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 Abstract
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Group Title: Economic information report - University of Florida Food and Resource Economics Dept. ; 190
Title: Florida beef systems
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00026461/00001
 Material Information
Title: Florida beef systems management and marketing options for 1983-84
Physical Description: 14 p., : tables, ; 28 cm.
Language: English
Creator: Hewitt, Tim
Eason, Mark, 1957-
Publisher: Un. of Florida, Food and Resource Economics Dept.
Place of Publication: Gainesville
Publication Date: 1983
 Subjects
Genre: bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Includes bibliographical references.
General Note: Ec. Inf. Rept. 190.
General Note: Sept. 1983.
 Record Information
Bibliographic ID: UF00026461
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 002198643
oclc - 30080525
notis - ALD8521

Table of Contents
    Front Cover
        Front Cover
    Abstract
        Page i
    Table of Contents
        Page ii
    Main
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
    Reference
        Page 14
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ABSTRACT


Florida cattle producers have different management options in pasturing
calves on temporary winter pastures. The cow-calf operator may sell or keep
calves for winter grazing at weaning time. Producers with pastures have the
option of purchasing stocker calves to graze on winter pastures with or with-
out supplemental feeding.

Budget guides are presented to assist cattlemen in their 1983-1984
stockering decisions. Two stockering budgets are presented along with a rye-
ryegrass pasture budget and a cow-caTf budget. Price outlook information is
also presented to assist producers in analyzing their profit potential.

Key words: Stockers,,price outlook, budgets, cash costs, total costs,
and break-even prices.








TABLE OF CONTENTS


Page
ABSTRACT . . . . .. . . .... .

INTRODUCTION . . . . ... . .....

CATTLE OUTLOOK .. . . . . . 2

Review and Situation. . . . . ... .. 2
Effects of PIK. . . . . .. . 2
Fed Cattle Outlook. . . . . ... . 3

BUDGET FORMAT. . .. . . . . . 4

ESTIMATED COST OF WINTERING STEER CALVES IN NORTH FLORIDA. ..... 9

ESTIMATED COST OF WINTERING CALVES WITH SUPPLEMENTAL FEED. .... .10

ESTIMATED COSTS FOR A'100-HEAD SOUTHERN COW-CALF. ENTERPRISE. ... 10

REFERENCES . . . 14


LIST OF TABLES

Table

1 Cattle price outlook 1982-83; medium frame #1 steers . 5

2 Estimated costs and break-even prices for pasturing stockers
on temporary grazing (1.5 calves/acre, 135 days, 400 lbs.
to 589 Ibs., 1.4 lb. A.DG.) . . . . 6

3 Estimated costs and break-even prices for pasturing stockers
on temporary grazing and feeding supplemental corn (1.5
calves/acre, 140 days, 400 Ibs. to 645 Ibs., 1.75 lb.
A.D.G.). . . . . . . .... 7

4 Estimated growing cost for one acre of rye.-ryegrass, North
Florida, 1983 . . . . . 8

5 Estimated 1983 costs and break-even prices, for southern
cow-calf enterprise (100-cow unit on 200 acres, 85% calf
crop, 400 lb. average calf weight, spring calving) 11








FLORIDA BEEF SYSTEMS: MANAGEMENT AND MARKETING OPTIONS FOR 1983-84


Timothy D. Hewitt and Mark Eason


INTRODUCTION

Florida cattlemen are facing the prospects of cattle prices somewhat
lower than last year as they evaluate their options for 1983-84. Profit
margins remain relatively tight due to lower selling prices and higher
grain prices. Livestock producers must critically evaluate and analyze
performance and cost effective production systems. The economic situa-
tion dictates careful marketing and production planning by the efficient
cattle producer.
The effects of the Payment-In-Kind (PIK) program on the crop sector
have been strong enough to spill over into the livestock sector. While
much of this livestock impact will be delayed until 1984 because of the
lag between rising feed costs and livestock production decisions, recent
and prospective changes in feed costs and supplies are affecting the
livestock sector.
The purpose of this report is to provide some insight into selected
options available to Florida beef producers. As usual, cattlemen face a
sell or over winter decision on calves that they own or can buy, and a
culling decision on cows. Price prospects for this fall and next spring
are projected, and budget estimates are presented for a small cow-calf
operation and two different ways to produce stocker steers from the calf
crop.






