................
Grazing Land .. ............................... ...............
C lim ate ............. ..... .. ............. ......... .............. .
L a b o r . . . . . . .. . . . . . . . . . . .. . . . .
O their F actors ............................................ ......
Specifications of Benchmark Units ........... . .........
Costs and Returns Estim ates .... ....... .......................
Investment and Operating Capital ........................... ...
C osts and R returns ......... .........................................
Sensitivity A analysis ...................... .... ................
A p p en d ix . .... . . .. . . . . .. . . . . . . .. . . . . . . .. . . . .


COVER PHOTO: Mixed breeds of sheep on pasture, St. Croix.








FOREWORD

This report, "Potential Returns from Goat and Sheep Enterprises in the U.S. Virgin Islands,"
is one of a series of feasibility studies sponsored by the newly created Virgin Islands Agricultural
Experiment Station, College of the Virgin Islands. These investigations were financed totally with
Federal funds made available to the Station under the provisions of the Hatch Act, Amended.
Preparation of this report was accomplished by contracting for the services of the following
team of specialists: Dr. William L. Park, Chairman, Department of Agricultural Economics, Rut-
gers University, New Brunswick, N.J. and Dr. Robert L. Park, Professor of Animal Science,
Brigham Young University, Provo, Utah. This team conducted the study and wrote the manuscript
for this report.
The objective of these studies was to try to determine the agricultural enterprises, both plant
and animal, that have economic potential on the Virgin Islands. It is my belief that the agri-
cultural industry must be economically sound in order to be viable.
On the Virgin Islands, agriculture has been on the decline since the early part of the 1960's.
The average number of farms, farmers, and production of agricultural commodities (with the
exception of fluid milk) have all declined at a consistent rate. Among the questions which are up-
permost in the minds of many people are: What factors have been responsible for these declines?
Can these downward trends be stopped and perhaps reversed? What is the future of the agri-
cultural industry, particularly on St. Croix where 85 percent of the farmland is located? This
report on goat and sheep enterprises, along with the others, sheds some light on these questions.
These feasibility reports have also revealed the areas where lack of training and education on
the part of the farmers has adversely affected production. These subjects have now become part of
the new program of the V.I. Extension Service. At the same time, the lack of information about
the response of crops and livestock in this environment, which also limits production, has been rec-
ognized. These gaps in our knowledge have become the basis for the planned research program of
the V.I. Agricultural Experiment Station. Thus, these studies have given more direction to the ef-
forts of the Extension and research programs of this land-grant institution. More importantly, the
results of these studies are expected to be beneficial to full- and part-time farmers, as well as to po-
tential investors.
This series of reports rests squarely on the belief that a revival of agriculture would contribute
substantially to the general welfare through increased output of goods and services and by pro-
viding additional employment. Moreover, expanded production and marketing of farm products
could provide greater, and in some cases, cheaper sources of nutritious foods for consumers.
A more fully developed agriculture would complement the major industry-tourism- in two
ways. First, visitors would be pleased to be served local products, especially tropical fruits and
vegetables, by hotels and restaurants where such products are often not now available. Second-
and perhaps more important-an expanded agriculture would tend to preserve the environment of
exotic tropical islands. Most visitors and some permanent and semi-permanent residents come to the
Virgin Islands to seek this environment. If this attraction is destroyed, the basis of the major indus-
try of the Islands will be undermined.
The Virgin Islands Agricultural Experiment Station gratefully acknowledges the cooperative
assistance and contributions from many St. Croix farmers; Rudolph Shulterbrandt, Commissioner,
V.I. Department of Agriculture and his staff; and Bennett S. White, Jr., project consultant and
former USDA agricultural economist, now retired.

Fenton B. Sands, Director
March 1974










SUMMARY AND CONCLUSIONS


Goat and sheep raising has long been the tradi-
tional livestock enterprise for small landowners in
the Caribbean area. Moreover, there is a demand
for goat meat and mutton in the Virgin Islands
that is not likely to be met by large-scale com-
mercial operations.
The amount of land devoted to grazing in the
Virgin Islands has been declining in recent years,
in spite of the fact that the climate and forage
grasses are well-suited to animal agriculture.
This report describes four simulated benchmark
farms for the production of goat meat and mutton
on a small scale. These benchmark farms, or mod-
els, are based on actual operating conditions but
do not necessarily reflect conditions on a particular
farm. It is expected that the small operations will
be supplemental to other farm enterprises or off-
farm employment.
Capital requirements, including land and ani-


mals, would range from $331 to $386 per adult
animal, depending upon circumstances. Land can
be leased for $20 per acre per year, and less if the
potential operator does not own the land required
by the enterprise.
The average return to family labor for a 20-acre
goat operation and a 20-acre sheep operation is
estimated at $2.01 and $1.55 per hour, respect-
ively. The hourly rate of return to labor on a 5-acre
operation is slightly less. Labor income per hour
under alternative conditions can be quickly deter-
mined by using the breakeven charts provided in
this report.
It is evident that at prevailing lease rates for
land, family oriented goat and sheep operations can
indeed be profitable as supplemental family enter-
prises. They provide an opportunity for families
living in rural areas to create employment for older
children and homemakers that is not generally
available to them.








