An economic evaluation of confinement sheep production in the northern Rocky Mountains and the northwestern Great Plains

Abstract

Confinement sheep production is currently the subject of considerable research effort and commercial investment. This study evaluates the economic potential of confinement sheep production for the region of the Northern Rocky Mountains and the Northwestern Great Plains. The extent and composition of confinement sheep production within the region is surveyed. The main elements available to alternative sheep production systems are cataloged, and the ramifications of each element for different systems are estimated. Four sheep production systems representative of the range of alternatives are defined and budgeted. These four systems are economically evaluated by means of multi-period simulation. Sensitivity analysis is used both to replicate variations in the four systems and to measure the importance of variations in the budget estimates. It is concluded that a major transition to confinement production is unlikely under current conditions. However, confinement production can be a viable alternative under certain circumstances. It is also demonstrated that marginal tax rates are important factors in determining net profitability and should be included in economic evaluations of production alternatives.