Virgin Islands Agricultural Experiment Station Report No. 7 September 1974 Potential Returns from GOAT AND SHEEP ENTERPRISES in the U.S. Virgin Islands . ag “ee So £5 5m * ogo . aes pe ee eines te, +3 stage oe a MES = ee ate a Pay, Sirk ae i nd “4 i a ad yet i ve fs Pie me Des fee ase Ae MT” rahe wee ae OTR cs Ae ~ Ke” ies - = can a oe ay ai: ete re pris 4 @ osh thy y ba! WRreve eae Fe et Bh na Y a Ah ae wy a VIRGIN ISLANDS AGRICULTURAL EXPERIMENT STATION Fenton B. Sands, Director St. Croix, U.S. Virgin Islands 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 Foreword 2200. eee Summary and Conclusions ..................- PrOGEdUYES « x x SoH 8 Hee BEE: Sm wi mane Sata wm ERO Resource Base.) ee Grazing Land ...........0.0 0. eee Climate . 00.0. Labor ......... ebb bebe eee b beens Other Factors « cog s sg a oy 4 wan ¢ ew we wees w om Specifications of Benchmark Units .............. Costs and Returns Estimates . Investment and Operating Capital ............ Costs arid Returns: sie cso ose 2 mow wos wens 0 mem os Sensitivity Analysis .................2.-.. Appendix ........ en Te fe rrr 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 scrics 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 qucstions 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 shcep 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.? 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, O. 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 shecp 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 om 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 ‘I'DN (total digestible nutrient) requirements.? In addition, the carry- ing capacity was computed as a function ef 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 75¢ 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. 2Nutrition 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. 2 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.* 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) ~-_---~ se ty emia art 39,539 20,470 —48 Cropland harvested (acres) ~~ -------------------------------- 5,134 737 —86 Average size of allifarms (actes)) xensos oe ee 85 97 +14 Number of farms using land for grazing __._-____-_-_-_------------- 279 100 —64 On farms of up to 49 acres ~---~~ ees sia 181 70 —61 On fame BO HO. 17H ACROSS cette ee ee 57 15 —74 On farms of 175 to 499 acres _--— -_____-------+--------- 24 7 —71 Oni farivis' GF S00! te: 999 (WeTES: ox cree eee ei 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 Oni farms Of 800! te: 999 BePES. cee eens 3,532 1,921 —46 On farms of 1000 acres or more ~~---~-~--------_- a 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 author. Land use reported in the 1970 Census was for actual uce dering 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 smal] 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 on the prime farmland, 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 also some evidence that land 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 encourged live- stock enterprises, but within an environment of uncertainity. 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. ‘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. Inches of Rainfall 7-0F 6.0F (Fredericksted, 36 yrs) 5.0F Western * Region (Anna's Hope, 48 yrs) oF astern South Central Region (King's Hill, 37 yrs) I) iL A A i A 4. A 4. L Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1 4 1 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. 