Žagubica Municipality, in Eastern Serbia, is one of the most undeveloped municipalities in Serbia. It accounts for only 0.067% of the total GDP (Gross Domestic Product) of the Republic of Serbia. A large number of people migrated from this area to big cities or countries of the EU, mainly because of the economic underdevelopment and the lack of production and processing capacities. Nowadays agriculture has a major role in the economy of Žagubica, contributing to the total value created with 59.33%, which clearly speaks of its dominance, while far behind it is the manufacturing industry with 8.23% and commerce with 6.93%. Geographical position of the Žagubica Municipality, the Homolje territory, is an important natural resource of great potential, with specific characteristics of HNV (High Nature Value) region. Region of Homolje has a long tradition of sheep breeding and the quality of products has become well-known. However, depopulation of villages caused a decline in the production and closure of a number of processing facilities. The development of organic farming is one of the possible ways to revitalize the village and the development of this region rich in natural resources. This paper analyzes the strengths, weaknesses, opportunities, and threats (SWOT analysis) in the organization of organic sheep production in order to apply the necessary measures on the field for the organization of a new production system. The significant "advantages" of Žagubica Municipality are its herbal resources and the fact that the arable agricultural land makes 48.5% of the municipality area (42.9% of meadows and 26% of pastures) which is a good basis for the organization of the production. The issue of animal genetic resources is particularly analyzed and discussed. Under the "possibility" the attention is focused on various aspects of education in this field and its significance