Potential Returns from

GOAT AND SHEEP ENTERPRISES

by

WILLIAM L. PARK and ROBERT L. PARK


Goat and sheep raising has long been the tradi-
tional livestock enterprise for small landowners in
the Caribbean area. The flocks were usually very
small and supplemental to other income-producing
activities. In recent years, the interest in small flocks
of goats and sheep has continued not so much as
a principal means of livelihood, but as supple-
mental to off-farm income. As a part-time activ-
ity, much of the care of the animals is entrusted to
family members who otherwise would have little
opportunity to earn money. There is a need to
determine whether small-animal operations can be
profitable under present Virgin Islands conditions.
There is also a need to assess the contribution that
small-animal agriculture might make toward im-
proving the socio-economic welfare of lower in-
come families.
According to a 1964 livestock inventory on St.
Croix, the average farm flock consisted of 18 head
of goats or 25 head of sheep.1 Over 80 percent of
the goats and 65 percent of the sheep were in
flocks of fewer than 100 head. The 1970 Census of
Agriculture for the Virgin Islands reported that
goat and sheep numbers have fallen only slightly in
recent years and that flock sizes are still relatively
small. In 1970, there were 2,721 head of goats
and 2,185 head of sheep reported on St. Croix,
the principal agricultural production area in the
islands. These numbers, incidentally, include only
reports from farms that sold $100 worth of farm
products or more. By mainland standards, the num-
bers of animals are very small, but in terms of the
Virgin Islands population which has a strong pref-
erence for goat meat and mutton, they are sig-
nificant.
Goats and a Virgin Islands wool-less breed of
sheep are well adapted to local conditions. They

'Livestock inventory conducted by R. Park, 0. Skov,
et al., U.S. Dept. of Agriculture, Kingshill, St. Croix,
Sept. 1964.


like the forage and browse, and the mild climate
poses no problems for shelter. There is a strong
preference for goat meat and mutton by the na-
tive population, a demand which will likely prevail
for many years.
Objectives of this study were (1) to determine
the profitability of goat and sheep raising on small
land holdings in the Virgin Islands, and (2) to de-
termine the range of profitability of goat and sheep
raising on small farms under alternative sets of
conditions.

PROCEDURES
Because of the rather wide range of conditions to
which the cost and return estimates might be ap-
plied, four simulated benchmark farm units were
set up. These benchmark farms represent typical
and potential operations which exist or might exist
on St. Croix. Basic cost and returns estimates
were converted to equations to facilitate a sensi-
tivity analysis of selected economic variables.
The benchmark farms are (1) a 5-acre goat
farm, (2) a 20-acre goat farm, (3) a 5-acre sheep
farm, and (4) a 20-acre sheep farm. Although
larger operations might prove feasible, they were
not included in this analysis because they would
tend to be commercial operations rather than
family-oriented backyard operations which are the
subjects of this report.
In keeping with the nature of family-farm op-
erations, labor income is that which remains after
production costs and returns on investment at pre-
vailing interest rates are paid or satisfied. Land
cost is charged to the enterprise at its capitalized
prevailing rental value for agricultural purposes,
even though the market value of the land might
be substantially higher. Any value of land above
the farm value is assumed to be development value,
or "real estate" value, and not chargeable to the
enterprise.










The total cost approach is based on estimates
for investment cost, taxes, replacement allowances
for facilities and equipment, animal health, re-
pairs, interest on operating capital and cost of sup-
plemental feed. Labor is assumed to be provided by
family members, who, in turn, receive the income
from the enterprise. Sales values are computed
on the basis of f.o.b. farm prices, which is the cur-
rent practice on St. Croix. With practically no
exception, goats and sheep are sold at the farm to
butchers who arrange for the transportation of the
animals to the slaughter facility.
While the authors were at St. Croix, it was re-
ported that dogs cause substantial damage to goat
flocks if the goats are not penned and protected
at night. Substantial losses are incurred each year
from theft. Such losses, although impossible to pre-
dict in individual cases, are accounted for in an
average way in the analysis.
Open-ended interviews were held with typical
goat and sheep farmers on- St. Croix and with live-
stock specialists to determine production practices,
input-output relationships, replacement rates, birth
and death rates, animal weights and the like.
Carrying capacity was computed from established
nutrient standards for forage and grain concen-
trates in relation to animal TDN (total digestible
nutrient) requirements.2 In addition, the carry-
ing capacity was computed as a function of birth
and death rates, age of weaning, age of sale of
young fat stock, replacement rates and death
rates. Estimates computed in this manner were
found to be reasonable in light of actual ex-
perience.
When the benchmark farm models were com-
pleted, standard cost estimates were reduced, to
equation form. Labor income as a residual claimed
by the family was computed at (1) sale prices
ranging from 45 to 750 per pound liveweight,
f.o.b. the farm, (2) daily labor requirements rang-
ing from 1 to 3 hours for the 20-acre operation,
and (3) one-quarter to three-quarters of an hour
per day for the 5-acre model. These data were
then presented as breakeven estimates.

