The objective

of this work was to determine the impact of subsidies given

in assets for the purchase of productive actives in familiar

sheep production units (UPF) in the state of Mexico.

A survey was carried-out among 58 sheep farmers in a

population of 475 benefi ciaries, from January to March

of 2007. Seventeen months after subsidy release, 16% of

UPF were closed, 48% were stable or growing, and 36%

were contracting. Herd dynamics could be explained on

the basis of previous experience of the sheep farmer, the

capacity of the UPF to produce the feed required by the

herd, the adoption of new innovative and good practices the

production system, the network of knowledge to which the

farmer belongs, the sheep quality offered by the network of

livestock providers; and the conception of the activity of

the producer himself, as savings or as a business. Subsidies

directed to this activity did not increase productive capacity

of the herds, and did not generate wealth or employment.

Keywords: Sheep, subsidies, innovation management, effi ciency of public spending.