• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Overview of procedure
 Example situation incorporating...
 Comparison with current practi...
 Summary
 References
 Appendix 1: Investment, dirt open-lot...
 Appendix 2: Annual operating expenses...
 Appendix 3: Total annual investment,...
 Appendix 43: Footnotes for table...






Group Title: Staff paper - Food and Resource Economics Department - 194
Title: The method for estimating the economic viability of cattle backgrounding and finishing from experimental trial results
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00054812/00001
 Material Information
Title: The method for estimating the economic viability of cattle backgrounding and finishing from experimental trial results
Series Title: Staff paper
Physical Description: 20 p. : ; 28 cm.
Language: English
Creator: Simpson, James R
Sloan, F. S ( Frank Sloan ), 1921-
Publisher: Food and Resource Economics Dept., Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla
Publication Date: 1982
 Subjects
Subject: Beef cattle -- Economic aspects -- Florida   ( lcsh )
Beef cattle -- Feeding and feeds -- Economic aspects -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Bibliography: p. 14.
Statement of Responsibility: by James R. Simpson and F.S. Baker.
General Note: "February 1982."
Funding: Florida Historical Agriculture and Rural Life
 Record Information
Bibliographic ID: UF00054812
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 001649982
oclc - 08612694
notis - AHW1566

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Title Page
    Overview of procedure
        Page 1
    Example situation incorporating trial rations
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
    Comparison with current practices
        Page 13
    Summary
        Page 14
    References
        Page 14
    Appendix 1: Investment, dirt open-lot type system, 1979
        Page 15
        Page 16
    Appendix 2: Annual operating expenses for 5,000 head feedlot, flume and dirt open-lot types at 90 and 60 percent of capacity, 1979
        Page 17
    Appendix 3: Total annual investment, operating and replacement costs, and cost per head fed, three sizes of flume and dirt open-lot systems at 90 and 60 percent of capacity, 1979
        Page 18
    Appendix 43: Footnotes for table 8
        Page 19
        Page 20
Full Text
Z2~ 401


Staff Paper Series


FOOD AND RESOURCE ECONOMICS DEPARTMENT

Institute of Food and Agricultural Sciences
University of Florida
Gainesville, Florida 32611























THE METHOD FOR ESTIMATING THE ECONOMIC VIABILITY
OF CATTLE BACKGROUNDING AND FINISHING FROM
EXPERIMENTAL TRIAL RESULTS

by

James R. Simpson and F.S. Baker, Jr.


Staff Paper 194


February 1982


Staff Papers are circulated without formal
review by the Food and Resource Economics
Department. Content is the sole responsi-
bility of the author.


Food and Resource Economics Department
Institute of Food and Agricultural Sciences
University of Florida
Gainesville, Florida 32611














THE METHOD FOR ESTIMATING THE ECONOMIC VIABILITY OF CATTLE
BACKGROUNDING AND FINISHING FROM EXPERIMENTAL TRIAL RESULTS

James R. Simpson and F.S. Baker, Jr.


Results from numerous beef cattle backgrounding and finishing feeding

trials are reported in the literature. The result's applicability is

dictated by economic considerations, but there does not appear to be a

generalized method for converting the physical data into an economic

analysis. The purpose of this paper is presenting a procedure for making

the transformation from physical to economic results.

OVERVIEW OF PROCEDURE


A number of approaches are possible to determine a feeding or forage

trial's economic viability. However, it appears that the most useful

one would answer the question: Is this feeding procedure or feedstuff

more cost effective than alternative procedures? In order to quantify

the results there must be a standard or norm,, in effect, a procedure

for both intra and interfirm.comparisons, 'Consequently, we argue that

the-data.should be presented in a format.which applies to a specific

area,.but which can be modified to fit.other'situations.


James R. Simpson is Extension Livestock Marketing Economist and
Associate Professor, Food and Resource Economics Department, University
of Florida; F.S. Baker, Jr. is Professor and Animal Nutritionist, Quincy
Agricultural Research a;nd, Education Center.


Presented at the 1982 Florida Feedlot Clinic, Wauchula, Florida,
February 18, 1982.