'Nutrition standards were taken from "United States-
Canadian Tables of Feed Consumption and Nutrient Re-
quirements," National Academy of Sciences, 1969-70,
and from Morrison's Feeds and Feeding, Morrison Pub.
Co., Ithaca, N.Y.


RESOURCE BASE


The well-tended farms and agricultural enter-
prises of the Virgin Islands have a long history of
excellent productivity since colonial times. The
major agricultural production region in the islands
under the U.S. flag is located on St. Croix. It is a
small, relatively dry tropical island located in the
Caribbean Sea approximately 900 miles from
Miami and 1,500 miles from New York City. St.
Croix is approximately 6 miles wide and 23 miles
long and has a land area of about 54,000 acres.
Historically, the more significant enterprises on
St. Croix included sugarcane and cotton and to
some extent fruits and vegetables. Livestock opera-
tions were an important source of essential protein
for the local population. Goats and sheep were an
especially important means of meeting such needs.

Grazing Land
Today, the sugarcane and cotton operations
have ceased and fruit and vegetable production is
not practiced on a large scale. Small-animal live-
stock enterprises are still a significant source of pro-
tein for the native Cruzan population. When sugar-
cane production on a commercial scale stopped
with the 1965-66 crop year, it was hoped that the
land released could be used to produce forage and
pasture to support animal agriculture. Although the
opportunity for developing a viable livestock in-
dustry seemed to exist, these industries have not
flourished as anticipated. According to the agricul-
tural census, land area in farms declined from
39,539 acres in 1964 to 20,470 acres in 1970
(Table 1). The land used for grazing purposes
declined even further-from 19,611 acres to 7,584
acres in the same period, a reduction of 61 per-
cent. The amount of potential pasture is still large,
even though the population increase on the island
and its attendant demand for land have been rel-
atively high.
It is estimated that between 7,000 and 8,000
acres of improved pasture are being used by the
beef industry.3 Less than this amount is being used
for dairy purposes and a small but undetermined
area is devoted to forage for small animals such as

"See Park, William L. and Park, Robert L., "Profit-
ability of Beef Production in St. Croix, U.S. Virgin
Islands," V.I. Agricultural Experiment Station, 1974.
See also Appendix Table A-1.












Table 1.-Use of land in the Virgin Islands for pasture or grazing, 1964 and 1970


Census year Percent
Item change
1964 1970 from 1964

Total number of farms -----------------_____------------------ 466 212 -55
Total land in farms (acres) -------------------------------- 39,539 20,470 -48
Cropland harvested (acres) -------------------------------- 5,134 737 -86
Average size of all farms (acres) ------- -__---- ---- 85 97 +14
Number of farms using land for grazing ------------------------ 279 100 -64
On farms of up to 49 acres ------------------------------ 181 70 -61
On farms of 50 to 174 acres ------------------ 57 15 -74
On farms of 175 to 499 acres --------------- 24 7 -71
On farms of 500 to 999 acres ------------------------- 9 4 -56
On farms of 1000 acres or more ----------------- 8 4 -50
Land used for pasture or grazing (acres) ---_ _____________ 19,611 7,583 -61
On farms of up to 49 acres ---------------------------- 1,046 662 -37
On farms of 50 to 174 acres ------------------------------ 2,766 850 -69
On farms of 175 to 499 acres __--------------------------- 4,332 1,186 -73
On farms of 500 to 999 acres ----------------------- 3,532 1,921 -46
On farms of 1000 acres or more ------------- -..-- 7,935 2,964 -63
Average amount of land per farm used for pasture or grazing (acres) 70.3 75.8 +7.8
On farms of up to 49 acres --- ----------------- 5.8 9.5 +63.8
On farms of 50 to 174 acres ------------------------------ 48.5 56.7 +16.9
On farms of 175 to 499 acres -------- --------- 180.5 169.4 -6.2
On farms of 500 to 999 acres ------------------------- 392.4 480.2 +22.4
On farms of 1000 acres or more ----- ------------ 991.9 741.0 -25.3


Source: Census of Agriculture, U.S. Department of Commerce, Computations by the
the 1970 Census was for r,.f-l .... A'.--in 1969


goats and sheep. Several thousand acres on St.
Croix could be used for small-animal production,
if the economic incentives to do so are present. The
actual location of such lands has not been accu-
rately identified but is under study.
Several non-agricultural factors on St. Croix
have exerted major influences on land use on the
island and are significant in evaluating the poten-
tial land resource available for livestock production
in general and small animals in particular. First,
the population of St. Croix increased from
22,000 in 1965 to 41,000 in 1972, as reported
by the V.I. Dept. of Commerce. This growth has
generated a strong demand for land for housing
and commercial uses which was not provided by
existing population centers. An important segment
of this population increase was composed of main-
landers who had the financial resources to success-
fully bid for land in prime locations. It appears
that most housing development has not taken place


author. Land use reported in


on the prime fannland, but through the market
process, land at all locations of the island has taken
on values far in excess of that justified for agricul-
tural purposes.
Second, the improvement of roads and the acqui-
sition of automobiles has placed virtually every
part of the island within the housing demand zone.
Third, industrial demands are increasing. Fourth,
it is becoming increasingly difficult to find com-
petent farm workers at wage rates which make it
possible for agricultural enterprises to be economi-
cally viable. There is alsomm-evidence thaLland
tenure patterns have influenced the use of land for
farming purposes. The leasing of large areas of
land by absentee owners to local farmers for rela-
tively short periods tends to discourage capital
investment for agricultural development on a long-
term basis. Such practices have encouraged live-
stock enterprises, but within an environment of
uncertainty.








