Karoo Meridian — Products, Services & Revenue Model
The wool and lamb products, the value-added services and the revenue model underpinning Karoo Meridian.
Section 5 · Business Plan
Products, Services & Revenue Model
The wool and lamb products, the value-added services and the revenue model underpinning Karoo Meridian.
5.1 Revenue streams
| Stream | Share | Description & pricing basis |
|---|---|---|
| Wool sales | 38% | Fine Merino clip (17–20 micron target), classed on-farm, sold at Gqeberha auctions and via forward contracts; certified sustainable premium targeted. |
| Lamb sales | 32% | A2/A3 lamb into premium domestic wholesale, retail and butchery channels; feedlot finishing to consistent 20–22 kg carcasses. |
| Breeding stock | 14% | Performance-tested ewes and rams sold to commercial producers in SA and African export markets. |
| Stud auctions | 8% | Annual production auctions of elite rams and stud ewes; pricing driven by breeding values and reputation. |
| Meat exports | 6% | Halaal-certified frozen lamb to UAE, Saudi Arabia and Qatar via accredited export abattoirs. |
| By-products | 2% | Skins, wool pieces, crutchings and cull income. |
5.2 Unit economics
At steady state each breeding ewe generates approximately R2,510 of
annual revenue across wool (±4.5 kg greasy at Merino prices), weaned
lamb output (105% lambing weaned, ~55% of drop marketed after
replacements) and a pro-rated share of genetics income, against ±R1,180
of direct costs (supplementary feed, veterinary, shearing, marketing and
allocated labour) — an annual contribution of roughly R1,330 per ewe
before overheads, or a ±53% contribution margin. Contribution scales
with lambing percentage more than any other variable, which is why
reproduction efficiency dominates the breeding objective.
The plan assumes weaned lambing rates rising from 95% (Year 1,
maiden-heavy flock) to 105–110% at maturity. Well-managed SA Merino
flocks achieve 100–130%; communal averages are far lower. Every 5-point
miss on weaning percentage removes roughly R60–70 per ewe of
contribution (~R1.5m per year at full flock). Predation control and ewe
nutrition in late gestation are the operational hinge points.
5.3 The vertically integrated platform
The Company controls the value chain from genetics to export
documentation. Upstream: stud breeding, AI and embryo programmes.
Midstream: commercial flock production on rotational veld, feedlot
finishing, on-farm wool classing and shearing. Downstream: meat
processing through accredited partner abattoirs migrating to owned
capacity in Phase 3, direct wool export relationships, stud auctions and
a breeding-stock sales platform. Integration captures margin at each
transfer point and, critically, produces the traceability data that
export buyers now price.
5.4 Wool clip economics
Wool revenue is a function of fleece weight, yield (clean-to-greasy
conversion), micron positioning and certification status. The Company
targets a flock average of 18.5–19.5 micron at 4.3–4.8 kg greasy fleece
weight per adult, with a clean yield of ±62%. The table below
reconstructs the clip revenue build-up at Year 5 scale and shows the
sensitivity of clip value to the two management-controllable levers:
micron (via genetics) and certification (via production standards).
| Clip parameter | Year 5 value | Basis |
|---|---|---|
| Sheep shorn (adults + hoggets) | ±34,000 | Total flock less lambs at shearing |
| Average greasy fleece weight | 4.6 kg | Merino adult norm at target nutrition |
| Gross clip (greasy) | ±156 t | Includes pieces, bellies, locks |
| Main-line clip (greasy) | ±130 t | Fleece wool after skirtings |
| Clean yield | 62% | Karoo dust-adjusted |
| Achieved price (clean, certified) | ±R250/kg | Discount to indicator for flock build-phase micron mix |
| Skirtings & oddments realisation | ±R60/kg greasy | Pieces, bellies, locks basket |
| Indicative clip revenue | ±R166m gross wool line | Reconciles to 38% of R472m less lamb-wool allocation |
Each micron of genetic fineness gained across the flock is worth
roughly 5–8% on clean price in a normal market; each 5-point gain in
certified share adds the certified premium (±R7–10/kg clean at current
differentials) on the marginal bales. Both accrue over multi-year
breeding horizons — which is why the genetics budget is capital, not
cost.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Karoo Meridian Wool & Livestock (Pty) Ltd.