4 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 identificd 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 conditigas and relating that value to the nutrient requirements 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:* 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 35 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/Ib.) : 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 1See 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. 2 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. 5 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 permit 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. 6 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 ]ower 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 s) Well and trough (25% of $1,660)° 415 20 21 Sub-total $8,671 $306 Livestock: Goats Sheep Brood females (30 Ibs. @ 50¢)* (29) $1,160 (30) $1,200 Sires (120 Ibs. @ 50¢) (1) 60 (1) 60 Young stock (25 Ibs. Aug. @ 60¢) (25) 375 (22) 330 Sub-total $1,595 $1,590 Total investment capital $10,266 $10,261 Investment capital per adult animal 342 531 Adjusted investment capital * 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. ? Fences consist of net wire plus 2 barbed wires on posts placed on 8 ft. centers and 6 gates for 6 pastures. * ince 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 betichmark 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 Ibs. per head X price) + sale value of culls of $160 Expenses — $648 + interest on investment of $595. Therefore, (85X50) P,-+ 160—648—595 365H i i) — 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 Ibs. @ 50¢)* (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 $200 per acre is assumed to be development value and not chargeable to the enterprise. *Fences consist of net wire plus 2 barbed wires on posts placed on 8 ft. centers and 2 gates for 2 pastures. * Since this is a backyard operation, animals are watered at the household well. ‘Number in () represents number of head. 5 Depreciable capital is included at 50 percent of original value. The above equation reduces to: ; 11.644 P,—2.967 — H Where L] = labor income per hour P,=sale price for young goats ($/Ib.) 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- 8 ures 2 through 5. To illustrate their use, consider Figure 2 which is the 20-acre goat operation. If the sale price is 60¢ 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 (25¢/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 $651 Liveweight of stock sold (Ibs.) 1,130 4,570 1,080 4,020 Cost per lb., liveweight ($) 0.18 0.14 0.19 0.16 Income: Young stock sales (50 Ib. @ 60¢) (21) $630 (85) $2,550 (20) $600 (74) $2,220 Cull brood females (80 Ib. @ 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 $1.55 Table 6—Labor income per hour (LI) for a 20-acre Table 7—Labor income per hour (LI) for a 5-acre goat or sheep operation at alternative sale prices and goat or sheep operation at alternative sale prices and daily labor requirements, St. Croix, 1974 daily labor requirements, St. Croix, 1974 Liveweight Hours worked per day (H) Liveweight Hours worked per day (H) saleprice * e sale price ($/1b) 1.0 1 J 2.0 2.5 3.0 ($/1b.) 0.25 0.375 0.5 0.625 0.75 seritennirnrrereeen es) OUOTS = aie Dollars 6 iene aig ree is Goats (P,) Goats ( P.) $ .45 2.27 1.52 1.14 0.91 0.76 $ .45 1.49 0.99 0.74 0.59 0.50 50 2.86 1.90 1.43 1.14 0.95 50 2.06 1.37 1.03 0.82 0.69 55 3.44 2:29 1:72 E37 1.15 59 2.64 1.76 Lo2 1.06 0.88 60 4.02 2.68 2.01 1.61 1.34 60 3.22 2.14 1.61 1:29 1.07 1.84 1.53 65 3.79 2.53 1.89 1.52 1.26 65 4.60 3.07 2.30 70 9.18 3.46 2.59 2.07 1.73 70 4.36 2.91 2.18 1.75 1.45 75 5:77 3.84 2.88 2:51 1,92 75 4.94 3.29 2.47 1.98 1.65 Sheep (P,) Sheep (P,) $ 45 1.59 1.06 0.79 0.64 0.53 $ 45 1.20 0.80 0.60 0.48 0.40 50 2.10 1.40 1.05 0.84 0.70 50 L753 1.17 0.88 0.70 0.58 55 2.60 1.73 1.30 1.04 0.87 55 2.30 1.53 1.15 0.92 0.77 60 3.11 2.07 1.55 1.24 1.04 60 2.85 1.90 1.42 1.14 0.95 1.81 1.45 1.21 65 3.40 2.26 1.70 1.36 1.13 65 3.62 2:41 70 4.12 2.75 2.06 1.65 L357 70 3.94 2.63 1:97 1.58 1.31 75 4.63 3.09 2:31 1.85 1.54 73 4.49 2:99 2.25 1.80 1.50 sales 1 Priced at f.o.b, the farm. The prevailing practice on St. ‘Priced at f.o.b. the farm which is the prevailing Croix is for buyers to pick up the livestock at the farm. point. 