Climate
In general, the climate on St. Croix is favorable
to goat and sheep production. Temperatures are
mild and well within acceptable ranges, thereby
making extensive buildings for shelter unnecessary.
The average annual rainfall is about 43 inches per
year, but is highly variable from place to place on
the island, from month to month during the year,
and from year to year (fig. 1). There is a reason-
ably predictable wet season from August to Novem-
ber during which the water-plant balance is
favorable.4 The remaining months usually do not
receive sufficient moisture to maintain continued
plant growth. St. Croix is usually free of the most
violent storms which spawn in the Caribbean, but
occasionally large amounts of rain will fall during
short periods of time.


Figure 1.-Average annual rainfall, selected weather
stations, St. Croix, U.S. Virgin Islands, long term
normal rates. Source: U.S. Weather Bureau; chart
by the authors.

Labor

Because of a social stigma associated with agri-
cultural labor, qualified farm workers tend to seek
employment elsewhere. A large share of the farm
workers are not native Cruzans, but are "green
carders" from other islands in the Caribbean not
under U.S. jurisdiction. The labor market in which

For detailed information, see Bowden, Martyn. "Water
Balance On a Dry Island," Geography Pub. Dartmouth,
Pub. No. 6, 1968. See also Appendix Table A-2.


agriculture competes is also strongly influenced by
higher wage rates paid by large industrial concerns.
This factor in itself will make commercial goat and
sheep operations unacceptable to most entrepren-
eurs. On the other hand, the above stigma does
not tend to exist if the enterprise is owner-operated
and controlled. Thus, the labor market is not con-
sidered to be a limiting factor for family goat- and
sheep-production units as described in this report.

Other Factors
Adequate roads, power sources and communica-
tion links exist for the operation of family goat and
sheep enterprises. Supplies, equipment and produc-
tion inputs, although generally available, are diffi-
cult to obtain in comparison to availability in
established agricultural areas. Since St. Croix is a
small island, such items must be imported, thereby
subjecting farmers to inconvenience and, occasion-
ally, aggravating delays. Nevertheless, these prob-
lems are not great enough to make family goat
and sheep operations impractical.
There is a small government-owned and operated
slaughterhouse on St. Croix with sufficient capa-
city to handle production substantially above that
which it is now handling.

SPECIFICATIONS OF BENCHMARK UNITS

As mentioned earlier, the four benchmark farms
were identified to reflect alternative conditions
under which family goat and sheep operations
might be organized. Actually, the benchmark farm
is a computed model of actual operating conditions
but will not necessarily represent any individual
farm. If an operation is more or less efficient than
that specified here, its profitability will also be
proportionately greater or smaller. The models are
also designed to allow users to insert alternative
prices and labor inputs in estimating profitability.
Benchmark farms are not considered to be com-
mercial operations. They are descriptive of family
operated business which supplement regular family
income which in most cases will be off the farm.
Therefore, the measure of profitability is defined
as labor income per hour. It is the residual after
the costs of production are met including interest
on investment and depreciation.
Separate analyses were made for goats and sheep,











primarily because the birth rate for goats is repor-
ed to be higher than that for sheep. To reflect
different sizes of operations which might exist on
the island, the benchmark farms are specified to
contain either 5 or 20 acres of pasture. Detailed
specifications of the models are shown in Table 2.
The carrying capacity of the pasture and sup-
plemental grain concentrate was computed by
determining the amount of total digestible nutri-


ents (TDN) which ordinary guinea grass pasture
will produce under average rainfall conditiWps and
relating that value to the nutrient requiretjaents of
the herd or flock as it might be composed at a
point in time. A standard herd composite was
defined as a herd unit (HU). It is expressed as
pounds of TDN per year required to support the
herd composite. For example, a herd with 10
brood females would also contain 5.8 nursing kids


Table 2.-Specifications for benchmark goat and sheep operations, St. Croix, 1974

Benchmark farm
Item Goats Sheep
5 Acres 20 Acres 5 Acres 20 Acres

Carrying capacity at a point in time:1
Brood females 7 29 8 30
Nursing young 4 17 4 15
Growing young 2 8 2 7
Sires 1 1 1 1