TIMOTHY D. HEWITT is an Area Extension Economist, Food and Resource
Economics Department, University of Florida, Agricultural Research
Center, Marianna, Florida and MARK EASON is an Area Extension Economist,
Food and Resource Economics Department, University of Florida,
Agricultural Research and Education Center, Quincy, Florida.











CATTLE OUTLOOK


Review and Situation


The cattle industry was buffeted by adverse weather and the PIK
program in the first half of 1983. The adverse weather reduced gains in
feedlot and increased calf death loss. The weather over much of the
cattle feeding area reduced feedlot gains and contributed to reduced fed
beef production and stronger fed cattle prices than expected in March
and April.
Commercial beef production in the first quarter rose only one per-
cent from a year earlier because of reduced non-fed cattle slaughter and
poor feedlot conditions. Cattle slaughter rose only half a percent, but
commercial dressed weights averaged four pounds heavier as the fed cattle
proportion of the marketing mix increased from 70 to 73 percent. Non-fed
steer and heifer slaughter declined 35 percent from a year earlier. Cow
slaughter declined nearly three percent below last winters' level, the
first quarterly year-to-year decline since the fall of 1981.


Effects of PIK

The PIK program has affected the livestock sectors and may cause
some changes in cattle programs. Initially, livestock marketing may
increase as some producers alter production decisions. This could
result in larger meat supplies in the short run, causing prices to
decline later in 1983. However, livestock inventories are already at
relatively low levels. In the longer term, nevertheless, livestock
production will be smaller than with continued low-cost feed as break-
even costs rise. Since livestock prices typically rise proportionally
more than any drop in output, livestock receipts are likely to eventually
be higher with PIK and may offset the higher costs of gain.
Higher feed prices will force feeder cattle prices down, as feedlot
operators attempt both to keep operating costs down and to place fewer
animals on feed. Large numbers of young cattle are being removed from








PIK wheat grazeout acreage and most of these animals will be placed on
feed for at least a short period or will go directly to slaughter. How-
ever, cattle feeders will be reluctant to fill their lots at current
feeder cattle prices, so feeder cattle prices could be under downward
pressure in the fall and perhaps well into next year.


Fed Cattle Outlook

The number of cattle on feed June 1 in seven feeding states was
estimated at 7.33 million head, down slightly from the 7.36 million head
on hand a year ago. Marketings of fed cattle during June increased 12
percent over last year. Placements of cattle and calves on feed during
June were one percent under 1982's figure.
Pork supplies during the last half of the year will be larger than
in 1982---probably up'3 to 5% in the 3rd quarter and up 8 to 10% in the
4th quarter. But broiler supplies in this period may be only slightly
larger than last year. Any change in the farm to retail margin on beef
will be another possible influence on cattle prices in the months ahead.
If-margins follow the seasonal pattern of the past couple of years, they
will widen during the June-September period. If so, this would be a
negative influence on cattle prices.
Increased placements of heavier, fleshy, cattle coming off pasture
in the early summer will expand fed cattle marketing this summer and
early fall. Fall feedlot placements are likely to be slightly below the
large placements of a year ago. Higher feed prices and the higher break-
even prices when most of these cattle are marketed, along with the
smaller calf supply, will hold down the placement rate this fall.
Yearling feeder cattle supplies are 19 percent above a year earlier,
and many of these have been removed from wheat pasture. These cattle
will be fleshier and less desirable for additional grazing, particularly
on the less abundant pastures and ranges. Some will be placed on feed.
However, with the already higher feed prices and lower fed cattle prices,
cattle feeders are likely to be cautious bidders for these feeder cattle.
Thus as marketing increase prices are likely to decline. Given the
existing feed costs and expected fed cattle prices this summer and fall,
feeder cattle will need to be purchased at prices averaging in the mid








$50's to low $60's per hundredweight to break-even. Yearling prices may
stay in the mid $60's for the remainder of the year.
Feeder calf prices are likely to remain in the low to mid $60's,
only slightly below the strong spring prices, so long as pastures remain
good. Larger numbers of calves marketed off wheat pasture may be shifted
to other grazing programs since rates of gain have been poorer than usual.
However, prices this fall may decline to near $60 as marketing of these
calves plus this year's calf crop rise seasonally. The general cattle
price patterns expected from the current situation for the fall and
spring are presented in Table 1.


