Saskatchewan Herd Size Economics June 26, 2012 14 th Annual WBDC Field Day Kathy Larson WBDC Beef Economist
2003 1.32 million 2006 1.56 million 2012 1.29 million Down 17% from peak Down 2% from pre-bse
SK Beef Cows & Operations, 2001-2012 # Beef Cows # Beef Operations thousands) # Beef Cows (in 1600 1500 1400 1300 1200 1100 1000 7,314 SK Beef Operations 44% from 03 to 11 16000 14000 12000 10000 8000 6000 4000 # Beef Oper rations 900 2000 800 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Statistics Canada 0
SK Beef Cows & Avg Herd Size, 2001-2012 1600 Herd Size 160 # Beef Cows (in thousands) 1500 1400 1300 1200 1100 101 147 140 120 100 80 60 40 20 1000 200120022003200420052006200720082009201020112012 0 Source: Statistics Canada, Table 002-0048 & 003-0032.
MEGA OR MID-SIZE What is the ideal herd size? No right answer. Avg. costs continue to decline as herd size increases (McNinch 2000) Optimal herd size 500-999 (Langemeier et al, 1994) NA livestock agric will trend towards fewer operations in production, processing & marketing (Farm Foundation 2006) Herdsizeexpansion limited by land, labour& capital requirements (Brocklebank 2004)
Mega or Mid-Size Consolidation has occurred in other parts of our industry 11 feedlots in SK 2 packers in Western Canada Shift towards larger farming operations in SK 13% of farms generate $500K in farm receipts accounts for 60% of farm receipts Evidence in COP findings over the years
Herdsize Ranges in COP Study 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2002 2005 2008 2011 450+ 300-449 150-299 0-149 Source: WBDC COP Studies, several years.
EX. HERD SIZE GROWTH AMONGST REPEAT PARTICIPANTS 5 producers who participated in 2003 also participated in 2011 In 2003 avgherd size 215 In 2011, avgherd size 440 Herd size increases ranged from 40 to 480%
2011 COP Herd-Size Analysis 0-149 150-299 300-449 450+ % of Herds 20% 37% 23% 20% Avg Herd Size 96 211 356 635 Direct Costs $409 $393 $393 $370 Yardage $300 $221 $169 $130 Other $35 $29 $21 $25 Total Costs $744 $643 $583 $525 550 lb B/E $1.35 $1.17 $1.06 $0.95 Jun Source: 26, 2012 WBDC s 2011 Cost of 2012 Production WBDC Field Study; Day 30 operations.
2011 COP Herd-Size Analysis $800 $700 $35 $600 $500 $400 $300 $300 $29 $221 $21 $169 $25 $130 Other Yardage Direct Costs $200 $409 $393 $393 $370 $100 $0 0-149 150-299 300-449 450+ Source: WBDC COP Study, 2011.
2011 Top 25% Study Average Top 25% Diff +/- Avg Herd Size 307 486 +179 DOF/cow 165 163-2 ---------------------$/cow----------------------- Direct Costs $392 $360-32 Yardage $206 $126-80 Other $28 $15-13 Total Costs $626 $501-125 550 lb B/E $1.14 $0.91-0.23
THE 2011 PARTICIPANTS Avg Winter Feeding Period: 165 days 90% use extensive field feeding ~30% feed silage ~60% feed grain or pellets 57% own a bale processor Avg pasture turn-out date: May 10 Some producers grazed year-round 31% had lease land 87% rented pasture
COP 2011 CALVING START May 6% Jan/Feb 16% April 52% March 26%
COP 2011 WEAN DATE Dec 16% Oct/Sep 36% Nov 15-30 16% Nov 1-14 32%
COP 2011 RETAIN or SELL? All retained a portion of 2011 calf crop 1/3 retained all of their calves 27% retain only their repl heifers Marketing ranged from selling in spring, grassing, finishing & custom feeding
2011 COP PARTICIPANTS 45% are repeat study participants 60% have off-farm employment 23% are father-son partnerships Average age of participants: 43 53% use AgExpert accounting program
CLOSING COMMENTS Determine your own Cost of Production Increasing herd size can lower production costs, but smaller herds can be low-cost Low-cost Low quality Low-cost producers do not corners on: Pasture, bulls & herd health Spending less on these items often leads to reduced herd productivity raises costs
AnyQuestions?