Total 14 55 15 53
Herd replacement rate:
Culls at 7 yrs. of age (%) 14 14 14 14
Death and theft loss (%) 10 10 10 10
Annual birth rate (%) 350 350 300 300
Number of gestation periods 1.5-2 1.5-2 1.5-2 1.5-2
Age of young at time of sale (mos.) 3 3 3 3
Weight of animals (lbs.) :
Brood females 80 80 80 80
Young stock at time of sale 50 50 50 50
Sires 120 120 120 120
Number of young stock for sale annually 21 85 20 74
Sale prices (cents/lb.) :
Young stock, liveweight 60 60 60 60
Old stock, liveweight 50 50 50 50
Feed sources:'
Concentrate per day (lbs.) 0.5 0.5 0.5 0.5
Pasture (lbs. TDN/acre/yr.) 1,500 1,475 1,500 1,475
Source of labor Family Family Family Family
Farm value of land/acre $200 $200 $200 $200

See Appendix Table A-2. This is a composite of the herd. Since young stock are marketed at 3 months of
age and females gestate up to two times a year, the total number of animals handled during the year is substan-
tially greater than reported here. Carrying capacity is determined by dividing the total digestible nutrients (TDN) re-
quired by the herd composite into the TDN in the available feed.
Grain concentrate is fed to adult animals for 180 days per year. The lbs. of TDN produced per acre is based
on typical operating conditions on St. Croix. Well-managed pasture may yield substantially higher than that reported
here. See Appendix Tables A-1 and A-2.









and 2.9 weaned kids if the following conditions
are met: (1) the annual birth rate is 350 percent,
(2) kids are weaned at 2 months of age, and
(3) young stock are marketed at 3 months of age.
Details of these computations are given in Appen-
dix Tables A-1 and A-2.
The physical layout for these family operations
is rather simple. Pastures are fenced into 2.5 to 3
acre units to pennit pasture management. Fences
are strong, consisting of a net wire plus two barbed
wire strands. Holding pens are provided to reduce
losses from dogs and thievery. It is assumed that
water for the herds will be provided by the farm
well. A small shelter is provided to store the sup-
plemental feed and, as conditions may require
from time to time, to protect a few animals. Equip-
ment is limited to small hand tools. It is assumed
that acacia and other brush will be controlled with-
out the aid of large power equipment.

COSTS AND RETURNS ESTIMATES
The enterprise is expected to pay for the cost
of capital and depreciation whether or not these
are incurred as a part of current operations. For
example, if a family owns its land free and clear,
the cash flow due them will be greater than pre-
sented here because they can enjoy interest income
as well as labor income. Similarly, if the operation
is using existing fences, the depreciation charge
represents a replacement allowance for future
expenditures. This item is also an addition to cash
flow.

Investment and Operating Capital

The major investment capital required for the
enterprise is for land and fencing. Total invest-
ment capital per adult animal ranges from $331
to $386, depending upon the size of the operation
and the specie of animal (Tables 3 and 4). Land is
charged to the enterprise at its capitalized rental
value. At the time of this study-July 1973-land
was being leased to farmers for agricultural pro-
duction for $20 per acre or less. At a capitalization
rate of 10 percent, the capitalized value would be
$20/0.1 or $200. Prevailing interest rates at the
time of this study ranged upward from 7.5 percent
per year. The higher capitalization rate represents
a risk factor on agricultural capital.


Fences, holding pens, buildings and the like are
costed in at their replacement value. Depreciation
or replacement allowance is determined by using
the straight-line method (Tables 3 and 4).
The need for operating capital is not great and
generally turns over quite rapidly. Thus, interest
is charged to the enterprise on only 25 percent of
the cost of items directly affecting the cash flow.

Costs and Returns

Costs and returns for the four benchmark units
are shown in Table 5. These estimates are based
upon the specifications presented in Table 2 and
the investment and depreciation costs presented in
Tables 3 and 4. The cost of producing goats and
sheep, exclusive of the investment and labor
income, amounts to 18 and 19 cents per pound
liveweight for goats and sheep, respectively, on the
5-acre operation (Table 5). Due to lower facilities
cost per head, production costs on the 20-acre
operation are lower than on the smaller units. Such
production costs amount to 14 and 16 cents per
pound for goats and sheep, respectively.
Income from livestock sales is computed f.o.b.
the farm. This is consistent with present practices
on St. Croix wherein local butchers purchase the
animals at the farm and either provide for or
arrange for transportation of the animals to the
slaughter facility. The number of animals for
slaughter takes into account the following factors:
(1) a 10 percent death and theft loss, (2) culling
rate of 14 percent, (3) herd replacements, (4) the
birth rate, and (5) feed availability. Detailed infor-
mation on estimated sales is shown in Appendix
Table A-4.
Returns to family labor obviously depend upon
how efficiently the family applies its labor to the
enterprise. If the family can operate the 20-acre
goat enterprise on 2 hours a day, the hourly return
or wage rate would be $2.01 per hour (Table 5).
The sheep operation is somewhat less profitable
because of a lower lambing percentage (300 per-
cent compared to 350 percent). The small 5-acre
operation can be expected to return $1.61 and
$1.42 per hour for goats and sheep, respectively.
These rates of return are favorable in comparison
to wage rates usually available to family members.
Even at the lowest rate of return computed in










Table 3.-Investment and operating capital cost of a 20-acre goat or sheep operation, St. Croix, 1974