(2)


The problem of fluctuation in output and input prices can be over-

come by comparing the trial results to a localized industry norm presenting

the results in a fashion which permits potential adopters of the new

practice to evaluate the results using their own economic and physical

relationship data. Based on this method of comparing trial results, the

procedure is:

1) Develop a table of cattle performance in the feedlot trials.

2) Calculate the ration in pounds per head per day, dry matter
basis.

3) Develop a table of present ingredient costs on an as-fed and
dry matter basis.
4) Calculate the cost per head per day for the ration.

5) Calculate cost per pound of gain for the ration only.

6) Calculate cost per pound of gain in a complete budget.

7) Compare cost per pound of gain from the trial with cost
from current practices.

8) Analyze the results and determine any constraints to adoption
of the new practice if it is more profitable.

EXAMPLE SITUATION INCORPORATING TRIAL RATIONS


A cattle feeding trial with varying amounts of high moisture corn

and corn silage was conducted at the University of Florida's Agricultural

Research Center in Quincy (North Florida) for a two year period, 1973

and 1974. There were two phases, a backgrounding or growing phase, and

a finishing phase. The trials were conducted on Angus crossbred (1/8 to

1/4 Brahman) calves originating in Central Florida. All 50 calves in

each trial were sired by one Angus bull. The calves averaged 488

pounds when they were started on the growing ration 17 days after arrival

at Quincy in the early fall.









Feedlot Performance

The cattle were divided into five lots of 10 head each. The perfor-

mance results for the five lots,identified as numbers 20-24 given in

the original report (Baker, 1975),are presented in Table 1. The cattle

in Phase I were fed 103 days, with corn varying from 10 percent to 85

percent of the ration. Silage varied from 75 percent of the ration down

to 2 percent. The average daily gain increased from 1.91 pounds per head

for the high silage ration, to 3.02 pounds for the low silage fed cattle.

Total dry matter fed declined from 7.39 pounds per pound of gain with

the high silage ration, to 4.90 pounds with the low silage ration.

Cattle in the finishing phase (II) were held on feed for a longer

time (a maximum of 119 days) on the high silage ration than on the low

silage one (70 days). Average daily gain varied from 2.29 pounds per

head with the high silage ration, to 2.84 pounds per day with the low

silage ration. Total dry matter fed declined from 8.46 pounds per pound

of gain, to 5.74 pounds per pound of gain with the low silage operation.

Ration and Ingredient Costs

The ration in pounds per head per day for the growing and finishing

phases (I and II), on a dry matter basis, is presented in Table 2. The

ingredient costs, given in Table 3, are first provided on an as-fed basis

and then divided by the percent dry matter to arrive at a cost per unit

of dry matter. The units, such as tons, are then converted to a per

pound basis in the last column. Space is provided at the bottom of

Table 3 for feedlot operators to enter their own as-fed costs and then

calculate their own costs per pound of dry matter. Feedlot operators
would have to use dry matter content of their ingredients to calculate costs.

The cost per head per day for the ration only, calculated in Table 4,

increases from $0.73 for lot 20 in the growing phase, (75 percent silage







Table l.--Feedlot performance of 1973-74 Quincy AREC fed cattle as
in the research report (average two trials)


Days
Corn, %
Dry matter
Gross wt.
Silage, %
Dry matter
Gross wt.
Initial wt., lb.
Final wt., lb.
Avg. daily gain, lb.*
Feed/head/daily, lb.
Dry matter
Gross wt.
Feed dry matter/lb. gain
Total
Corn
Silage


Lot 20
103


10
6


75
87
475
672
1.91


1.41
33.7


7.39
0.76
5..53


I


*Gains with different superscripts differ significantly.

