NEW data shows that the gross margins in Merino fine wool enterprises has risen by 55 per cent.
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It is a story those in the industry are aware of given the high prices for wool, surplus sheep and prime lambs.
Craig Wilson of Wagga is the principal of Craig Wilson and Associates and he described the alignment of good prices as “the perfect storm.”
“We are seeing higher average numbers and that is good … producers who have got their genetics and management in the right spot are starting to make ridiculous amounts of money,” he said.
In 2017 gross margins for fine wool enterprises increased by $554 a hectare.
NSW Department of Primary Industries sheep development officer, Geoff Casburn, of Wagga said the story was positive for sheep across the board, with a wether enterprise proving a real winner.
“We saw a huge 61 per cent leap for 18-micron wether enterprises, generating $51.73 per dry sheep equivalent (DSE) or $517 per hectare,” Mr Casburn said.
“Self-replacing Merino flocks with 18 micron wool had the highest gross margin at $55.43 DSE, and the two top enterprises benefited from high prices for finer wool.”
Mr Casburn said producers who took advantage of to increase the value of wool cuts by 15 per cent could expect to see returns of $81.29 per DSE for 18 micron wethers or a total of $812 a hectare.
“When we applied the same market sensitivity to 18 micron ewes, a 15 per cent increase on average returns saw the enterprise delivering $65.02 per DSE or $650 per hectare.”
Both wool and meat prices were high in 2017.
Mr Casburn said cost structure helps explain performance differences between enterprises.
“The highest costs per DSE were found in 20 micron ewes joined with terminal rams, due to the higher replacement ewe and fodder costs,” he said.