Years to Replacement
Item Amount replacement allowance

Investment capital:
Land (20 acres @ $200/acre)' $4,000 -
Fencing and gates (1.23 mi. (, $3,195/mi.)' 3,931 15 $262
Holding pens and feed bunks 100 20 5
Shelter 200 15 13
Miscellaneous equipment 25 5 5
Well and trough (25% of $1,660)' 415 20 21
Sub-total $8,671 $306
Livestock: Goats Sheep
Brood females (30 lbs. @ 500)4 (29)$1,160 (30)$1,200
Sires (120 lbs. @ 50f) (1) 60 (1) 60
Young stock (25 Ibs. Aug. a 600) (25) 375 (22) 330
Sub-total $1,595 $1,590
Total investment capital $10,266 $10,261
Investment capital per adult animal 342 331
Adjusted investment capitals 7,930 7,925
Interest on adjusted investment at 7.5% 595 594

Operating capital;
Animal health $ 33 $ 30
Repairs 93 93
Land taxes 40 40
Supplemental feed 170 176
Total operating capital $336 $339
Interest on 25% of operating capital at 7.5% $6 $6

Any land value above $200 per acre is assumed to be development value and not chargeable to the enterprise.
2 Fences consist of net wire plus 2 barbed wires on posts placed on 8 ft. centers and 6 gates for 6 pastures.
SSince this is a backyard operation, animals are to be watered at household well.
*Number in () represents the number of head.
Depreciable capital is included at 50 percent of original value.


Table 5, the return per acre for labor income is
more than $50.

SENSITIVITY ANALYSIS

In an effort to make the model befichmark farms
more useful to the livestock industry of the Virgin
Island, the models were subjected to a sensitivity
analysis which consisted of computing family labor
income estimates for alternative sale prices and
hours of labor per day to operate the unit. The
cost analysis was reduced to a simple equation in
which the more stable elements were assumed to be
constant as presented in Table 5 and the less cer-


tain elements were considered to be variable. For
example, family labor income per hour for the 20-
acre goat operation would be expressed as follows:
income -expenses
Labor income per hour-
365 days X hours per day
Income- (85 head X 50 lbs. per head X price)
+ sale value of culls of $160

Expenses $648 + interest on investment of $595.
Therefore,
(85 X 50) Pg+ 160-648-595
LI=365H
365H










Table 4.--Investment and operating capital cost of a 5-acre goat or sheep operation, St. Croix, 1974

Years to Replacement
Item Amount replacement allowance

Investment capital:
Land (5 acres @ $200/acre)' $1,000 -
Fencing and gates (0.44 mi. @ $3,195/mi.)' 1,406 15 94
Holding pens and bunks 50 20 2
Shelter 75 15 5
Miscellaneous equipment 25 5 5
Well and trough (.06 of $1,660)' 100 20 5
Sub-total $2,656 $111
Livestock: Goats Sheep
Brood females (80 lbs. @ 500)' (7) $280 (8) $320
Sires (120 lbs. @ 50*) (1) 60 (1) 60
Young stock (25 lb. avg. @ 60) (6) 90 (6) 90
Sub-total $430 $470
Total investment capital $3,086 $3,126
Investment capital per adult animal 386 347
Adjusted investment capital $2,258 $2,298
Interest on adjusted investment at 7.5% 169 172
Operating capital:
Animal health $ 8 $ 8
Repairs 33 33
Land taxes 10 10
Supplemental feed 44 44
Total operating capital $ 95 $ 95
Interest on 25% of operating capital at 7.5% $2 $2

1 Any land value above $200 per acre is assumed to be development value and not chargeable to the enterprise.
'Fences consist of net wire plus 2 barbed wires on posts placed on 8 ft. centers and 2 gates for 2 pastures.
'Since this is a backyard operation, animals are watered at the household well.
' Number in () represents number of head.
'Depreciable capital is included at 50 percent of original value.


The above equation reduces to:
11.644 P,- 2.967
LI=
H

Where LU = labor income per hour

Pg=sale price for young goats ($/lb.)
II = hours of family labor per day.

Estimates of labor income (LI) for the four
models under alternative conditions are presented
in Tables 6 and 7.
The equations can also be used to compute
breakeven points under alternative conditions.
These results are presented in chart form in Fig-


ures 2 through 5. To illustrate their use, consider
Figure 2 which is the 20-acre goat operation. If
the sale price is 600 per pound and you can oper-
ate on 2 hours of labor per day, you can determine
your wage or labor income rate by finding 60 on
the vertical axis and moving horizontally until you
reach the line marked 2 hours (H), then move
down and read the wage rate of $2.01 on the
bottom scale. On the other hand, if you think you
can operate the farm on 1.5 hours per day, move
across to the line marked 1.5 hours (H) and read
the wage rate at the bottom, $2.68. If you want
to make estimates for values not on the chart, use
the equations by inserting the proper, or pertinent,
values and solve by using simple algebra.