Feedlot performance, Phase II
Lot 20 Lot 21 Lot 22 Lot 23 Lot 24
Days 119 102 80 70 70
Corn, %
Dry matter 35 54 71 81 91
Gross wt. 22 39 59 74 92
Silage, %
Dry matter 57 38 21 10 0
Gross wt. 73 56 35 19 0
Initial wt., lb. 672 738 780 771 786
Final wt., lb. 945 986 950 963 984
Avg. daily gain, lb.* 2.29 2.44 2.13 2.74 2.84
Feed/head/daily, Ib.
Dry matter 19.0 18.7 17.7 17.7 16.5
Gross wt. 41.1 35.4 28.8 26.4 22.0
Feed dry matter/lb. gain
Total 8.46 7.70 8.76 6.42 5.74
Corn 2.97 4.15 6.20 5.21 5.20
Silage 4.83 2.92 1.81 0.66 0

*Gains with different superscripts differ significantly.
Source: Baker, 1975.


presented


Lot 24
103


Feedlot
Lot 21
103


31
20


57
74
476
739
2.55


15.3
33.1

6.03
1.84
3.44


--


performance,
Lot 22
103

43
30


45
64
479
780
2.92


16.5
32.8

5.66
2.45
2.55


Phase I
Lot 23
103

56
42


33
51
475
772
2.88


16.5
30.0


5.73
3.18
1.91


2
3
475
786
3.02


14.9
20.1


4.90
4.17
0.11













Table 2.--Ration in pounds
finishing phases


per head per day for the growing and
(I and II)


Growing phase (I)

Lot number (Dry matter basis)

Ingredient 20 21 22 23 24

------------Lbs./hd./day-----------

Corn silage 10.6 8.8 7.5 5.5 (.2
High moisture corn (shelled) 1.0 4.2 6.7 8.7 12.2
Protein supplement (61%) 1.5 1.4 1.4 1.4 1.4
Cane molasses 0.5 0.5 0.5 0.5 0.5
Hay 0.5 0.4 0.4 0.4 0.6

Total 14.1 15.3 16.5 16.5 14.9





Finishing phase (II)

Ration (Dry matter basis)

Ingredient 20 21 22 23 24

------------Lbs./hd.day------------

Corn silage 10.8 7.1 3.6 1.8 0.0
High moisture corn (shelled) 6.1 9.5 12.0 13.7 14.3
Protein supplement (56%) 1.5 1.5 1.5 1.6 1.6
Cane molasses 0.6 0.6 0.6 0.6 0.6
Hay -- -- --

Total 19.0 18.7 17.7 17.7 16.5

Source: Unpublished research results.





(6)




Table 3.--Ingredient costs, as-fed and dry matter basis, December, 1981.

Cost used in analyses/

Cost Cost per Cost
per ton Percent ton dry per lb.
as-fed dry matter dry matter
Ingredient basis matter basis basis

Dollars Percent -------Dollars ------

Corn silage 30 36 83.33 0.0417
High moisture corn (shelled) 109 74 147.00 0.0736
Protein supplement
56% 200 90 222.22 0.1111
Cane molasses 100 76 131.58 0.0658
Hay 60 90 66.67 0.0333
Your cost

Cost Cost per Cost
per ton Percent ton dry per lb.
as-fed dry matter dry matter
Ingredient basis matter basis basis

Dollars Percent ------- Dollars ------

Corn silage
High moisture corn (shelled)
Protein supplement
56%
Cane molasses
Hay


-/Prices as of December, 1981.





(7)




Table 4.--Cost per head per day for growing phase (I), December, 1981/

Cost used in analysis

Lot number

Ingredient 20 21 22 23 24

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

Corn silage .442 .367 .313 .230 .009
High moisture corn (shelled) .074 .310 .494 .641 .898
Protein supplement (56%) .167 .156 .156 .156 .156
Cane molasses .033 .033 .033 .033 .033
Hay .017 .014 .014 .014 .020

Total .733 .880 1.010 1.074 1.116
Your cost

Lot number

Ingredient 20 21 22 23 24

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

Corn silage
High moisture corn (shelled)
Protein supplement (56%)
Cane molasses
Hay

Total


a/Ration in Table 2 times ingredient costs in Table 3.





(8)


on a dry matter (DM) basis, to $1.12 in the 2 percent silage ration.

The cost per head increases continuously as corn constitutes a higher
percent of the ration.

