The Financial Benefits of Going Grass-Fed with Sheep

How to weather inflation of agricultural inputs.

A common expectation is that grass-fed market lambs should fetch a premium price, a price that is higher than conventional grain-fed lamb. That is not always the case unless you are able to tap into a niche market. Sales barns or livestock markets do not pay a higher price. However, there is another angle of looking at the financial benefits of going grass-fed. That is the cost of producing grass-fed lambs compared to grain feeding. 

There are two figures that decide about the level of the profitability of a sheep farm (or any other business). That is income and cost. If your income were to be the same with grass-fed lamb compared to grain-fed lamb, let’s examine cost to determine the level of profitability.  

We just went through a spell of inflation, which increased costs. However, I experienced very little increase in costs. My cost to maintain the farming operations went up only marginally. It was so marginal that it did not cut much into my profit margin.  

Here is a list of my variable expenses/costs and how they were affected:  

Feeding hay in round bales in the winter requires very little labor. Ulf Kintzel / White Clover Sheep Farm

Hay: My main annual expense is hay for winter feeding. It costs me several thousand dollars each year to have my hay made by my neighboring custom-haying business at my farm. Of course, the price for custom haying went up because of the higher fuel cost and the higher cost for bale netting wrap. The two dollars more per bale I was charged sum up to an almost minuscule amount simply because my hay feeding cost is about a bale per ewe per year.  

Fuel: Fuel cost for diesel went up compared to the same time the year before by about $1.50 per gallon. However, my annual diesel use is just below 200 gallons since grazing sheep requires little use of any machinery. So, at the most I spent an additional $300 in diesel fuel in 2023. My tractor is used to put hay in the barn in the summer for storage and to bring hay out in the winter. It is used for bush hogging in the summer. And it is used to plow snow in the winter. That’s all. That is an increase in cost of a couple dollars per ewe. 

There are many needed items on the list to manage a sheep farm from trace mineral salt to ear tags to iodine for newborn lambs and light in the barn during winter hours and during lambing season. The increase in cost for all these items is negligible and amounts to cents, not dollars per ewe in increased costs.  

Here is a list of variable costs that I don’t have: 

Grain: I spent zero dollars on purchasing feed grain. However, the cost of grain itself is not the only grain-feeding cost. You need the equipment to transport, store, and feed grain. You need your own or paid trucking, feed bins, feeders, and equipment to get the feed to the feeders. I don’t have any need for any of the above. Repair costs for any of them have gone up too, in part because of the higher cost for materials. You also need a structure to feed the sheep in the winter. The size of such a structure would need to be a lot bigger than what I have for lambing and hay storage. The scope of the costs is enormous.  

Labor: Labor costs, which already have always been a high cost for any business, have gone up tremendously in the last few years. The rise in labor cost has outpaced inflation in recent months. Needless to say, the cost of paying someone to help you feed your sheep is high. Letting sheep graze from spring to fall and feeding round bales of hay in the winter is far less labor intensive. After all, the sheep do the work when grazing. 

Perennial pasture, once established, generates very little machine or seed cost compared to growing feed grain. Ulf Kintzel / White Clover Sheep Farm

Seed Costs: The cost of seed grain for animal feed has also risen a lot over the last years. I have perennial pasture. Once such pasture is established, it generates hardly any seed costs except for perhaps the occasional frost seeding of clovers. If you don’t grow any grains of any sort but still feed grain to your sheep, you don’t buy expensive seed, but you pay for the rising cost of feed grain.  

More Fuel: If feed grain is grown, the fieldwork is extensive: preparing seed beds, seeding, cultivating or applying herbicides, harvesting, transportation, and more. The increase in fuel costs is manyfold compared to haying or bush hogging and otherwise grazing such acreage.  

In essence, the cost for grass-fed sheep is far lower than for grain-fed sheep. While I have costs associated with grazing, e.g. electric fencing, that a sheep farm, that mostly or only feeds stored feed and grain may not have, these costs are still far lower than any costs associated with grain feeding. Thus, I am left with a much higher profit margin for those of my lambs for butchering purposes that I sell for a similar price as grain-fed lambs sell for.  

However, that is not the whole story. Because of the high demand in direct sales and because of the ability to sell many lambs as breeding stock, in large part because of my sheep’s ability to thrive on grass, my need to sell market lambs to a vendor or at sales barns is limited. Direct sales of grass-fed meats can do the same. Going grass-fed has the ability to open up markets.  

I want to give a word of caution, though: The logistics of raising sheep on pasture and not feeding an ounce of grain are not easy. The knowledge needed is vast. Grass-fed does not mean turning sheep loose in some grazing cell and letting them fend for themselves. It requires lots of brain power. It requires a rotational grazing system. It requires good pasture management. I am very familiar with both systems, grain-fed and grass-fed alike. Feeding more grain to increase daily gains is far easier than figuring out what your pasture or pasture rotation is missing to accomplish the same. Yet, going grass-fed for the last three decades since I started has served me well financially. And since my costs are so low with my grass-fed sheep, I never felt the sting of higher inflation in the last few years.