cattle feeding - ndsu agriculture and extension · do we want to feed cattle? what kind of cattle...
TRANSCRIPT
Cattle Feeding - has a positive and modest impact on the community
• More Feeding - because – better markets for larger
lots of uniform preconditioned calves
– Add and capture value in superior cattle
– utilization of damaged grains and byproduct feeds
– keep more people involved in agriculture
– Economic activity and diversification
Cattle Feeding - competitive potentially rewarding enterprise with associated risk
• Feeding - because – Personal interest,
knowledge and/or experience
– Complimentary to other agricultural enterprises
– Utilization of available resource
– Opportunity for expansion of operation to support next generation
– Economic profits
ND Adult Farm Management
-100
-50
0
50
100
150
200
250
2009 2008 2007 2006 2005
Net Return
background
finish
replacements
Industry Trends
• High grain prices – increased byproducts • Low cattle inventory- high prices • Excess feeding capacity – shift north • Continued concentration • Product Branding • Growing niche markets (natural, organic,…) • Added documentation (PVP, ID, …) • Alliances (supply chain integration) • Greater Regulation • International Competition
Cattle Feeding Requirements
• Source of cattle • Competitive reliable feed • Favorable climate – temps, rainfall • Capitol/financing • Land/facilities/equipment/infrastructure • Interest and knowledge • Services – vet, trucking, feed • Markets • Labor
Important Business Concepts
Competitive advantage
• Examples – Land best suited to corn and
alfalfa crops best marketed through finish feedlot
– Feed base in range country supports custom heifer development
– Low cost land reclamation forage and proximity to DDGS supports custom cattle wintering
Economy of scale
• Overhead – Equipment
– Facilities
• Marketing
• Purchasing
• Examples – JBS Five Rivers
960,000 feeding capacity 13 locations
SWOT analysis
Strengths Weakness Opportunities Threats
location
feed
cattle
equipment
facilities
capitol
markets
Knowledge
competition
labor
Economies of Scale Capital Cost Summary (NDSU 1997)
Feedlot Size
Lot Land Building Equip Mach Total $ Per Head
1000 156,111 54,720 251,970 462,801 $467.80
5000 636,409 174,797 583,270 1,394,476 $278.90
20000 2,222,945 517,594 2,119,014 4,859,553 $242.98
How about our Winter Weather? ND weather?
Greater intake and maintenance
Performance can be high
Wind protection and bedding critical
Snow and storm work, preparations, and cost
Ideal feeding climate in much of the rest of the year
Local Feed Resources
• Large farming base
• Cheapest hay in country
• Many opportunity feeds – screenings, damaged
crops, feed barley – Midds, DDGS, WDGS, oil
seed meal, pressed pulp – CRP hay, stover,
aftermath
Cattle/Feeding Alternatives • Wintering stock cows
• Feeding cull cows
• growing/developing heifers
• Bull test/ development
• Wintering calves for grazing
• Preconditioning /backgrounding
• Finishing calf feds
• Finishing yearlings
• Dry lot cow calf
Business planning
• Analyze a business/enterprise idea on paper including definition of production, financial requirements, associated risks and projected returns
• Informal to Document
• Takes time, research, and honesty
• Planning to evaluate alternatives
• Access to credit
Example: Situation
• Due to high grain prices feed yards are looking and offering good value for heavier cattle
• Medium quality hay has consistently been available and at a cost of about $50/t
• Current farming operation includes a shop, well, utilities, tractors, trucks and equipment available for seasonal feeding
• 5-6 cwt calves are available through local sale barns and direct from Oct-Jan, with considerable discounts on heifers in fall diminishing by grazing/breeding season
Description of Business
