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That said, I usually find the herd-modifier to speed enough of a downside to rarely bother with them and slaughter them on the spot when I get some as loot from battles.
I don't think they add carry capacity as its usually marked as a symbol if they do. Guess its more bread (grain) and butter for my men! SELLING THE LIVE STOCK
Personally I slaughter them and use or trade the meat and hides. Make sure you sell your meat/hide with good profits to earn Denars and Trade skill.
I calculated a loss doing that (only calculated for hogs). Two denar loss in comparison to selling live
As I said, it depends on the prices in the city at the time, cause the prices for the animals and the endproducts vary independently
There are rumors my men call my wife a cow behind my back.
Everyone knows she's a hog, sir.
Slaughter for meat or sell as any other trade good. You can sometimes by livestock at very low prices and sell meat at high prices. While rare, there could be situations where meat is more valuable than livestock.
you can trade them. their prices do flux city/city. but, rarely worth the herd penalty.
the only "good" use is to do the quests, which demand them. again, pita to carry them around with a herd penalty. probably can store them in a city until you need them.
I've been butchering villagers work horses forever. Very good value there
In certain Towns, you're going to see the sale prices for livestock fluctuate to points where selling them "live" makes sense. Though, I do not know "why." AFAIK, nothing actually uses the live animal as a consumable resource, but there may be a mechanic there for Tanneries to make use of them.
I had a Tannery in a Fief that I supplied on occasion with hides. They had a good supply of them, though. Not to far away was a Town where both the Hide and Pig market prices fluctuated fairly regularly and profits could be made on either. IOW - There's not going to be a consistent answer to "what is the best option, here." :)
For animals you might get as "loot," I'd suggest always opting to slaughter them since you don't want a "herd" penalty to crop up.