As a sheep farmer, I felt I needed to learn some about economics. It is good I have accounting experience and knowledge of managing a business. Economics was touched on slightly when I was obtaining an accounting degree. This year I felt I needed to learn more than a basic idea of economics. I wanted to know how economics work, what are the influences, and who makes the decisions of country economics. I could attend college classes, but I do not have the money or the time to attend college. I am too busy with family affairs to attend any type of schooling at this present time. I started reading articles, news posts and a few books to learn. I am still learning.
The economy of a country and area affect the price my sheep sell for, what I pay for feed and transportation costs. It also affects my own personal life in how much money it takes to keep my household up and running properly. Put simply, the economy affects what we eat, wear, where we go, and live.
I recently looked up what the inflation rate is for the United States in September – 8.3%. Simple meaning, the same item cost 8.3% more in September than it did in August. As inflation increases, the federal government raises the interest rates on loans. Raised interest rates are to stop people from borrowing money by loan or on credit cards, restricting what is purchased. Less purchasing, lower demand for product, creates an excess of the product, causing the supplier of the product to lower the price, therefore lowering inflation.
But what happens when raising the interest rates do not stop or lower inflation = recession happens. We all dislike the word “recession”. I think of long lines for car fuel, high grocery bills, and unemployment. I have been through a few recessions.
Today, I had some sheep consigned in a special replacement sheep and goat sale. The goats went through the sale ring first. Prices were low. Most of the nice young nannies and registered billies went for market animals to be slaughtered. Then the sheep came in. I had the only registered Dorper sheep, a ram and two ewes. The ram did not bring what I wanted, I PO’d or Purchased Out, and kept the ram. I sold one ewe and PO’d the other. Two weeks ago, any nice built ewe brought $350 USD, I was not going to sell this nice registered ewe for $200. I returned home with the ram and ewe. There were not many people at the sale, and very few were buying any goats or sheep.
What are my plans for the ram and ewe I returned with – use them to produce market lambs or breeding stock. The ram I had considered not to sell, as he is a good quality breeding ram. I will need another ram at the beginning of next year. I have already placed the ram in a pen with a few ewes. I am putting him to work.
Later, I checked to see what the market reports were for this week, the prices for feeder and slaughter lambs dropped sharply. The number of sheep for sale was higher than last month and last year at the same time. People are selling out, the drought and lack of hay causing hay prices to be too high to feed their sheep through the winter. The breeding ewe market is flooded, with a lot of ewes going to slaughter.
The lack of breeding stock producing will create a shortage of market lambs in the spring.
A recession, and it looks serious that there will be a recession in the close future, will prevent people from purchasing breeding stock in the spring, to assist with production of market lambs.
I see market lamb prices getting high once more. High prices for a lamb on the hoof, means really high prices at the meat market for the consumer. When meat prices get too high for the consumer, they do not eat meat, or they eat less meat.
While the outlook for next spring and even next year does not look really good – recessions do not last forever. The markets will come back into balance. People will want to raise sheep as a hobby or business once more. The prices will return to a more profitable margin.
I do slaughter and eat my own lambs, as I know what is in the meat, actually what is not in the meat.
The rains will come, the grass will turn green and I will continue to be a sheep farmer.