Meat Goat Profits

Business Summary

This factsheet provides economic information on developing and operating a commercial meat goat enterprise on a small acreage. This information was generated by a group of meat goat producers who arrived at a consensus on investment, production, costs and revenues.

This is a supplemental enterprise that starts production with 50 females and grows to 100 females over a five year period.

This information is intended as a business planning tool. Managers will have to assess all the key production and financial variables that would influence the success of their enterprise.

Production Targets

Weaning percentage
...New operator	150%
...Established operator	185%
.
Market weight	80 to 90 pounds

Meat goats breed at 70 lbs. or eight months of age and have a five month gestation period. The operation would produce one crop of kids in May of each year so that minimal facilities would be needed. The kids and does would be on grass or fed together over the summer.

The offspring (bucks and doelings) destined for the meat market would be expected to achieve market weight at six to eight months of age and sold in late fall.

Manure removal is essential when animals are held year round in a small area.

Financial Benchmarks

At 70 head, break even meat prices needed to cover:
.
Total direct costs	$0.61/pound
Total direct + indirect costs	$1.44/pound
Total economic costs	$1.67/pound

Capital Investment

.	Investment
Land	.
Crop land (10 acres)	$12,000
.	.
Improvements & Facilities	.
Utilities (enterprise share)	$1,680
Pole shed (15’ x 30’)	$2,775
Perimeter fencing	$3,500
Cross fencing	$500
Fence line feeders	$275
Pens	$500
Total Improvements & Facilities	$9,230
.	.
Stock	.
Breeding does	$10,000
Breeding bucks	$1,000
Predator control dog	$250
Total Stock	$11,250
.	.
Equipment	.
Electric fencer	$280
Hoof trimmers	$35
Small tools	$225
Truck (enterprise share)	$1,000
Waterers	$280
Total Equipment	$1,820
.	.
Total Investment	$34,300

Market Factors

Revenues are generated through the sale of goats to the meat (slaughter) market and the sale of breeding stock. The primary market for meat goats is the ethnic market consisting of direct sales to ethnic consumers and sales to a processor with a developed market of ethnic consumers. The prime marketing period is late November to the end of February. Producers may also find advantages in joint marketing efforts in order to access distant markets (central Canada and the United States) and to provide consistant volume to some retail/foodservice markets.

Meat animals are marketed weighing 60 to 100 pounds liveweight (30 to 50 pounds rail grade).

The sale of breeding stock will offer higher returns. However, there needs to be a viable commercial industry to support the market for breeding stock.

Cash Flow Projections - Meat Goat Enterprise

Cash flow must be looked at separately from revenue and expenses to assess the viability of the enterprise. Year to year variations in prices, the number of animals marketed and personal withdrawls will affect cash flow.
.	Year 1	Year 2	Year 3	Year 4	Year 5
Number of breeding does	50	60	70	80	90
Weaning percentage	150%	150%	175%	175%	185%
Cash Outflows	.	.	.	.	.
Total Capital Investment	$34,300	.	.	.	.
Total Cash Operating Expenses 1	$6,042	$6,920	$7,917	$8,778	$9,706
Personal Withdrawls	$0	$0	$0	$0	$0
Annual Debt Payment	$2,268	$2,268	$2,268	$2,268	$2,268
Total Cash Outflows	$42,611	$9,188	$10,185	$11,046	$11,975
.	.	.	.	.	.
Cash Inflows	.	.	.	.	.
Borrowed Capital	.	.	.	.	.
Equity Capital	$25,000	.	.	.	.
Total Cash Revenues	$6,856	$8,559	$12,137	$13,371	$16,234
Total Cash Inflows	$41,156	$8,559	$12,137	$13,371	$16,234
.	.	.	.	.	.
Net Cash Revenues	($1,455)	($629)	$1,952	$2,325	$4,259
Cumulative Cash Flows	($1,455)	($2,084)	($131)	$2,193	$6,452
Debt level is not likely to exceed 25% since some lenders may be reluctant to lend to the meat goat industry on the basis of meat goat assets only.

Critical Cost Variables

Proper nutrition and effective marketing are considered to be important management variables in a meat goat enterprise.

Feeding Program (Does)
Feeding programs will vary according to management style and available resources. Goats are browsers and will do well on brush pasture as well as on year round feed.

.	Pounds/head/day	Head	Days	Total Pounds	$/pound	Total Cost	Cost/Head
Hay	5.0	70	210	73,500	$0.04	$2,960	$42.29
Grain	1.2	70	100	8,400	$0.07	$605	$8.64
Salt & mineral	.	.	.	.	.	$231	$3.30
Total	.	.	.	.	.	$3,796	$54.23

Marketing Management
The key marketing issues for meat goat operations are to achieve acceptable prices for market animals and breeding stock.

Key marketing activities include:

• Developing relationships with consumers to support direct sales.
• Developing relationships with processors to support sales.
• Establish relationships with other producers to develop breeding stock sales.
• Establish relationships with other producers to develop markets.