The cost per head per day for the finishing phase (Table 5) varies

considerably, from $1.11 in the high silage ration (57 percent of DM)

to $1.27 when there is no silage in the ration. Space is provided in

both Tables 4 and 5 for operators to enter their own costs.
Totals for the combined phases are given in Table 6. The average

cost per head per day is lowest for the all silage ration ($0.93) and

highest ($1.18) for the high corn ration. Table 7 is provided for you

to estimate your own costs per head.
The final economic analysis, which is total estimated costs and

returns from the five feeding approaches is provided in Table 8 under

the assumption that the cattle are fed in a 5,000 head dirt-type feedlot

which is operating at 90 percent of capacity. There are 1,000 head of
steers, assumed to be owned by the feedlot, bought at $0.62 per pound

and placed on feed September 1, 1981.

The investment, operating expenses and equipment replacement costs

are updated to 1981 from a 1980 bulletin by Simpson, Baldwin and Baker.

The relevant tables from that publication are given as Appendices 1, 2
and 3. Production costs are calculated both with and without cattle.

Capital costs (interest on operating capital and opportunity cost on

investment capital) are combined with ownership costs (depreciation,

taxes and insurance). Total costs are then calculated both with and

without cattle. An explanation of how each figure is derived is provided
in the footnotes to Table 7. Space is provided in the table for you to

calculate your own costs.










Table 5.--Cost per head per day for finishing phase (II), December, 1981-/

Cost used in analysis

Lot number

Ingredient 20 21 22 23 24

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

Corn silage .451 .296 .151 .075 .000
High moisture corn (shelled) .449 .700 .884 1.009 1.053
Protein supplement (61%) .167 .167 .167 .178 .178
Cane molasses .040 .040 .040 .040 .040
Hay .000 .000 .000 .000 .000

Total 1.107 1.203 1.242 1.302 1.271
Your cost

Lot number

Ingredient 20 21 22 23 24

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

Corn silage
High moisture corn (shelled)
Protein supplement (61%)
Cane molasses
Hay

Total


a/Ration in Table 2 times ingredient cost in Table 3.






(10)


Table 6.--Total cost of ration and cost per pound of gain, December, 1981

Lot number

Item 20 21 22 23 24


Growing phase (I)


Average daily gain (Ibs.)-/
Total days-/
Total gain (Ibs.)b/
Cost per head per day ($)C/
Total cost per head ($)/
Cost per lb. of gain ($)e/


Average daily gain (Ibs.)-/
Total days/
Total gain (Ibs.)b/
Cost per head per day ($)-
Total cost per head ($)d
Cost per lb. of gain ($)e


Average daily gain (lbs.)-/
Total days
Total gain (Ibs.)
Cost per head per day ($)h
Total cost per head ($)
Cost per lb. of gain ($)/


1.91
103
197
0.733
75.50
0.38


2.29
119
273
1.107
131.73
0.48


2.12
222
470
0.93
207.23
0.44


255
103
263
.880
90.64
0.35


2.92
103
301
1.010
104.03
0.34


2.88
103
297
1.074
110.62
0.37


Finishing phase (II)

2.44 2.13 2.74
102 80 70
248 170 192
1.203 1.242 1.302
122.70 99.36 91.14
0.50 0.59 0.48

Combined phases (I & II)


2.49
205
511
1.04
213.34
0.42


2.58
183
472
1.11
203.39
0.43


2.83
173
489
1.17
201.76
0.41


a/From Table
b/Calculated
~/From Table
d/Total days
per day.


1.
from Table 1.


times cost per head


e/Total cost.per
total gain.
fFrom Table 5.


head divided by
.' 1i


g/Summation of total gain from both
phases divided by summation of
days, both phases.
h/Total cost per head, both phases,
divided by total days.


3.02
103
311
1.116
114.95
0.37


2.84
70
199
1.271
88.97
0.45


2.95
173
510
1.18
203.92
0.40





(11)


Table 7.--Total cost of ration and cost per pound of gain, your cost

Lot number

Item 20 21 22 23 24


Growing phase (I)

Average daily gain (Ibs.)
Total days
Total gain (Ibs.)
Cost per head per day ($)
Total cost per head ($)
Cost per lb. of gain ($)
Finishing phase (II)

Average daily gain (Ibs.)
Total days
Total gain (Ibs.)
Cost per head per day ($)
Total cost per head ($)
Cost per lb. of gain ($)
Combined phases (I & II)

Average daily gain (Ibs.)
Total days
Total gain (Ibs.)
Cost per head per day ($)
Total cost per head ($)
Cost per lb. of gain ($)






