Regenerative Agriculture And The Net Present Value Of Sheep
By Harry Carr
In simple terms “Regenerative Agriculture” seeks to restore the ecological balance to our bioregion that has been degraded by our current industrial farming practices. We have lost half our topsoil, greatly reduced our soil organic matter (carbon content), and destroyed the diverse species habitat on the native prairie ecosystem that thrived not so long ago.
Contrary to much current news about how “bad” livestock are for the environment, they actually play an important and essential ecological role in carbon cycling and restoring biodiversity to our native prairie grasslands. The prairie thrived with abundant wildlife. My guess is that the wildlife of the prairie belched and they engaged in flatulence, as do humans. This process can be defined as the product of biological digestion. If an animal respires it digests what it eats and must return its waste out the other end, as a solid, liquid, or a gas. While you can look at this as excrement, most farmers look at it as fertilizer. It’s understandable that folks get confused. Seeing this as a problem, rather than a solution, to our ability to survive without destroying our environment is unfortunate.
Alan Savory has been working on all aspects of grazing and environmental resource management for the last 60 years. You can listen to a talk he gave here on the essential role livestock play in ecosystem management, and how without them desertification ensues.
In his essay “The Farmer as Conservationist” Aldo Leopold states:
Conservation means harmony between men and land. When land does well for its owner, and the owner does well by his land; when both end up better by reason of their partnership, we have conservation. When one or the other grows poorer, we do not.
Following along the philosophical lines of Savory and Leopold, I am writing this essay “The Net Present Value of Sheep”. I am attempting to look at what is economically possible on average soil in the grand-prairie region of east central Illinois (Mint Creek) considering that we have returned the ground to a biodiverse perennial vegetation (the species of which will evolve over time). The numbers are in value added terms, rather than net returns, as expenses can vary greatly depending on the individual situation. Is the land paid for? How much of the labor is performed by the owner-operator versus hired help, etc. The idea of Net Present Value is to show the value of a sheep operation projecting out future income on a regular basis much like one would value a perpetuity. The sheep bring value to the land, the farmer and to civilization itself, being an excellent source of protein that is environmentally sustainable and regenerative.
Let's first look at what the University of Illinois has posted as a budget for growing crops in this area, with projected losses in 2020 (image at bottom). This is conventional industrial agriculture with all the chemicals.
Next let’s look at regeneratively grazed sheep as a perpetuity.
Say I need to make $30,000 per year just to meet my basic living expenses. How much money do I need to have saved to make this goal? Well, that depends on the interest rate I can receive from my money saved. If I can get 5% interest, then ($30,000/.05=$600,000). So my savings of $600,000 yield me $630,000 after one year at a 5% interest rate, thereby not causing an erosion of my capital of $600,000 after the cost of my living expenses.
In our present world 5% may be hard to receive without overt risk, so what if I can just be safe and get 1%, how much savings would I need? I would then need 3 million ($30,000/.01=$3,000,000). This is quite a jump, from $600,000 to $3,000,000. Now, how much savings would you need at a negative interest rate of 1%?
I truly do not know the answer to this question because however much money I have it just keeps getting smaller rather than larger, so I never have any money that isn’t being eroded by time. This captures the retirement crisis in the world right now. Interest rates are time traveling backwards. About 25-30 percent of all investment grade debt in the world now trades at negative rates, approximately 17 trillion dollars. More is headed our way.
So imagine in my world of Regenerative Agriculture I hand scythe my perennial pasture grass with no fossil fuel consumption. All that is required for me to do this is a scythe, and abundant physical energy. No input costs are incurred. I’ll probably need to eat more than I would normally, but we can say that I need to eat anyway, so lets ignore that for a bit. The sun doesn’t charge for shining and the grass grows for free. I just need to scythe the grass. Let’s say the price received for hay is $75 for a large square bale. I can scythe an acre and get six of these, so my labor and scythe yield me $450 per acre. I need about 67 acres to retire, if I am willing to scythe. The value of grass growth per year requires 67 acres (to receive $30,000 in value) and an insane amount of scything! There is a wonderful feeling however of not needing any outside inputs. No fossil fuels or equipment to breakdown, no herbicides, pesticides and believe it or not my back pain is gone when I stay in extremely good physical shape that scything provides. This is truly working capital. There is one caveat; over time the scything away of organic matter in the form of grass will deplete the soil. I need a natural way of restoring those nutrients lost in the scything of grass off the land.
