financial and performance benchmarks for the heifer operation normand st-pierre, ph.d. department of...
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Financial and Performance Benchmarks for the Heifer Operation
Financial and Performance Benchmarks for the Heifer Operation
Normand St-Pierre, Ph.D.Normand St-Pierre, Ph.D.
Department of Animal SciencesDepartment of Animal Sciences
The Ohio State UniversityThe Ohio State University
(614) 292-6507(614) 292-6507
st-pierre.8@osu.edust-pierre.8@osu.edu
Benchmarks: a PARADOXBenchmarks: a PARADOX
Very useful for comparing yourself to your Very useful for comparing yourself to your peers.peers.
But can just as easily lead you in the wrong But can just as easily lead you in the wrong direction.direction.
BenchmarksBenchmarks
EmpiricalEmpirical Survey of producersSurvey of producers
Who – Representative sampleWho – Representative sample Data ValidationData Validation DefinitionsDefinitions
The Chicken and the EggThe Chicken and the Egg
Are the benchmarks driving the producers?Are the benchmarks driving the producers?oror Are Are
the producers driving the benchmarks?the producers driving the benchmarks?
BenchmarksBenchmarks EmpiricalEmpirical Expert-basedExpert-based
AssumptionsAssumptions Says who?Says who? The chicken and the eggThe chicken and the egg
An Expert Benchmark – The OSU BudgetAn Expert Benchmark – The OSU Budget
Feed Costs 3 to 12 13 to 23 3 to 23
Corn $ 45 $62 $ 107
Soybean Meal $ 24 $ 31 $ 55
Dical phosphate $ 6 $ 6 $ 12
Salt $ 2 $ 2 $ 4
Hay $128 $179 $307
Corn Silage $ 62 $ 86 $148
TOTAL $267 $ 366 $633
An Expert Benchmark – The OSU BudgetAn Expert Benchmark – The OSU Budget
Other Variable Costs 3 to 12 13 to 23 3 to 23
Veterinary and Med. $ 4 $9 $ 13
Utilities $ 6 $ 7 $ 13
Bedding $ 22 $ 22 $ 44
Misc. and Supplies $ 7 $ 8 $ 15
TOTAL $39 $ 46 $85
An Expert Benchmark – The OSU BudgetAn Expert Benchmark – The OSU Budget
Total Costs 3 to 12 13 to 23 3 to 23
Feed $ 267 $366 $ 633
Other Variable Costs $ 39 $ 46 $ 85
Labor Costs $ 56 $ 67 $ 123
Equipment Charge $ 15 $ 16 $ 31
Building Charge $ 37 $ 41 $ 78
TOTAL COSTS $ 414 $ 536 $ 950
QuestionsQuestions
What if you feed more corn silage or haylage as What if you feed more corn silage or haylage as opposed to hay?opposed to hay?
An Expert Benchmark – The OSU BudgetAn Expert Benchmark – The OSU Budget
Feed Costs 3 to 12 13 to 23 3 to 23
Corn $ 45 $62 $ 107
Soybean Meal $ 24 $ 31 $ 55
Dical phosphate $ 6 $ 6 $ 12
Salt $ 2 $ 2 $ 4
Hay $128 $179 $307
Corn Silage $ 62 $ 86 $148
TOTAL $267 $ 366 $633
QuestionsQuestions
Where are the dead heifers?Where are the dead heifers?
An Expert Benchmark – The OSU BudgetAn Expert Benchmark – The OSU Budget
Total Costs 3 to 12 13 to 23 3 to 23
Feed $ 267 $366 $ 433
Other Variable Costs $ 39 $ 46 $ 85
Labor Costs $ 56 $ 67 $ 123
Equipment Charge $ 15 $ 16 $ 31
Building Charge $ 37 $ 41 $ 78
TOTAL COSTS $ 414 $ 536 $ 950
Financial Benchmarks:The Sweet 16
Financial Benchmarks:The Sweet 16
16 measures of profitability, solvency, liquidity, 16 measures of profitability, solvency, liquidity, repayment capacity and financial efficiencyrepayment capacity and financial efficiency
3 Solvency ratios:3 Solvency ratios: Debt to Asset ratioDebt to Asset ratio Debt to Equity ratioDebt to Equity ratio Equity to Asset ratioEquity to Asset ratio
The Sweet 16The Sweet 16 3 Solvency ratios:3 Solvency ratios:
Debt to Asset ratio (D/A)Debt to Asset ratio (D/A) Debt to Equity ratio (D/E)Debt to Equity ratio (D/E) Equity to Asset ratio (E/A)Equity to Asset ratio (E/A)
However, However, Asset = Debt + EquityAsset = Debt + Equity If D/A = 0.40 If D/A = 0.40 thenthen
E/A = 0.60E/A = 0.60 andand D/E = 0.66D/E = 0.66
So why use three ratios when one captures 100% of the available So why use three ratios when one captures 100% of the available information?information?