(12)








Table 8.--Estimated costs and returns for 1981, 5,000 head capacity feedlot with experimental trial data,
combined phases


Item


Investment-/
Production costs
Cattle l/
Operating expenses-
Equipment replacement cost-/
Feed cost e/
Veterinary f/
Total less cattle
Total with cattle
Capital costs
Operating capital (16% on 90% of
with cattle costs) g/
Interest on capital investment
(16%) h/
Subtotal
Ownership costs!
Depreciation
Taxes
Insurance
Subtotal
Total capital & ownership costs
Total costs
Less cattle
With cattle
Incomej-
Net income, total
Above production costs
Above all costs
Breakeven-_
Production costs
All costs
Cost of gainl/
Production costs
All costs
Net income, per head sold
Above production costs
Above all costs
Net income per head sold per day
Above production costs
Above all costs


Lot number
20 21 22 23 24 Your estimates
----------------------------- Dollars -----------------------------

546,451 546,451 546,451 546,451 546,451


294,500
35,520
8,880
207,230
4,910
256,450
550,960


295,120
32,800
8,200
213,340
4,910
259,250
554,370


296,360
29,280
7,320
203,390
4,910
244,900
541,260


294,500
27,680
6,920
201,760
4,910
241,270
535,770


293,880
27,680
6,920
203,920
4,910
243,430
537,310


48,396 44,704 38,971 36,261 36,365

53,334 48,962 43,716 41,093 41,093
103,064 100,214 90,348 78,411 77,980


5,133
1,466
733
7,332
110,396

366,846
661,346
570,686


4,712
1,346
673
6,731
106,945

366,195
661,315
595,445


4,208
1,202
601
6,011
96,359

341,259
637,619
573,705


3,955
1,130
565
5,650
84,061

325,331
619,831
582,160


3,955
1,130
565
5,650
83,630

327,060
620,940
594,238


203,840 229,250 232,446 256,829 265,178
-99,660 -65,870 -63,914 -37,671 -26,702

.59 .57 .58 .56 .55
.71 .68 .68 .65 .64

.53 .51 .52 .50 .48
.76 .73 .73 .67 .65


206
-92

.93
-0.42


232 235
-65 -65


1.13
-0.32


1.29
-0.36


259 268
-38 -27


1.50
-0.22


1.55
-0.16


Footnotes are given in Appendix 4.





(13)


Income in Table 8 is calculated by assuming a price of $0.61 per

pound net of shrink and marketing costs. Net income, breakeven cost,

and cost of gain are calculated on production costs and on all costs.

The high corn ration (lot 24) provides the highest net income, $268 per

head if only the minimal production costs are considered, and -$27 if

all costs are taken into account. Capital and ownership costs are

developed separately by item so each operator can include a few or as

many costs as seem relevant.

COMPARISON WITH CURRENT PRACTICES


The evaluation of economic viability between the trials using data

from each operator's own situation is useful, but the bottom line is com-

parison between trial results and current practices. Only in this fashion

is it possible to determine if the trial approach has applicability for

a specific operation.

The problem in comparing trial results with current practices is

the need for standardizing the comparisons. To take an extreme example,

if the trial results call for feeding cattle 100 days with slaughter at

950 pounds, while current practices are for slaughter at 1,100 pounds

after feeding for 180 days, a simple comparison of net income per head

would lead to an invalid interpretation of the findings since time is

ignored. Thus, a crucial factor is accounting for this variable. One

relatively quick way to remove the effect of time is by dividing the net

income by the number of days the cattle are on feed to determine a net

income per head per day. In the example, the net income for lot 20 is

$0.93 per day above production costs. It is $1.55 for the lot 24 type

ration indicating that the high corn approach is about 60 percent more

profitable.





(14)

SUMMARY


The purpose of this report is presentation of the method for estimating

the economic viability of experimental cattle feeding trials. The argu-

ment has been made that the economic analysis should be derived from

rations which have their cost estimates calculated on a dry matter basis

rather than on an as-fed basis.