The prospect of scything 67 acres of grass every year in my retirement however seems daunting, so I decide to get some sheep. The sheep will eat the grass for free! They do not charge me any interest. They also provide the side benefit of having a rear mounted fertilizer attachment to help restore the fertility of the land and grow more grass! Sheep poop out 80% of what they ingest and their excrement is enriched biological fertilizer. So the sun doesn’t charge for shining, the grass grows for free, the sheep fertilize by pooping, with a side dress of pee! What a perfect world we live in. The sheep provide us with a complete protein with their meat, and remarkably they reproduce on their own, without AI (which in this world could mean artificial insemination or artificial intelligence). Not only do they reproduce, but they do so abundantly, yielding an exponential growth ability. On my 67 acres of grass I can raise about 6 sheep per acre, or about 400 head of sheep. Sheep are not sheep, however, without lambs. Lambs, how cute, fluffy, wooly little suckling lambs that are very easy to love.
To get a glimpse of how well these sheep reproduce consider this. With a modest 130% lambing rate (sheep usually have twins which would be a 200% lambing rate), a fifty percent harvest rate of the new crop of lambs, mostly ram lambs, as we only need a few for that non artificial insemination, a ten percent death loss (sheep live about 10 years), our 400 sheep on 67 acres has reproduced exponentially to over thirty thousand head in ten years! Add another five years or fifteen years total and we are up to 200 thousand head, and in five more years, we have made it to 1.6 million head of sheep. 1.6 million head of sheep from four hundred in twenty years!!! Such is the beauty and devastation of exponential growth. While this kind exponential growth hasn’t exactly happened with sheep on our planet it has with people, and that is a discussion for another day.
So what is a sustainable number of brood sheep on my 67 acres and what net present value do they produce? Well in simple terms to achieve a replacement rate of sheep population I need to not harvest ten percent of my female lambs and keep them for replacement brood stock. The sale barn market for a non organic conventionally raised (100 pound) 10-month-old live lamb is about $130. So if I wholesale 480 (400x1.3-10%) of my lambs born I receive $62,400 of value added. Assuming I can provide all of the care, maintenance and health needs of the sheep on my own this provides a perpetual income with a net present value of $1,248.000. (This is the sheep value required to provide an annual gross value added income of $62,400 at a 5% interest rate.) That increases my return per acre from $450 of hay to $931 of wholesale lamb. Granted that this is possible, but not probable. Zero outside inputs is not realistic. If the land is owned outright, there would still be taxes to pay. Probably some vet bills, certainly some kelp and mineral is advised. All nominal costs compared to income however. No fertilizer is needed, no herbicides and pesticides etc.
Now if you ask me, would I rather scythe 67 acres for hay a year or tend a flock of 400 ewes (what brood female sheep are called), it may seems embarrassingly obvious that the latter is easier than the former, certainly its twice the return. Consider though that with the sheep you never get a day off and you have to feed them through the winter in our Midwest climate, which probably means putting up some hay anyway. Remember that in this thought experiment we have no fossil fuels to burn and no outside inputs. Our perennial pasture grows without our help, but it grows much more abundantly with sheep grazing and fertilizing. The biblical beauty of this pastoral world makes me want to lie down in green pastures and walk beside still waters. How about this for soul restoration?
With the sustainable production of 480 lambs on 67 acres, this yields about 12,000 lbs of meat. The average human requires about ¼ pound of meat per day to achieve their needs. I will round this to 100 pounds per person per year. My 67 acres of pastoral wonderfulness feeds the meat protein needs of 120 people. Will that feed the world however? How many acres of arable land with sheep grazing are needed to feed the world? Remember, this is with no chemicals fertilizer, no GMO’s, no herbicides and pesticides etc. This is all natural lamb goodness, regenerating the ecosystem. But will this feed the world???
To be continued…
University of Illinois has posted as a budget for growing crops in this area, with projected losses in 2020. This is conventional industrial agriculture with all the chemicals.
Sheep out on organic pasture after first snow fall in November 2019 at Mint Creek Farm.