BUDGET FORMAT


The following budgets (Tables 2-4) are included as aids in analyz-
ing a cattleman's decision about what to do with cattle he now owns or
with those he might buy. Remember, the budgets are intended as general
guides. Cattlemen are encouraged to use their figures in the budgets
to fit the local situation.
The first section of each budget lists the "cash costs" and shows
a total for these costs. They include all "out-of-pocket" costs which
are incurred whether the cattle were raised or purchased. "Procurement"
and "marketing" costs are also cash costs, but they are not always
applicable and are listed separately in the second section of the
budgets. Overhead, land, labor and management costs are often con-
sidered non-cash costs and are also listed separately in this section.
Note that the pasture cost is a $109 per acre which does not include
the land rent shown in the pasture budget. Finally, a total of all
costs is given at the bottom of the second section.
"Procurement" costs are estimated for calves which are purchased.
They include order buying charges, a shrink charge, a death loss, a
50-mile haul, and an additional medication cost. Procurement costs
would not be incurred by the farmer with home-raised calves.
"Marketing" costs represent an estimate of cattle selling expenses.
If a producer decided to carry these cattle through the next stage
of production, these expenses would not be incurred. Marketing costs
























Table l.--Cattle price outlook 1982-83; medium frame #1 steers
Pric oulo (/w)Yu


Price outlook ($/cwt.) Your
Weight Expected Optimistic Pessimistic estimate

------------------Dollars--------------


Fall 1983 prices

Sept.-Oct. '83

Sept.-Oct. '83

Spring 1984 prices

April-May '84

April-May '84


400-500

600-700



600-700

900-1100


Date


- -








Table 2.--Estimated costs and break-even prices for pasturing stockers on
temporary grazing (1.5 calves/acre, 135 days, 400 Ibs. to
589 Ibs., 1.4 lb. A.D.G.)

Item Quantity Price Cost/hd. Your farm

---------------Dollars--------------
Stocker calf/ 400 Ib. 62/cwt. 248.00
Pasture 1 Dec. 15 to
April 30 1.50 ac. 109/ac. 72.67
Hay 200 lb. 65/t. 6.50
Medication, minerals, etc. 3.50
Growth stimulant 3.0 1 3.00
Other operating/ 3.00
Interest on operating
capital $336.67 6.0% 20.20
Death loss 1.0%' 248.00 2.48
Total cash costs 359.35

Procurement costsc/ 9.96
Marketing costs- 17.53
Labor 15.0 hr. 3.50/hr. 5.25
Management costs-" 3.70
Overhead costs/ 3.00
Land costs, pasture 191 4.93
Total all costs 403.72

Break-even prices

Cost included Total amount Price/cwt. Your farm
--------------------Dollars----------------------
Cash costs 359.35 61.01 _
Procurement costs 9.96 1.69 _
Marketing costs 17.53 2.98
Labor, management,
overhead and land 16.88 2.87
Total all costs 403.72 6.___

a/Grade: medium frame 1.
b/Maintenance and repairs.
/Order buying = $0.75/cwt. x 400 Ibs. = $3.00, transportation at $2.00/hd.,
1% shrink on $248.00 = $2.48, 1.0% death loss x $248.00 = $2.48.
d/$12.00/hd. auction charge, 1% shrink on 589 Ibs. at $60/cwt. = $3.53,
transportation at $2.00/hd., other marketing costs = $0.00.
e/15.0% time of 300 calves at $20,000 for 135 days = $3.70.
-/Depreciation, interest on investment, taxes, insurance, etc.
91.50 acres/calf at $15/acre per year for 180 days.








Table 3.--Estimated costs and break-even prices for pasturing stockers on
temporary grazing and feeding supplemental corn (1.5 calves/acre,
140 days, 400 Ibs. to 645 Ibs., 1.75 lb. A.D.G.)

Item Quantity Price Cost/hd. Your farm

---------------Dollars--------------
Stocker calfa/ 400 Ib. 62/cwt. 248.00
Pasture 1 Dec. 15 to
May 5 1.50 ac. 109/ac. 72.67
Hay 200 lb. 65/t. 6.50
Corn 4 bu. 3.75/bu. 15.00
Medication, minerals, etc. 3.50
Growth stimulant 3.0 1 3.00
Other operating/ 3.00
Interest on operating
capital $351.67 6.0% 21.10
Death loss 1.0% 248.00 2.48
Total cash costs 375.25

Procurement costs/ 9.96
Marketing costs/ 17.87
Labor 2.50 hr. 3.50/hr. 8.75
Management costse/ 3.84
Overhead costs/ 3.00
Land costs, pasture I-/ 5.07
Total all costs 423.74