Table 5.-Costs and returns to a simulated 5- and 20-acre family
operated goat or sheep enterprise, St. Croix, 1974

Benchmark farm
Item Goats Sheep
5 Acres 20 Acres 5 Acres 20 Acres

Expenses:
Land taxes (2/acre) $ 10 $ 40 $ 10 $ 40
Facilities cost (Replacement allowance) 111 306 111 306
Repairs (@ 2% of original value/year) 33 93 33 93
Animal health (25w/head/year) 8 33 8 30
Supplemental grain concentrate
Feed at $7/cwt. 44 170 44 176
Interest on operating capital 2 6 2 6
Total $208 $648 $208 $651
Liveweight of stock sold (lbs.) 1,130 4,570 1,080 4,020
Cost per lb., liveweight ($) 0.18 0.14 0.19 0.16
Income:
Young stock sales (50 lb. @ 60f) (21)$630 (85)$2,550 (20) $600 (74)$2,220
Cull brood females (80 lb. @ 50) (1) 40 (4) 160 (1) 40 (4) 160
Total $670 $2,710 $640 $2,380
Returns:
Return to labor and capital $462 $2,062 $432 $1,729
Interest on invested capital at 7.5% 169 595 172 594
Family labor income $293 $1,467 $260 $1,135
Estimated daily family labor required (hrs.) 0.5 2.0 0.5 2.0
Average hourly return to family labor $1.61 $2.01 $1.42 $1.55










Table 6.-Labor income per hour (LI) for a 20-acre Table 7.-Labor income per hour (LI) for a 5-acre
goat or sheep operation at alternative sale prices and goat or sheep operation at alternative sale prices and
daily labor requirements, St. Croix, 1974 daily labor requirements, St. Croix, 1974


Liveweight Hours worked per day (H)
saleptice '
($/lb) 1.0 1.5 2.0 2.5 3.0

Goats (Pg) --- -- Dollars --_--_-----
$ .45 2.27 1.52 1.14 0.91 0.76
.50 2.86 1.90 1.43 1.14 0.95
.55 3.44 2.29 1.72 1.37 1.15
.60 4.02 2.68 2.01 1.61 1.34
.65 4.60 3.07 2.30 1.84 1.53
.70 5.18 3.46 2.59 2.07 1.73
.75 5.77 3.84 2.88 2.31 1.92


Sheep (P5)
$ .45
.50
.55
.60
.65
.70
.75


1.59 1.06 0.79 0.64 0.53
2.10 1.40 1.05 0.84 0.70
2.60 1.73 1.30 1.04 0.87
3.11 2.07 1.55 1.24 1.04
3.62 2.41 1.81 1.45 1.21
4.12 2.75 2.06 1.65 1.37
4.63 3.09 2.31 1.85 1.54


Liveweight Hours worked per day (H)
sale price
($/lb.) 0.25 0.375 0.5 0.625 0.75

Goats (Pg) ____Dollars .---__-____-...
$ .45 1.49 0.99 0.74 0.59 0.50
.50 2.06 1.37 1.03 0.82 0.69
.55 2.64 1.76 1.32 1.06 0.88
.60 3.22 2.14 1.61 1.29 1.07
.65 3.79 2.53 1.89 1.52 1.26
.70 4.36 2.91 2.18 1.75 1.45
.75 4.94 3.29 2.47 1.98 1.65


Sheep (P,)
$ .45
.50
.55
.60o
.65
.70
.75


1.20 0.80 0.60 0.48 0.40
1.75 1.17 0.88 0.70 0.58
2.30 1.53 1.15 0.92 0.77
2.85 1.90 1.42 1.14 0.95
3.40 2.26 1.70 1.36 1.13
3.94 2.63 1.97 1.58 1.31
4.49 2.99 2.25 1.80 1.50


'Priced at f.o.b. the farm. The prevailing practice on St. Priced at f.o.b. the farm which is the prevailing sales
Croix is for buyers to pick up the livestock at the farm. point.


11.644 Pg-2.967
Goats-LI =.
II
10.137 P,-2.973
Sheep-LI= -
II


Goats-LI=


Sheen LI=


2.877 Pg-0.923
H
2.740 P5-0.932


H









(H) Hours per Day


L 11.644P.-2.967
H
H 11.644P.-2.967
LI.

= LIH +0.255
11.644


.65
-15
O .60


S.55

.50


LI. 10.137P- 2.973
H
H= 10.137P--2.973
LI.

P= LI7+0.293
10.137+


.4T

-T


0 1.00 2.00 3.00 4.00 5.00 6.00 7.00
Labor Income, Dollars per Hour (LJ)


Figure 2.-Breakeven relationships between sale
price (Pg), labor income (LI), and daily labor re-
quirements (H) for a simulated 20-acre goat opera-
tion, St. Croix, 1974.


(H) Hours per Day


2.877P=-0.923
H
H 2.877P'-0.923

LIM
P= 2.877 +0.321


0 1.00 2.00 3.00 4.00 5.00 6.00 7.00

Labor Income, Dollars per Hour (Lh)


Figure 3.-Breakeven relationships between sale
prices (P,), labor income (LIU), and daily labor re-
quirements (H) for a simulated 5-acre goat opera-
tion, St. Croix, 1974.


0 1.00 2.00 3.00 4.00 5.00 6.00 7.00
Labor Income, Dollars per Hour (LI4


Figure 4.-Breakeven relationships between sale
prices (P.), labor income (LIM), and daily labor re-
quirements (H) for a simulated 20-acre sheep opera-
tion, St. Croix, 1974.