Cost of Raising ReplacementsCost of Raising Replacements
Items 0-7 w 6.5 m 16.5m 23.5m Total
Housing ($) 3 14 31 22 70
Feed ($) 40 165 180 268 653
Bedding ($) 5 33 7 3 48
Labor ($) 32 31 60 41 164
Equipment ($) 0 39 56 44 139
Breeding, reg. ($) 100 40 140
TOTAL 180 282 374 378 1214
Cost of Raising ReplacementsCost of Raising Replacements
Items 0-7 w 6.5 m 16.5m 23.5m Total
Total for period ($) 180 282 374 378 1214
Mid-Point Cum. ($) 140 321 649 1025
Death Factor 1.03 1.02 1.02 1.01
Death Cost ($) 4 6.5 13 10.5 34
Total with death ($) 184 288 387 388 1248
Future value1 222 340 427 400 1389
110% annual discount rate
Land Price and Feed CostsLand Price and Feed Costs
Land Value ($/acre) Corn Silage Yield (t/acre) Hay yield (t/acre) Net Interest (%)
$ 1,000 16 4.5 8
$ 4,000 16 4.5 6
Corn Silage (IN) $/ton 22.5 32.5
(OUT)$/ton 25 36.11
Hay ($/ton) 100 153
Land Price and Feed CostsLand Price and Feed Costs
Land Value ($/acre) Corn Silage Yield (t/acre) Hay yield (t/acre) Net Interest (%)
$ 1,000 16 4.5 8
$ 4,000 16 4.5 6
Corn Silage, $/heifer + $100
Hay, $/heifer + $120
Sub-Total + $220
Interest (@8%) + $ 17.50
TOTAL + 237.50
Benchmarking Nutrient Costs (ADG = 0.8 kg/d 1.75 lb/d)Benchmarking Nutrient Costs (ADG = 0.8 kg/d 1.75 lb/d)
Weight (kg)
Days ME Mcal/d
RDP g/d
RUP g/d
150-175 32.25 9.6 407 261 175-225 62.5 11.9 505 233 225-275 62.5 14.1 597 207
275-325 62.5 16.2 685 183 325-375 62.5 18.2 769 162
375-425 62.5 20.1 850 142 425-475 62.5 24.5 1038 448
475-525 62.5 26.4 1119 432 525-575 62.5 28.3 1197 418
575-600 31.25 30.1 1274 407
Benchmarking Nutrient CostsBenchmarking Nutrient CostsWeight kg
ME $/d
RDP $/d
RUP $/d
Min $/d
TOT $/d
150-175 0.496 -0.012 0.174 0.05 0.613 175-225 0.615 -0.016 0.156 0.05 0.720 225-275 0.729 -0.018 0.138 0.05 0.823
275-325 0.838 -0.021 0.122 0.05 0.922 325-375 0.941 -0.024 0.108 0.05 1.016
375-425 1.039 -0.026 0.095 0.05 1.106 425-475 1.267 -0.032 0.299 0.05 1.420
475-525 1.365 -0.034 0.289 0.05 1.511 525-575 1.463 -0.037 0.279 0.05 1.603
575-600 1.556 -0.039 0.272 0.05 1.690
ME = $0.052/Mcal; RDP = $-0.031/kg; RUP = $0.303/kg
Benchmarking Nutrient CostsBenchmarking Nutrient Costs
Weight kg
Days Total $d
Total $/period
% of TOTAL
150-175 32.25 0.613 19.15 3.0 175-225 62.5 0.720 45.01 7.0 225-275 62.5 0.823 51.45 8.0
275-325 62.5 0.922 57.61 9.0 325-375 62.5 1.016 63.51 9.9
375-425 62.5 1.106 69.12 10.8 425-475 62.5 1.420 88.76 13.8
475-525 62.5 1.511 94.44 14.7 525-575 62.5 1.603 100.17 15.6
575-600 31.25 1.690 52.81 8.2 TOTAL $ 642
Benchmarking Nutrient Costs400 kg, 880 lbsBenchmarking Nutrient Costs400 kg, 880 lbs
Gain kg/d (lbs/d)
ME Mcal/d
RDP gd
RUP gd
TOT $/d
TOT $/kg
0.5 (1.10) 18.0 760 86 0.983 1.966 0.6 (1.32) 18.7 791 105 1.024 1.707 0.7 (1.54) 19.4 821 124 1.065 1.522
0.8 (1.76) 20.1 850 142 1.106 1.382 0.9 (1.98) 20.7 878 159 1.141 1.268
1.0 (2.20) 21.4 905 176 1.182 1.182
ME = $0.052/Mcal; RDP = $-0.031/kg; RUP = $0.303/kg
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Question the AuthorityQuestion the Authority
Who pays for the dead animals?Who pays for the dead animals? What is the value of time?What is the value of time? What is the relationship between the different What is the relationship between the different
elements of the benchmarks?elements of the benchmarks? Is there a free lunch?Is there a free lunch?
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