Break-even prices

Cost included Total amount Price/cwt. Your farm

--------------------Dollars------------------
Cash costs 375.25 58.18
Procurement costs 9.96 1.54
Marketing costs 17.87 2.77
Labor, management,
overhead and land 20.66 3.20
Total all costs 423.74 65.9 7

a/Grade: medium frame 1.
b/Maintenance and repairs.
C/Order buying = $0.75/cwt. x 400 Ibs. = $3.00, transportation at $2.00/hd.,
1% shrink on $248.00 = $2.48, 1.0% death loss x $248.00 = $2.48.
d/$12.00/hd. auction charge, 1% shrink on 645 Ibs. at $60/cwt. = $3.87,
transportation at $2.00/hd., other marketing costs = $0.00.
/15.0% time for 300 calves at $20,000 for 140 days = $3.84.
f/Depreciation, interest on investment, taxes, insurance, etc.
2/1.50 acres/calf at $15/acre per year for 185 days.
















Table 4.--Estimated growing cost for one acre of rye-ryegrass, North Florida,
1983.

t Cost/ Your
Item Unit Quantity Price
acre farm

----------Dollars----------
I. Cash expenses

Rye seed bu. 1.5 8.50 12.75

Ryegrass Ib. 20.0 .28 5.60

Limea/ ton 1/3 18.00 6.00

Fertilizer- cwt. 5.0 6.65 33.25

Nitrogen lb. N 75.0 .29 21.75

Machinery -- -- 6.80

Labor hr. 1.5 3.50 5.25

Land rent, 6 mos. acre 1.0 30.00 15.00

Interestb/ $ 106.40 .065 6.92

Total cash expenses 113.32

II. Fixed costs of machinery 9.72

III. Total growing cost 123.04


a/Cost spread; fertilizer is 5-10-15 or equivalent.
b/13% for 6 months.








include auction charges, a 1% shrink on the out-weight, and a 50-mile
haul. Cattle sold directly from the farm might only incur a pencil
shrink; a weight discount agreement between buyer and seller.
A "management" cost was calculated in addition to a "labor" cost.
There are as many ways to estimate management cost as there are people
to calculate it. Our estimate is an appropriate fraction of time
allocation for a $20,000 per year man for the proportionate period
of the year during which the particular cattle enterprise is active.
"Overhead" costs include depreciation, interest, taxes, and
insurance on facilities and equipment used in the enterprise. The
"land" charge is based on rental rates for pasture and is charged for
the portion of the year used by the enterprise.
Break-even prices were calculated on the major expenses cate-
gories and are presented in the section directly following the budget.
Thus, the user who warrts an estimate of the price necessary to recover,
say, cash expenses, marketing, and procurement costs can get it with-
out having land, management, labor and overhead included.


ESTIMATED COST OF WINTERING STEER
CALVES IN NORTH FLORIDA


This rye-ryegrass wintering program begins in December and ends
in April providing 135 days grazing. The cost of the pasture is
estimated to be about $109/acre; excluding rent (Table 4). The price
used for 400 pound good steer calves this fall is $62/hundredweight,
and the expected price for 589 pound choice steers next spring is
$60/hundredweight.
Under the conditions budgeted here, it would take approximately
$61/hundredweight next April for the calves to cover cash costs. Our
estimate is that $68.55 would be necessary to cover estimated total
costs, including returns to labor, management, overhead and land.
The outlook for next spring appears unlikely to provide prices which
would generate returns above total costs, and for the budgeted situa-
tion a loss is expected. Producers should use their estimates in
analyzing their particular decisions. An average daily gain of 1.4
pounds is used in the example for 135, days'grazing. Some producers
may have higher gains which may change the profit picture.








ESTIMATED COST OF WINTERING CALVES
WITH SUPPLEMENTAL FEED


This wintering program starts in mid-December with 400 pound good
steer calves and ends in May with 645 pound good choice feeder steers.
In addition to the annual pasture, calves are fed 4 bushels of corn.
Cattle prices assumed are $62/hundredweight for 400 pound calves this
fall and $60 for 645 pound steers next spring. In this grazing system,
steers are stocked at the rate of 1.5 per acre or about 800 pounds/acre
over the grazing season. Steers are expected to gain an average of
1.75 pounds/day for 140 days.
The break-even selling price needed next spring to cover cash
expenses is about $58/hundredweight. When procurement, marketing,
overhead, land, labor and management costs are added to cash expenses,
a price of $65.69/hundredweight is needed to cover all costs.


