Is Profitability in Cow-Calf Industry Really Possible???

Transcription

1 Tucker Farms What Creates Profit for a Livestock Producer? Tunas, MO Wesley Tucker Agriculture Business Specialist University of Missouri Extension Is Profitability in Cow-Calf Industry Really Possible??? What do you think the average cow-calf producer makes per cow per year? But what is average? MiG since 1992 High vs. Low Profit Cow-Calf Producers (SPA Data IA: ) Profitability? Return & Cost Factors Financial return to capital, labor & mgmt. Per cow Total financial cost per cow Total financial cost per cwt. produced High 1/4 Average Low 1/4 $ $9.90 -$ $ $ $ $47.32 $72.23 $ So there s a difference between top and bottom It s not just average IA & IL study to determine what separated them 4 yrs: Herd size: 20 to 373 cows

2 Variables In The Equation Cost Variables Feed Cost Operating Cost Depreciation Cost Capital Charge Hired Labor Family Labor Production Variables Calf Weight Calf Price Cull Weight Cull Price Weaning Percentage Calving Distribution Other Variables Herd Size Investment Source: 2001 Beef Research Report Iowa State University What our Livestock Industry was Built On Land Feed Fuel Fertilizer Cheap Land Wide open spaces Lots of available land Cheap Feed Corn Lots of alternative feed sources Cheap Fuel Allowed us to harvest forages Cheap Fertilizer Allowed us to grow more forage Yearly Forage Production++Browse 65 days Hay Spring Summer Fall Winter Hay Feed Costs Summer (Growing Season) Winter (Dormant Period)

3 Summer (Growing Season) What Drives the Costs? Land, Feed, Fuel, & Fertilizer Utilization Where is Your Forage Going? Grazing Efficiency # Pastures 1 pasture 4 pasture 8 pasture 12 pasture 24 pasture Grazing Period Continuous 7-10 days 3-5 days 2-4 days 1-2 days Utilization Rate 30% 35% 50% 65% 70 + % Grazing Management 35% - Where s the other 35%? How did it help the animal? $40/acre 1000# forage 20 min/day 50 to 70% Are we feeding them what they need each day? Winter Dormant Period What Drives the Costs? Feed & Hay Days Grazing

4 Philosophy 101 Cow, sheep, goat, or horse can all harvest forages cheaper than you can! Why do animals have 4 legs? Relative Cost of Supplying a Unit of Energy to Ruminants Euler's theorem A mathematical theorem relating marginal to average products. The theorem states that where a function is homogeneous of order n in its arguments, so that, for example, if y = f(x, z), then f (λx, λz) = λ n f(x, z), the sum of the marginal product of each argument times its quantity equals ny. This implies that if f( ) is a production function with y as output and x and z the inputs, the amount of factors used times their marginal products equals total output if and only if n = 1. Thus if factors are paid their marginal products, only with constant returns to scale does the sum of factor earnings exhaust the total product. Grazed pasture 100 Relative Cost of Supplying a Unit of Energy to Ruminants All Hay 222 Equipment & depreciation, fuel & oil, repair & maintenance, labor Relative Cost of Supplying a Unit of Energy to Ruminants Grazed pasture 100 Alfalfa hay 192 All hay 222 Silage 277 Dehydrated forages 419 Grains & concentrates 322 Source: Dr. Rob Kallenbach, State Forage Specialist, University of Missouri

5 Basic Ingredients to Produce Grass Solar Energy Water Soil Nutrients Fertility Removed by Haying vs. Grazing Nutrient Removal (lbs/acre) 2 Tons of Hay Grazing Nitrogen 100 N 10 N Phosphorus 30 lb P 2 O 5 7 lb P 2 O 5 Where s your money going? Potassium 80 lb K 2 O 1 lb K 2 O Source: Dr. John A. Lory, Environmental Nutrient Management Specialist, University of Missouri Nutrients in Hay What s It Worth? 1000 lb bale of grass hay 1000 lb bale of grass hay 25 lb of N 25 lb of N 30% N - $ lb P 2 O lb P 2 O 5 100% P 2 O 5 - $ lb K 2 O 20 lb K 2 O 100% K 2 O - $11.00 Total = $20.44 N=$0.71, P=$0.55, K=$0.55 My Experience Nutrient Management is More than Just Hay Manure is worth $200 - $250/ year

6 Nutrient Distribution Rotation Frequency Years to get 1 pile / sq. yard Shade? Continuous day 4 day 2 day Manure is worth $200 - $250/ year Can I Control Them? Forage Yield Stocking Rate: Cool-Season Grasses April June August October What is the Most Profitable? Harvest Excess Forage Vary Stocking Rate Run Less Animals Add Alternative Enterprise Desire to Own More Breeding Animals Multi-Species Grazing April Alter June Kidding/Lambing August October & Weaning Forage Yield Extending the Grazing Season Stockpiling Forages Planting Winter Annuals Fall Fertilization Grazing Crop Residues Matching Stocking Rates with Growth Curve Improving Utilization It Doesn t Start January 1 st Tall Fescue in Autumn Almost entirely leaf Grows rapidly from early September until November 1 to 2 tons per acre with good management More fall growth than other CSG s Waxy layer on leaves slows deterioration

7 Cuticle Layer of Tall Fescue Top Cuticle Layer Stomata Strip Grazing Perimeter Fence Vascular Bundles with Bundle Sheath Temp Fence Bottom Cuticle Layer Bulliform Cells Winter Water Utilization Rates of Stockpiled Tall Fescue Figure 1. Comparison of stockpiled tall fescue quality to average hay quality. Allocation Utilization days % Source: Mark Kennedy,, Missouri, , and John Jennings, Arkansas, Winter Feeding Equipment Haying Management May 15 vs. July 15 What Does 1000# of Energy Give You? Energy Required to Grow a Steer from 500# to 700# Can I Drive This Time? 1200# Dry Cow Last Trimester 78 days 1200# Dry Cow Middle Trimester 97 days

8 Forage feeding losses What Does it Cost? MO SWCD FY2010 Fence - $55/acre (1 year of fertilizer) Water Development & Distribution - $80/acre Yearly Cost Fence 10 year investment - $5.50/yr Water 15 year investment - $5.33/yr Total $11/yr How Long to Repay? Grazing Efficiency Total Season IT DEPENDS!!! Dairy Stockers Cow/calf Goats Finishing Etc. # Grazing Utilization Pastures Period Rate 1 pasture Continuous 30% 4 pasture 7-10 days 35% 8 pasture 3-5 days 50% 12 pasture 2-4 days 65% 24 pasture 1-2 days 70 + % How Long to Repay? Strip Grazing Perimeter Fence I m Cheap!!! Portable Fencing Above Ground Pipe Temp Fence Winter Water

9 Utilization Rates of Stockpiled Tall Fescue Allocation Utilization days % Repayment Strip Grazing Quickest Payback Invest Money Saved in Fence & Water Yearly Forage Production++Browse 65 days Hay The more metal and fuel you put between solar energy and a animal s belly the less profitable you will be. Jim Gerrish Conclusion Management Feed Costs Extending the Grazing Season Nutrient Management Marketing Stocking Rates Spring Summer Fall Winter Hay