Projected Benefits and Costs for a Typical Range-Based Sheep Operation in North Dakota

Sheep production is an important economic activity in North Dakota, especially for larger operations using range-based pastures.

In this article, we provide sources of revenues, production costs and net returns to management and farm overhead for a 250-ewe lamb operation (Table 1). In addition, we provide selected projected (2026) prices for inputs and outputs and selected quantities of production variables with the greatest impact on net returns used in the analysis (Table 2). Furthermore, several assumptions were used to develop the range-based budget. These assumptions were based on past history, current markets, academic publications and opinions from industry and academic experts. The primary assumptions used in the analysis are presented in the following sections.

(Table 1 summary)

• Total gross receipts: $294.90 per ewe ($73,724 total)
• Total variable costs: $245.06 per ewe ($61,262 total)
• Total fixed costs: $34.65 per ewe ($8,661 total)
• Total costs: $279.71 per ewe ($69,923 total)
• Net return to management and overhead: $15.73 per ewe ($3,935 per flock)

We assumed that sheep operators will produce feeder lambs with an average weight of 75 pounds with a lambing rate equal to 1.25 lambs/ewe, and culling rates of 10% for ewes and 15% for rams. In addition, North Dakota State University Extension projections for feeder lamb prices for October 2026 are expected to be in the neighborhood of $3.00/lb.

We used a mature ewe death loss rate of 6.5% of the flock, a coverage rate of 31 ewes per ram (8 rams/flock) and a 4% transportation shrink in the revenue calculations.

Although the current price of wool is $0.90/lb, the cost to transport wool to the closest buyer in Belle Fourche, South Dakota, is expected to be much greater than the value of the wool; we assumed the price of wool is equal $0.0/lb. However, loan deficiency payments for unshorn

…pelts ($2.59/lamb) and ungraded wool ($0.38/lb) for lambs, ewes and rams were included as sources of revenue.

To calculate the costs for pasture and feed, we assumed that it would require two acres of pasture to support one ewe, and pasture would be grazed for 180 days per year, implying that ewes and rams would be provided feed in a drylot for 185 days during the winter months.

We also assumed that sheep would require:

• Hay: 3% of body weight daily
• Grain-based feed: 1.5% of body weight daily

Hay price was set at $80/ton as a proxy cost.

NDSU Extension’s recommended vaccination and healthcare regimens were included using May 2026 prices, including an Ovine progressive pneumonia test ($7/ewe).

Breeding assumptions:

• Ram cost: $500
• Life: 5 years
• Interest rate: 7.5%
• Breeding soundness exam: $75/ram

Marketing costs assumed:

• Commission: $2.25/lamb
• Inspection: $0.15/lamb
• Yardage: $0.35/lamb
• Feed: $0.25/lamb
• Various checkoff fees applied

Transportation assumptions:

• 50-mile distance
• $6.50 per mile round trip

Shearing assumptions:

• $150 setup fee
• $7.50 per ewe, $15 per ram
• $60 for food/refreshments

Labor:

• 1.5 hrs/day (pasture), 3 hrs/day (winter)
• 90% family labor, 10% hired
• Wage rate: $25/hour

Predator control:

• $750/year total
• $600 net cost after cost share

They include equipment such as:

• 90-hp tractor ($60,000)
• ATV ($15,000)
• Work truck ($50,000)
• Feeders and hay rings

Assumptions:

• 7-year life expectancy
• 30% salvage value (major equipment)
• Only 25% used for sheep enterprise

Operating costs:

• 7% of purchase price for fuel/repairs
• Utilities: $150/month
• Taxes: 1% of land value
• Insurance: $1,000/year ($4/ewe)

Key financial results:

• Net return: $15.73/ewe ($3,935 total)
• Break-even lamb price: $2.82/lb (6% below projected price)
• Break-even hay price: $111/ton
• Break-even grain price: $214/ton

The enterprise budget is based on NDSU projections, but producers can use a decision spreadsheet tool (to be available on the NDSU Extension website) to input their own numbers and compare results.

Contact: jon.biermacher@ndsu.edu