Rural Industries Research & Development Corporation

RIRDC Short Report:
The Economics of Commercial
Angora Goat Enterprises

THE FULL REPORT

This is a comprehensive summary of the full research report The Economics of a Commercial Angora Goat Enterprise by Lloyd Davies and Geoff Murray. RIRDC Research Paper Series No 97/11. (January 1997). It is available from RIRDC for $10 plus $6 p&h - phone (02) 6272 4819 or use our
online order form.

Can an Angora enterprise be justified from a commercial grazier's viewpoint?

The Angora goat industry has gone through the speculative phase of its development. It has reached a commercial phase where the prices paid for breeding stock are in line with the commercial returns. New bloodlines imported from Texas and South Africa have greatly improved the commercial returns and further selection will see more gains.

The incorporation of goats in grazing enterprises can bring a number of benefits.


• They are useful in weed control programs, saving spraying costs and reducing chemical use
  
• They result in better pastures that benefit other livestock or cropping enterprises
  
• They diversify income
  
• They may fit in well with labour availability on the farm.

There are, however, extra costs and procedures associated with Angora goats.

• Fencing has to be good. A fence that is satisfactory for crossbred sheep is generally adequate. Capital outlays for fencing and other facilities such as shearing can sometimes be too high to justify.
  
• Goats need to be handled differently from sheep and this has to be understood. Many people learn to handle them well and prefer to work with them rather than sheep.
  
• Goats require good management to achieve high kidding percentages. Predation is a significant problem and losses due to exposure in cold weather are common. Many graziers place newly born kids and their mothers in sheds. This is a labour-intensive procedure. However, kids from the new bloodlines appear to be bigger and more robust, which has led some larger producers to discontinue the use of shelter sheds and yards for the first week or two of the life of a kid. The use of shepherd dogs is now a common and successful method of reducing predation.
  
• Goats are shorn twice a year and most people also crutch twice a year.
  
• Prices paid for the mohair fibre have varied considerably in recent times. Short-term prospects appear favourable, but it is possible that periods of low prices will occur again.
  
• Prices paid for goat meat have been variable. New and more stable markets may develop with better marketing. The capretto market for kid meat, developed in Western Australia, has provided an excellent outlet for goat meat. Increasing slaughter of kids means less opportunity for increasing Angora production and productivity

Comparative returns

Gross margin estimates, as at September 1995, for a number of livestock enterprises are listed in the table on page 3. The key figure is the gross margin per dry sheep equivalent (DSE) which allows comparison of all enterprises on the basis of the amount of feed consumed. For example, an Angora doe enterprise, using intensive kidding, requires 2.2 times as much feed for a doe and her progeny as does a merino wether. To compare on a per DSE basis the gross margin per head is divided by 2.2.

It can be seen from the table that Angora goat returns compare favourably with other enterprises. The gross margin return per DSE for the Angora/capretto enterprise is particularly attractive. Here, 90 per cent of the wether kids and 25 per cent of the doe kids are sent to the abattoir at less that 10 weeks. So far this market is available only in Western Australia, but there is potential for a similar market in other States.

GROSS MARGIN RETURNS FROM ANGORA, CASHMERE, SHEEP AND BEEF ENTERPRISES

Fibre prices

Recent history has shown that prices can fluctuate considerably for mohair. The graph below shows the prices reported by the National Mohair Pool Pty Ltd, from 1979 to 1995 for two of the major lines - the A kid and the adult line, A Fine Hair.

 

Mohair prices for A kid and A fine hair 1979 to 1995

 

The graph shows clearly that prices have fluctuated widely over the period and that for a time in 1992-93 there were no sales.

The considerable variation in price suggests that farmers should spread the risk of future price falls. Most graziers would choose to run other enterprises to provide the bulk of their income, with an Angora enterprise that can be given more emphasis when prices are high.

As demand for mohair is driven largely by fashion, there are likely to be continued fluctuations in prices for it. On the positive side there is a world body, the International Mohair Association (IMA), promoting the use of mohair.

Much of the demand for mohair comes from summer suiting in Asian countries, particularly Japan. Strong growth in these areas means strong demand for mohair. Mohair is also used in clothing such as jumpers, and demand is higher when the "hairy" or "bulky" look is fashionable.

Stockpiles of unsold mohair are now exhausted and, because of a reduction in Angora goat numbers, supply is lower in all countries. A reduction in the subsidy paid to Texan mohair producers has seen interest in this region change to meat production for the Mexican market.

On the negative side, mohair is not well suited to fast, modern textile machinery. There are fewer manufacturers competing for supplies and mohair is easier to replace with synthetic alternatives than are other fine natural fibres.

In addition, Japan is having economic problems that are not only reducing its demand for mohair products, but also are flowing through to impact on other world economies. Mohair is facing strong competition from lightweight wool products for summer suits.

International production of mohair is closely linked to the price paid for it. Supply eventually falls after a price collapse. It can take 2û3 years for the market to correct itself because stockpiles take time to clear. Many producers will store their mohair if prices are unsatisfactory. Worldwide trends in production are shown in the following graph drawn from information supplied by the International Mohair Association.

The graph shows that world production has halved since 1988. The fall in production has been most rapid in the largest producer, South Africa.


World Production of mohair 1970 to 1995



What areas suit angoras?

There are geographic limits to where goats should be run. Angoras are less suited to both the pastoral and high-rainfall zones. In pastoral areas, feral goats use more of the herbage sources, while predators cut kid survival. In higher rainfall areas, internal parasites are a major problem. Goats are therefore not recommended in coastal areas.

In tablelands areas there should be either natural or built shelter available. Drainage should be good to ensure that foot problems are minimised. In addition, goats should not be located in country where vegetable fault (usually burrs, thistles or grass seed picked up by the fleece) is excessive.

Goats are generally found in the southern States - mainly the tablelands in NSW and in the southern areas of Western Australia.

 

How to decide if angoras are profitable

Current gross margin returns show that all graziers with country suited to goats should be looking at the possibility of running Angora goats. The question of diversifying into a goat enterprise rests on what sort of return on capital can be achieved. This will depend on the capital outlay required to introduce the goats - including any upgrading of fences and shearing facilities.

The other main factor is how much money the Angora enterprise will make compared with the enterprise that it will replace.

If weed control is a factor this must be also allowed for. In the full report (see page 1 for details) four different situations were chosen to illustrate return on capital (see Table 5 in the full report). Returns ranged from minus one per cent (û1%) to 41%.

• A û1% return resulted where goats replaced ewes on a one-for-one basis and $3000 worth of capital improvements were required.
• The 41% return was obtained where goats ran on country that had briars, and other stock did not need to be removed to make way for them.

In the budgets, sheep returns were based on an EMI of 664 cents. As of 15 December 1995 the indicator was 612 cents. That means any comparisons in mid-December 1995 which involved a reduction in sheep numbers would show better returns for Angoras than indicated here.

Goats will be a proposition where:

• the capital expenditure on fences and shearing facilities is not a major cost
• the gross margin returns per DSE from the Angora enterprise are superior to the existing enterprise
• there are weed control benefits from using goats
• labour is available for the critical times of twice-a-year shearing
• predator control can be thorough
• the grazier adopts a positive attitude to running goats.

There are biases against goats in some local areas. It will take time to overcome these, but the best way to start doing so will be to show other farmers when a goat enterprise is doing well financially.

 

Acknowledgment

Editorial comments from Maria Rose formerly of RIRDC are gratefully appreciated. Also, thanks go to the Angora producers for the information they provided and the comments they made on earlier drafts.