11.644 P,—2.967 2.877 P,—0.923 Goats—LI= Goats—LI= H H 10.137 P,—2.973 2.740 P,—0.932 Sheep—LI= II Sheep LI= H 10 (H) Hours per Day x 3.02.52.0 1.5 1.0 70 5 6 2 60 [e} a 8 _11.644P:—2.967 3 11.644P.— 2.967 ” 50 H= Ll LcH = 0.255 45 11.6447 — 7 0 1.00 2.00 3.00 4.00 5.00 6.00 7.00 Labor Income, Dollars per Hour (LI) Figure 2.—Breakeven relationships between sale price (P,), labor income (LI,), and daily labor re- quirements (H) for a simulated 20-acre goat opera- tion, St. Croix, 1974. (H) Hours per Day 5 75.625,50 .375 125 70 2 65 5 8 60 eo Bf Rw oa) 2.877P:—0.923 re] u.e= ” H 50 y= 2-877? —0.923 - Ll. 45) pet 40.921 T ~~ 2.877 0 1.00 2.00 3.00 4.00 5.00 6.00 7.00 Labor Income, Dollars per Hour (LI.) Figure 3.—Breakeven relationships between sale prices (P,), labor income (LI,), and daily labor re- quirements (H) for a simulated 5-acre goat opera- tion, St. Croix, 1974. (H) Hours per Day ¥5 3.02.52.0 1.5 1.0 70 P=] = 65 5 8 60 o WY a - ws = 10-137P.—2.973 3G H w 10.137P-—2.97 50 H= : Ll. LAH p=" 0.29 5] 10.137 +9293 a ol 0 1.00 2.00 3.00 4.00 5.00 6.00 7.00 Labor Income, Dollars per Hour (LI-) Figure 4.—Breakeven relationships between sale prices (P,), labor income (LI,), and daily labor re- quirements (H) for a simulated 20-acre sheep opera- tion, St. Croix, 1974. (H) Hours per Day 75 75.25.50 375 25 70 65 5 > .60 a 2 2.740P.—0.932 «99 tL=— een ‘. H B so 4 —_2:740P.—0.932 ~ Ll. LIsH 45 P.=—___ +. 0.34 CL. 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. 11 APPENDIX Table A-1.—Annual TDN requirements per herd unit, 20-acre goat and sheep operations, St. Croix, 1974 ‘i lbs. TDN Number of lbs. TDN : Herd Component head per means required per required per HU herd unit of tota 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 year‘ 10,996 Sheep: Brood females 10.0 56.2 2.2 22.0 8,030 Nursing lambs * 5.0 38.1 0.5 235; 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 1Two 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 (Ibs.) 1,500 1,475 1,500 1,475 TDN Produced on pasture (lbs.) 7,500 29,500 7,300 29,500 TDN Required per herd unit (lbs.)* 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 * 7 27 7 28 Grain concentrate fed (Ibs.)* 630 2,430 630 2,520 TDN in grain concentrate (Ibs.) 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-1. ? 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 Ibs. per day per brood female for 180 days per year or 90 lbs. per year. 12 Table A-3.—Estimated fencing cost for 20-acre goat or sheep operation, St. Croix, 1974 Unit No. units Value Item Price required Net wire, 150 ft./roll $39.95 44 $1,757.80 Barbed wire, 480 ft./roll 12.50 27 337.50 Steel posts, 7 ft. 2.10 817 1,715.70 Gates 20.00 6 120.00 Total $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 0.44 $3,195=$1,406 Table A-4.—Determination of livestock sales for 5- and 20-acre goat or sheep operation, St. Croix, 1974 Benchmark farm Item Goats 5 Acres 20 Acres 5 Acres 20 Acres No. of brood females 7 29 8 30 Death and theft loss (10%) 1 3 1 3 Number culled from herd (14%) 1 4 1 4 Number of offspring 25 102 24 90 Less death and theft loss (10%) 2 10 2 9 Less herd replacements 2 7 2 f Number of young stock for sale 21 85 20 74 Sales value per head ($): Young stock (50 lbs. @ 60¢) 30 30 30 30 Culls (80 Ibs. @ 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 13