• Type of business, structure of business, size and scale, ownership of cattle, expectations of performance, days on feed, marketing endpoint and method, custom feeding arrangements
Example: Business Description
• Construct a 500 head calf feeding facility to background fall purchased heifer calves
• Feed hay based ration supplemented with local grain screenings, feed grains, and byproduct
• Market heavy feeder heifers in Jan-Feb, and light stocker heifers and replacement heifers in Mar-Apr
• Purchase feeding/handling equipment
• Employ seasonal hourly labor
Operational Plan
– Feeding program • Rations and feeding protocols
• Feed sourcing and costs
• Performance targets and breakeven
– Health program • Treatment and vaccination protocols
• Death loss and treatment cost
– Procurement-Marketing plans • Target weight and date
• Location and method
– Labor • Needs and costs
Example: Operational Plans
Health
• Vaccination – 4 way viral
– 7 way clostridial
– Bangs
• Treatment – Treat 10%
– $20/HD
• Death loss – 1%
Procurement - Marketing
• Nov buy 500 heifers – 550 lbs @ $1.20
• Mar sell 250 heifers – 800 lbs @ $1.05
• Mar sell 240Heifers – 850 lbs @ $900
Labor – 150 days – 2.5hr/day
financials
• Budget BE • Capital investment/debt service • Income statement • Balance sheet • Cash flow projection
• Lender assistance • NDSU Extension • Adult farm management
Capitol Investments Quantity Cost Description
Site 15,000 Landscaping
Water 5,000 Waters and line
6,000 Well and pressure system
Feed Storage 3,000 Grain bin
Pen 23,000 Bunks
1,500 Gates
7,000 Windbreak fence
Handling Facilities 5,500 Chute and tub
Buildings 0
Machinery 50,000 Tractor and loader
25,000 Feed wagon
$146,000
Expenses quantity cost Annual cost Cost per head
Cattle
heifer calves 500 hd@550 Lb 1.20 $330,000 $660
Feed
screenings 100 T $30 $3,000 $6
hay 600 T $45 $27,000 $54
wheat midds 100 T $100 $10,000 $20
mineral 5 T $600 $3,000 $6
Vet/Health
vaccine $2,000 $4.00
pour-on $750 $1.50
antibiotic $1000 $2.00
vet service 2.5 hrs 200 $500 $1.00
Utilities
electricity $1,500 $3.00
Interest $325000 .06% $6,000 $12
Expenses Quantity Cost Annual cost Cost per head
Bedding
straw 50 T $30 $1000 $2.00
manure removal $2000 $4.00
Marketing
Trucking 700 mi $4 $2,800 $5.60
Commission 1% $4,100 $8.20
Check off $500 $1.00
Buying 2750 cwt $1 $2750 $5.50
Repairs $1500 $3.00
Fuel $2000 $4.00
Insurance $750 $1.50
Equipment and Facility
annual payment $14,000 $29
Labor 300 hr $15 $4500 $9.00
Income Quantity Price Total per head
Cattle
Feeder Heifer 250 hd @ 800 lb $1.05 $210,000 $840
Replacement Heifer 240 hd @ 850 lb $900 $219,000 $900
Total Income $429,000
Total Expenses $420,650
Feed cost per gain $.346
Yardage cost per day $.363 per day
Total COG $.766
Net per heifer $17.0 $8350
BE $858 - $1.04
Financing Issues
• Loan Structure – Annual feeder loans (cattle and feed) 75% – Term operating (equipment) 65% – Long term real estate (land, facility, site) 60%
• Equity-collateral – Co sign – Equip cost share – FSA guarantee / subordination – Custom feed
• Interest Rates – Beginning farmer – Socially disadvantaged
Loan Table SOURCE TYPE COLLATERAL/TERM AMOUNT PAYMENT
FSA Farm Ownership Land, well, pens 65,000 2000
5% down 40 year
45% FSA 1% for 20 yr
50% Bank 4%
FSA Term Operating Tractor, wagon, bin 70,000 12000
7 yr 5%
Bank Annual Operating Cattle, feed, utilities 325,000 331,000
90% bank sub Labor, repairs, truck
5% for 150 days
350,000
Custom Feeding
• Services – Feeding
– Processing • Chute charges
– Marketing
• Promotion/ Clients – Cow/calf
– Stocker
– Buyers
– Finish feedlot
– seedstock
• Billing – Feed + yardage
– Cost/ lb of gain
– Daily cost per head
• Business – Feeding contract
– Feed lien
Adopt a Professional Attitude
• You’re in the customer service business
• Be precise
• Be timely
• Be thorough
• Be knowledgeable
• Pay attention to details
• Cattle care is a responsibility