ESTIMATED COSTS FOR A 100-HEAD
SOUTHERN COW-CALF ENTERPRISE


Production cost estimates for a 100-head Southern cow-calf enter-
prise are shown in Table 5, as a guide to those operators who raise
their stocker calves. With the assumed management level for this budget,
it is possible to wean an 85% calf crop averaging 400 pounds per calf.
Since 17 replacement heifers are required per year, only 68 calves would
be sold in the fall.
Maintaining a.lOO-cow unit (100 mature cows, 17 heifers, 4 bulls)
herd under the assumptions listed would require $18,302 in cash expenses.
One ton of purchased hay was budgeted for each cow unit.
In order to compute "net" expenses to the calves, the expected
revenue from the sale of cull cows was deducted from cash expenses. The
value of this sale was $5,700 which resulted in net costs of $12,602.
This permitted an estimate of the calf price required to cover various
categories of cost. The assumption was that 43 steer calves and 25
heifer calves may be sold, averaging 400 pounds (farm weight).
The budget indicates that producers may be able to cover cash
expenses with a net selling price of about $46/hundredweight for 400






Table 5.--Estimated 1983 costs and break-even prices for southern cow-calf enterprise (100-cow unit on
200 acres, 85% calf crop, 400 lb. average calf weight, spring calvingl/)

Item Quantity Price Cost/100 hd. Your farm

--------------------Dollars----------------
Fertilizer (10-10-10 250 Ibs./ac.) 500 cwt. 6.65/cwt. 3,325
Nitrogen (40 Ibs./ac.) 8,000 1bs. .29/1b. 2,320
Lime (1/3 ton/ac.) 66.7 tons 18/ton 1,201
Hay (1 ton/cow unit) 100 tons 65/ton 6,500
Soybean meal (125 Ib./cow) 125 cwt. 14/cwt. 1,750
Salt & minerals ($3.50/cow unit) 350
Vet. & medicine ($8/cow unit) 800
Maintenance, repairs & fuel 700
Interest on (8 mos.) oper. cap. $16,946 8% 1,356

Total cash costs 18,302

Less salvage value of 15 cull
cows (950 lb.) @ .40 Ib. 142.5 cwt. 5,700

Net cash costs 12,602

Overhead (depr., interest on inv., taxes & ins.) 5,200
Labor (7 hrs./cow at $3.50/hr.) 2,450
Management (1/7 time, $20,000 per yr.) 2,858
Land (200 acres at $20/acre) 4,000

Total all costs 27,110

-/100-cow unit is 100 brood cows, 17 replacement heifers and 4 bulls.
Continued














Table 5.--Estimated 1983 costs and break-even prices for southern cow-calf enterprise (100-cow unit on
200 acres, 85% calf crop, 400 Ib. average calf weight, spring calvingl/)--Continued


Break-even prices per cwt. ofcalf sold
(Sell 68 calves, weaning weight 400 pounds)

Item Total amount Price per cwt. Your farm

------------------------------Dollars---- ------------------
Net cash costs 12,602 46.33
Overhead 5,200 19.12
Labor 2,450 9.01
Management charge costs 2,858 10.51
Land charge costs 4,000 14.71

Total all costs 27,110 99.68







pound calves. Overhead, labor and management charges added $19.12/hundred-
weight, $9.01/hundredweight, and $10.51/hundredweight respectively, to
the break-even price. The land charge was $20/acre/year which equaled
$14.71/hundredweight of calf. The break-even price to cover all costs
was $99.68/hundredweight.








REFERENCES


[1] Eason, Mark. "Evaluating Livestock Alternatives." Extension
Mimeograph, Food and Resource Economics Department.
Gainesville: University of Florida, January 1983.

[23 Gunter, Dan, John Holt, Jim Simpson, and George Westberry.
"Florida Beef Systems: Management and Marketing Options."
Extension Mimeograph, Food and Resource Economics Department.
Gainesville: University of Florida, September 1979.

[3] McKissick, John C. and R. Edward Brown, Jr. Georgia Stocker-
Finishing Alternatives (Fall/Winter 1981-82). Management
and Marketing Department Special Report 205. University
of Georgia Cooperative Extension Service. Athens: August
1981.

[4] Simpson, James R., F. S. Baker, Jr., and Mark Eason. Evaluating
North Florida Cattle Raising Alternatives. University of
Florida Cooperative Extension Service Circular 528.
Gainesville June 1982.

[5] U. S. Department of Agriculture. "Florida Livestock Roundup."
Florida Statistical Reporting Service. Orlando: Various
Issues, 1983.




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