\"The GrassGro™ model was used to simulate profitability of 14 sheep enterprises at four locations in south-eastern Australia. The simulated enterprises were: Merino wethers (superfine and fine wool); self-replacing Merino ewes (fine and medium wool); dual-purpose Merino ewes (fine and medium wool) joined to terminal sires; prime lamb first-cross ewes joined to terminal sires. A sheep model was also used to compare a self-replacing Merino enterprise with dual-purpose and prime lamb enterprises. GrassGro simulations highlighted that the fine-wool dual-purpose enterprise was the most profitable, followed by the prime lamb, self-replacing Merino and Merino wether systems. From 1999-2003, when a large premium existed for superfine-wool, Merino yearlings with superfine wool were as profitable as the fine-wool dual-purpose enterprise. The sheep model analysis showed that Merino yearlings had slightly greater gross margins than other enterprises when mean wool and meat prices for 1994-2004 were used, but not when prices for meat were high in relation to those of wool (June 2003-May 2004). In the sheep model comparisons, spring lambing resulted in greater gross margins than winter lambing and production of yearlings was more profitable than production of weaners. The dual-purpose Merino meat-wool enterprise is resilient against changes in commodity prices, but the genetic merit (wool production, fibre diameter and liveweight) of ewes purchased or bred should be considered. A prime lamb enterprise, using first-cross ewes, will not necessarily be more profitable than systems using a Merino ewe base, particularly when prices for first-cross ewes are high or when weaning percentages are low.
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