An example was presented based on trials at the Quincy Research

Center in 1973 and 1974. The physical results are combined with fall

1981 prices in an economic analysis. The first results were cost per

head for the ration only. These unit costs were then placed in a complete

budget which included facility and equipment investment, production costs,

as well as capital and ownership costs. The appropriate point of com-

parison was deemed to be net income per head per day to account for time

differences.
It takes time to prepare a good budget for existing operations and

incorporate trial results in the budgets for comparative purposes. But,

given the amount of money involved--and the probability of large error--

it is worth while to take the time and do good planning.


REFERENCES

Simpson, James R., L.B. Baldwin, and F.S. Baker, Jr. Investment
and Operating Costs for Two Types and Three Sizes of Florida Feedlots.
Fla. Agr. Exp. Sta. Bull. 817, University of Florida, January 1981.

Baker, F.S., Jr. "Use of Corn Silage for Growing and Finishing
Cattle." Proceedings. 1975 Florida Beef Cattle Short Course, May 1975.





(14)

SUMMARY


The purpose of this report is presentation of the method for estimating

the economic viability of experimental cattle feeding trials. The argu-

ment has been made that the economic analysis should be derived from

rations which have their cost estimates calculated on a dry matter basis

rather than on an as-fed basis.

An example was presented based on trials at the Quincy Research

Center in 1973 and 1974. The physical results are combined with fall

1981 prices in an economic analysis. The first results were cost per

head for the ration only. These unit costs were then placed in a complete

budget which included facility and equipment investment, production costs,

as well as capital and ownership costs. The appropriate point of com-

parison was deemed to be net income per head per day to account for time

differences.
It takes time to prepare a good budget for existing operations and

incorporate trial results in the budgets for comparative purposes. But,

given the amount of money involved--and the probability of large error--

it is worth while to take the time and do good planning.


REFERENCES

Simpson, James R., L.B. Baldwin, and F.S. Baker, Jr. Investment
and Operating Costs for Two Types and Three Sizes of Florida Feedlots.
Fla. Agr. Exp. Sta. Bull. 817, University of Florida, January 1981.

Baker, F.S., Jr. "Use of Corn Silage for Growing and Finishing
Cattle." Proceedings. 1975 Florida Beef Cattle Short Course, May 1975.





















App. 1. Investment, dirt open-lot type system, 1979.*
Total Cost by Size of Lot Cost per head by Size of Lot
Item 500 5,000 10,000 500 5,000 10,000
.............................. ..... dollars -..............-------......---------------------------......----------
Feeding Facilities
Concrete, pens' 3,303 30,198 60,396 6.61 6.04 6.04
Stabilizing, work alleys2 1,244 4,267 7,111 2.48 0.85 0.71
Reinforcing wire, pens3 376 3,441 6,882 0.75 0.69 0.69
Reinforcing wire, work alleys -
Asphalt, feed alleys5 1,493 8,533 17,067 2.99 1.71 1.71
Shades6 47,040 215,040 430,080 94.08 43.01 43.01
Bunks7 10,080 35,840 71,680 20.16 7.17 7.17
Cable over bunks8 336 1,536 3,072 0.67 0.31 -0.31
Pen fences and gates9 25,200 97,800 195,600 50.40 19.56 19.56
Water troughs'0 3,150 14,400 28,800 6.30 2.88 2.88
Water pipe" 556 2,570 5,140 1.11 0.51 0.51
Other water connections'2 75 750 1,500 0.15 0.15 0.15
Survey & site engineering13 1,500 3,000 4,000 3.00 0.60 0.40
Building permits" 100 500 750 0.20 0.10 0.07
Site preparation'5 2,400 20,000 40,000 4.80 4.00 4.00
Cattle working area'6 10,750 31,250 37,250 21.50 6.25 3.72
Construction insurance' 500 1,500 2,500 1.00 0.30 0.25
Lighting & elec. service'8 745 4,550 6,180 1.49 0.91 0.62
Subtotal 108,848 475,175 918,008 217.70 95.04 91.80
(Continued)