Projected Revenues	No.	Weight	Price	Year 3	Your Snapshot
Meat (weanling) bucks	62	85 lbs.	$1.00	$5,270	.
Meat (weanling) does	23	80 lbs.	$1.00	$1,800	.
Breeding doelings	23	.	$125.00	$2,875	.
Cull does	5	.	$40.00	$200	.
Value of increased inventory	.	..	.	$2,000	.
Support programs for 2003	.	.	.	$1,992	.
Total Projected Revenues	.	.	..	$14,137	.
.	.	..	..	.	..
Projected Direct Costs	.	....	.	.	.
Feed costs — Does	.	..	.	.	.
Hay	.	..	.	$2,960	.
Grain	.	..	.	$605	.
Salt & mineral	.	..	.	$231	.
Feed costs — Weaned offspring	.	..	.	.	.
Hay	.	..	.	$386	.
Grain	.	..	.	$184	.
Total Feed Costs	.	.	.	$4,366	.
Pasture management expense	.	.	.	$250	.
Veterinary costs	.	.	..	$431	.
Bedding	.	.	.	$60	.
Marketing	.	.	.	$129	.
Fuel & repairs	.	.	..	$522	.
Machinery costs	.	.	.	$610	.
Facility repairs	.	.	..	$200	.
Utilities	.	.	.	$170	.
Office expenses	.	.	.	$115	.
Manure removal	.	.	.	$300	.
Interest on operating 2	.	.	.	$345	.
Total Projected Direct Costs	.	.	.	$7,497	.
.	.	..	.	.	..
Return Over Direct Costs	.	..	.	$6,641	.
.	.	..	.	.	.
Projected Indirect Costs	..	...	.	.	.
Operator labour 3 (350 hours @ $12/hour)	.	..	.	$4,200	.
Land taxes, licences & insurance	.	..	.	$420	.
Depreciation4 on improvements	.	..	.	$830	.
Depreciation on equipment	.	.	.	$506	.
Total Projected Indirect Costs	.	..	.	$5,956	.
		.
Total Projected Direct & Indirect Costs	.	.	.	$13,453	.
.	.	.	.	.	.
Gross Operating Profit	.	.	.	$684	.
Interest on Investment 5	.	.	.	.	.
Land	.	.	.	$600	.
Facilities & improvements	.	.	.	$231	.
Stock	.	.	.	$788	.
Equipment	.	.	.	$46	.
Total Interest on Investment	.	.	.	$1,664	.
.	.	..	.	.	.
Total Projected Economic Costs	.	.	.	$15,117	.
.	.	.	.	.	.
Return To Management 6	.	.	.	($979)	.

Note: This budget is the third year of a five year growth plan for a starting commercial meat goat enterprise. The breeding herd would begin with 50 breeding females and increase to 100 breeding females in 5 years.

Sensitivity Analysis
The profitability of a meat goat enterprise will be strongly influenced by market prices for bucks and doelings and weaning percentage.

The table below shows the effect on return over direct costs⁷ for a 70 head operation to changes in weaning percentage and market prices for meat goats.

Weaning %	Market price ($/pound liveweight)
	$0.85	$1.00	$1.10	$1.20	$1.30
130%	($2,502)	($1,547)	($910)	($273)	$364
140%	($2,086)	($1,057)	($371)	$315	$1,001
150%	($1,669)	$567	$168	$903	$1,683
160%	($1,253)	$77	$707	$1,491	$2,275
170%	($836)	$413	$1,246	$2,079	$2.912
180%	($420)	$903	$1,785	$2,667	$3,549

Definitions

1	Cash operating expenses: Total direct costs + insurance
2	Interest on operating: The interest on an operating loan, estimated to be $5,572 at 9% for 6 months
3	Operator labour: Labour contributed by the owner-operator, valued at $10/hour. Not a cash cost.
4	Depreciation: The reduction in the value of an assets over its lifetime.
5	Interest on Investment: The cost of investing in capital assets rather than in a financial investment. Valued at 5% on all asset categories.
6	Return to Management: An amount left to compensate the owner-operator for risk and management.
7	Net cash income: Projected income - total direct costs - insurance

Resources

Books

• Meat Goats by Sara Edmond Agdex #435/20-1 $15.00 - available from Alberta Agriculture, Food and Rural Development or The Alberta Goat Breeders Association
• A Practical Range Approach to Goat Management and Marketing - $10.70 - available from The Canadian Boer Goat Association

• Weaning percentage and weaning weight
• Market prices for bucks and doelings
• Prices for breeding stock
• Feed prices

• Understand the specific needs of the market (eg. carcass size, degree of finish, consistency of finish and volume of supply.
• Locating the enterprise close to an urban centre to access the primary ethnic market.
• Keeping capital costs down by building own facilities and only paying for used materials and equipment.
• Achieving efficient production targets.
• Achieving an acceptable market price.