(H) Hours per Day


S.0
.oa
.60




.50
-55


.45

T


= 2.740P.-0.932
H

H= 2.740P,-0.932
LI,

P.= +0.34
2.740


0 1.00 2.00 3.00 4.00 5.00 6.00 7.00

Labor Income, Dollars per Hour (LI.)



Figure 5.-Breakeven relationships between sale
prices (P,), labor income (LI,), and daily labor re-
quirements (H) for a simulated 5-acre sheep opera-
tion, St. Croix, 1974.


. 65

.60

S.55

Sa.
U:


.50

.45


(H) Hours per Day








APPENDIX

Table A-I.-Annual TDN requirements per herd unit, 20-acre goat and sheep operations, St. Croix, 1974


Number of Percent lbs. TDN lbs. TDN
Herd Component head per Percent required per required per HU
herd unit of total head per day Daily Annually

Goats:
Brood females 10.0 52.6 2.2 22.0 8,030
Nursing kids' 5.8 30.5 0.5 2.9 1,058
Growing kids' 2.9 15.3 1.8 5.2 1,898
Sires 0.3 1.6 2.5 0.8 292
Total 19.0 100.0 30.9 11,278
Adjusted for death loss of 5% per year4 10,996
Sheep;
Brood females 10.0 56.2 2.2 22.0 8,030
Nursing lambs' 5.0 38.1 0.5 2.5 912
Growing lambs' 2.5 14.0 1.8 4.5 1,642
Sires 0.3 1.7 2.5 0.8 292
Total 17.8 100.0 29.8 10,876
Adjusted for death loss of 5% per year' 10,604

'Two gestations and 350 percent annual kid crop. Young stock remain in the herd for 3 months at which time they
are marketed.
Weaning age is at 2 months.
'Two gestations and 300 percent annual lamb crop. Lambs are marketed at 3 months of age.
If a 5-percent death loss occurs uniformly through the year, the feed requirement is reduced by only 2.5 percent.


Table A-2--Determination of carrying capacity for 5- and 20-acre goat or sheep operation, St. Croix, 1974

Benchmark farm
Item Goats Sheep
5 Acres 20 Acres 5 Acres 20 Acres

TDN Produced per acre (lbs.) 1,500 1,475 1,500 1,475
TDN Produced on pasture (lbs.) 7,500 29,500 7,500 29,500
TDN Required per herd unit (lbs.)1 10,996 10,996 10,604 10,604
No. of herd units supported by pasture feed 0.68 2.68 0.71 2.78
No. of brood females 2 7 27 7 28
Grain concentrate fed (lbs.)' 630 2,430 630 2,520
TDN in grain concentrate (lbs.) 488 1,883 488 1,953
No. of herd units supported by concentrate feed 0.04 0.17 0.05 0.18
Total herd units supported by pasture and concentrate 0.72 2.85 0.76 2.96
No. animals supported by pasture and concentrate:
Brood females 7 29 8 30
Nursing young 4 17 4 15
Growing young 2 8 2 8
Sires 1 1 1 1
Total animals 14 55 15 53

'See Appendix Table A-I.:
'Computed at 10 brood females per Herd Unit times the number of HU's and rounded to the nearest whole animal.
'Feeding rate is assumed at 0.5 lbs. per day per brood female for 180 days per year or 90 lbs. per year.













Table A-3.--Estimated fencing cost for 20-acre goat
or sheep operation, St. Croix, 1974


Item

Net wire, 150 ft./roll
Barbed wire, 480 ft./roll
Steel posts, 7 ft.
Gates
Total


Unit No. units Value
Price required

$39.95 44 $1,757.80
12.50 27 337.50
2.10 817 1,715.70
20.00 6 120.00
$3,931.00


A square 20-acre field with 6 equal sized pastures would
require 6,533 ft. of fence (1.237 miles)
Cost of fence per mile=$3,931/1.23=$3,195
The 5-acre operation with 2 pastures would require 0.44
miles of fence for a cost of
0.44x $3,195=$1,406








Table A-4.-Determination of livestock sales for 5- and 20-acre goat or sheep operation, St. Croix, 1974

Benchmark farm
Item Goats Sheep
5 Acres 20 Acres 5 Acres 20 Acres

No. of brood females 7 29 8 30
Death and theft loss (10%) 1 3 1 3
Number culled from herd (14%) 1 4 1 4
Number of offspring 25 102 24 90
Less death and theft loss (10%) 2 10 2 9
Less herd replacements 2 7 2 7
Number of young stock for sale 21 85 20 74
Sales value per head ($):
Young stock (50 lbs. @ 60) 30 30 30 30
Culls (80 lbs. @ 50() 40 40 40 40
Total sales ($):
Young stock 630 2,550 600 2,220
Culls 40 160 40 160
Total sales value 670 2,710 640 2,380




University of Florida Home Page
© 2004 - 2010 University of Florida George A. Smathers Libraries.
All rights reserved.

Acceptable Use, Copyright, and Disclaimer Statement
Last updated October 10, 2010 - - mvs