b *




















App. 1. (Continued)
Total Cost by Size of Lot Cost per Head by Size of Lot
Item 500 5,000 10,000 500 5,000 10,000
---------------------- doll ars ------------ ------------
Supporting facilities & equip.
Office building" 25,000 30,000 5.00 3.00
All weather access roads" 11,556 19,556 30,222 23.11 3.91 3.02
Silage facility" 8,405 42,014 24,028 16.81 8.40 2.40
Other storage & mixing equip." 11,800 73,300 115,300 23.60 14.66 11.53
Scale" 6,000 27,500 27,500 12.00 5.50 2.75
Land" 13,000 55,000 100,000 26.00 11.00 10.00
Well" 3,500 14,000 14,000 7.00 2.80 1.40
Rolling stock" 72,500 188,000 339,000 145.00 37.60 33.90
Perimeter fence" 1,445 3,262 4,380 2.89 0.65 0.44
Contingency & misc. equip." 6,000 60,000 120,000 12.00 12.00 12.00
Subtotal 134,206 507,632 804,430 268.41 101.52 80.44
Accumulated total 243,054 982,807 1,722,438 486.11 196.56 172.24
Waste management" 12,880 59,140 105,300 25.76 11.83 10.53
Accumulated total 255,934 1,041,947 1,827,738 511.87 208.39 182.77
Construction management" 10,000 90,000 150,000 20.00 18.00 15.00
GRAND TOTAL 265,934 1,131,947 1,977,738 531.87 226.39 197.77
*See Appendix 3 for footnotes.





















App. 2,. Annual operating expenses for 5,000 head feedlot, flume and dirt open-lot types at 90 and 60 percent of capacity,
1979.*
90 Percent of Capacity 60 Percent of Capacity
Flume Open Flume Open
Expense type lot type lot
--dollars--------------
Salaries and wages' 64,800 79,200 64,800 71,280
FICA, insurance and other2 9,720 11,880 9,720 10,692
Property insurance3 84 84 84 84
Telephone and market news4 3,000 3,000 3,000 3,000
Utilitiess 28,272 8,160 25,445 6,120
Maintenance and repair' 24,803 35,988 18,602 .26,991
Office and supplies' 1,200 1,200 1,200 1,200
Gas and oil' 37,608 60,394 28,206 45,296
Advertising, dues, subscriptions' 1,500 1,500 1,500 1,500
Travel and entertainment" 3,000 3,000 3,000 3,000
Legal, bookkeeping and audit" 1,700 1,700 1,700 1,700
Nutrition and consulting" 2,700 2,700 2,700 2,700
County taxes" 5,412 5,700 5,412 5,700
Miscellaneous" 7,500 7,500 7,500 7,500
TOTAL 191,299 222,006 172,869 186,763
*See Appendix 5 for footnotes.
















App. 3. Total annual investment, operating and replacement costs, and cost per head fed, three sizes of flume and
dirt open-lot systems at 90 and 60 percent of capacity, 1979.
Total Annual Cost Cost Per Head Fed'
Equipment Equipment
Feedlot Capacity Initial replacement Operating Initial replacement Operating
and Type of Lot investment' cost2 expenses3 Total investment cost expenses Total
.. ......... .. .. ... --------------------. d dollars ------------------- ----------......
90 percent of capacity
500 Head
Flume 29,438 14,064 60,591 104,093 24 11 49 84
Dirt open-lot 34,962 13,533 59,796 108,291 28 11 49 88
5,000 Head
Flume 141,318 49,696 191,299 382,313 12 4 15 31
Dirt open-lot 148,817 53,147 222,006 423,970 12 4 18 34
10,000 Head
Flume 253,807 97,072 355,964 706,843 10 4 15 29
Dirt open-lot 260,013 106,093 416,790 782,896 11 4 17 32
60 percent of capacity
500 Head
Flume 29,438 14,064 56,584 100,086 36 17 69 122
Dirt open-lot 34,962 13,533 55,106 103,601 43 17 67 127
5,000 Head
Flume 141,318 49,696 172,869 363,883 17 6 21 44
Dirt open-lot 148,817 53,147 186,763 388,727 18 6 23 47
10,000 Head
Flume 253,807 97,072 319,583 670,462 16 6 19 41
Dirt open-lot 260,013 106,093 365,286 731,392 16 7 22 45
1. Amortized over 15 years at 10 percent from data in Table 9.
2. From Tables 16 and 17 over 15-year period.
3. From Tables 12, 13, and 14.
4. Totals divided by number of head fed (Table 11). Cost does not include cattle or feed.


