Estimation of optimal stocking rate of merino sheep

The evaluation of wool by objective measurement means that decreases in fleece weight, such as those caused by higher stocking rates, may be wholly or partly compensated for in value by increased prices for wool of reduced fibre diameter. This paper examines the effect of such compensations on the marginal returns to increased stocking rates.Two approaches were used. First, the effect of stocking rate on gross margins was examined over a given distribution of seasons so as to determine the most profitable stocking rate. Secondly, the cash flow of a wool-producing enterprise was examined over a random sequence of years. The most profitable stocking rate was increased by objective evaluation by about 12% if a decrease in fibre diameter of one micron were associated with an increase in wool price of 10 cents per kilogramme, using fleece weight-stocking rate relationships derived from field experiments.Inventory analyses were used to examine the long-term relationships between stocking rate, financial stability and profitability. For each stocking rate studied, the cash flow and mean and minimum bank balances of a farmer were simulated over a set number of years. The stocking rate at which the highest minimum bank balance was recorded was about 15% (one to two wethers per hectare) lower than that at which the standard of living and the mean bank balance were at a maximum. That is, a risk-avoidance policy would not differ greatly from a profit-maximisation policy with respect to stocking rate.