3.2 Modelling Sheep Systems

Abstract

At the Hill Farming Research Organization (HFRO), we have been modelling various components of sheep systems and we have also attempted to model, where a need was seen, whole sheep systems at different levels of organization. The sheep systems involved are of course pastoral grazing systems on hill or upland farms. The purpose of this paper is to briefly describe these models, to identify reasons for their existence and to outline some of the problems encountered in their construction.Models have been constructed at HFRO to satisfy particular needs. They cover a spectrum of interests. There are those which are concerned with resource allocation and economic evaluation, those which are built in an attempt to develop more precise operational management procedures and those which describe biological mechanisms and processes which may be conceptual but which provide a better understanding of particular components of an animal production system.The first model (Maxwell, Eadie and Sibbald, 1973) was built to provide answers to the economic questions “Is a particular level of investment in a hill sheep system a viable proposition in both the short and the long term?” and “How does the economic performance of this strategy compare with those of alternatives?”, alternatives being, for example, different levels and rates of flock build-up, with variations in the timing of investments. The model makes year-by-year calculations of cash flow and balance based on Gross Margin, taking account of capital invested, changes in variable costs, tax and interest rates. The Gross Margin is determined from price and cost data and from biological performance. The model also calculates overall economic performance, for a pre-selected project length, as Net Present Value and Internal Rate of Return, taking account of increased stock valuation. These results are used to compare alternative schemes with different rates of investment.