9-


r1 C





S19)


Appendix 4--Footnotes for Table 8


Investment--$475,175 (for 5,000 head dirt open-lot in 1979) times 1.15 to inflate
to 1981 prices = $546,451. (Simpson, Baldwin and Baker, p. 28). See Appendix 1.

Cattle--Assumed to be placed on feed September 1, 1981 at $62.00 per cwt. Lot is
operating at 90 percent of capacity so 4,500 are on feed. There are 1,000 head of
new cattle for comparative purposes. The cattle cost is as follows:


Average
initial
Lot no. weight


Total
weight
1,000 head


-------- Lbs.--------- ---Dollars--


475
476
478
475
474


475,000
476,000
478,000
475,000
474,000


294,500
295,120
296,360
294,500
293,880


Operating expenses--$222,006 annually
and Baker, p. 37). See Appendix 2.
$255,037. Then, 4,500 head times 365
Finally, $255,306 1,642,500 = $0.16


Days on Cost per
Lot no. feed head


with 90 percent capacity (Simpson, Baldwin
This times 1.15 to inflate to 1981 value
days = 1,642,500 cattle day equivalents.
per head per day.


Total cost
(1,000 head)


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


222
205
183
173
173


35.52-
32.80
29.28
27.68
27.68


35,520
32,800
29,280
27,680
27,680


Equipment replacement cost--$53,147 annually with 90 percent capacity (Simpson,
Baldwin and Baker, p. 48). See Appendix 3. This, times 1.15 to inflate to 1981
value = $61,119. Then, $61,119 1,642,500 cattle day equivalents = $0.04 per head
per day.


Days on Cost per Total cost
Lot no. feed head (1,000 head)


-------Dollars--------
8.88 8,880
8.20 8,200
7.32 7,320
6.92 6,920
6.92 6,920


/Feed cost--See Table 6.

SVeterinary and medicine


Item


There are 1,000 head of cattle in the trial.


Cost per Total
head cost


Veterinary
Worm medicine
Growth stimulant, Synovex-S
Vitamins, 4 ml per steer of A-D @ 0.04/ml
Other
Total


1.00
2.00
1.25
0.16
0.50
4.91


Total
cost


222
205
183
173
173


1,000
2,000
1,250
160
500
4,910





(20)
Appendix 4--Footnotes for Table 8 (Continued)


Operating capital--16 percent interest rate. Costs are weighted to 90 percent of
total with cattle expenses reflecting that not all expenses are incurred from the
beginning of the production period.
Annual, Percent Interest,


90% of interest,
Lot no. expenses 16%


of year
on feed


feeding
period


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


495,864
498,933
487,134
482,193
483,579


79,338
79,829
77,941
77,151
77,373


--%- --Dollars---
61 48,396
56 44,704
50 38,971
47 36,261
47 36,365


-' Interest on buildings and capital investment--Investment times 16 percent times
percent of year cattle are on feed (footnote g). For example, for lot 20, $546,451
times .16 = $87,432 times .61 = $53,334.

Ownership costs


Depreciation--Seven percent of capital
times percent of year cattle occupy the
$546,451 times .07 = $38,252 times 0.22


Taxes--Two
occupy the
times 0.22


investment times 0.22 (4,500 head 1,000)
lot. For example, for lot 20, it is
= $8,415 times 0.61 = $5,133.


percent of capital investment times 0.22 times percent of year cattle
lot. For example, for lot 20, it is $546,451 times 0.02 = $10,929
= $2,404 times 0.61 = $1,466.


Insurance--One percent of total investment.


Income--Fed cattle at $61 per cwt.


Lot no.


Average
sale weight
Der head


Net of marketing costs one percent death loss.


Total
No. of weight
head sold


990
990
990
990
990


935,550
976,140
940,500
954,360
974,160


-' Breakeven--Costs divided by pounds sold. See footnote j for weight sold.

SCost of gains--Costs without cattle divided by net gain.


Average
gain
Lot no. per head
20 470
21 510
22 472
23 489
24 510


No. of Total
head gain


990
990
990
990
990


485,100
504,900
467,280
484,110
504,900


Total
income


570,686
595,445
573,705
582,160
594,238




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