No. 13/2006
THE SILENCE OF THE LAMBS
Anders Skonhoft
Abstract:
A model analyzing the economics of sheep farming is formulated. The
basic idea is simple. Sheep are capital and they are held by farmers as
long as their capital value exceeds their slaughter, or meat, value. The
farmers are therefore portfolio managers aiming to find the optimal combination
of different categories of animals and the yields are compared with the
yields from other assets. The model is formulated within a Northern Scandinavian
economic and biological setting with a crucial distinction between the
outdoors grazing season and the indoors season, and with adult sheep and
lambs being different categories. In the first step, the management problem
is analyzed with only the meat income of the farmers taken into account.
In the next step, income from wool production is considered as well. The
analysis provides several results that differ from standard harvesting
theory.
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