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Economic ConsiderationsEconomic Considerationsof Livestock Grazing in of Livestock Grazing in 20092009
UW Extension Beef WorkshopUW Extension Beef Workshop
Mauston-March 21Mauston-March 21stst , 2009 , 2009
Keith VanderVelde, UW Keith VanderVelde, UW Extension Extension
Economic ConsiderationsEconomic Considerations
Is Grazing a Profitable Enterprise ?Is Grazing a Profitable Enterprise ?
Yes,Yes,• BECAUSE it INCREASES BECAUSE it INCREASES
PRODUCTION and REDUCES PRODUCTION and REDUCES COST if done properly.COST if done properly.
Economic ConsiderationsEconomic Considerations
What if you were told of a special What if you were told of a special crop production system that would crop production system that would increase output by at least 30% increase output by at least 30% and reduce your cost by 50%and reduce your cost by 50%
I think most of you would not have I think most of you would not have any trouble adapting to such a any trouble adapting to such a systemsystem
Economic ConsiderationsEconomic Considerations
In Most Situations Managed Rotational In Most Situations Managed Rotational Grazing will do both increase production Grazing will do both increase production and reduce cost by:and reduce cost by:• Increasing carrying capacityIncreasing carrying capacity• Increase ADGIncrease ADG• Improved herd healthImproved herd health• Longer productive lifeLonger productive life
It also results in larger calf crops and It also results in larger calf crops and producers are more aware of the health of producers are more aware of the health of the herdthe herd
Economic ConsiderationsEconomic Considerations
In Most Situations Managed Rotational In Most Situations Managed Rotational Grazing will do both increase production and Grazing will do both increase production and reduce cost by:reduce cost by:• Reducing Feed costReducing Feed cost• Reducing Fertilizer NeedsReducing Fertilizer Needs• Greater weed controlGreater weed control• Less Fuel needsLess Fuel needs• Less Labor(yes you move the cows but they Less Labor(yes you move the cows but they
harvest)harvest)• Less manure to haulLess manure to haul
It also results in more free and family time to It also results in more free and family time to get away get away
Economic ConsiderationsEconomic Considerations
Is Grazing a Profitable EnterpriseIs Grazing a Profitable Enterprise Do I have the NecessaryDo I have the Necessary
• LandLand• CattleCattle• Fencing Fencing
• LaborLabor• CapitalCapital
Economic ConsiderationsEconomic Considerations
ProfitabilityProfitability Do a Balance SheetDo a Balance Sheet Project Expenses and IncomeProject Expenses and Income Look at History of OperationsLook at History of Operations Remember Most Markets are CyclicalRemember Most Markets are Cyclical
• Get in when prices are lowGet in when prices are low• Get out or reduce inventory when prices Get out or reduce inventory when prices
upup
Economic ConsiderationsEconomic Considerations
Grazing EconomicsGrazing Economics
Beef-Cow industry looks break even in Beef-Cow industry looks break even in 2009based on Cattle-Fax projections2009based on Cattle-Fax projections
Time to reduce input cost Time to reduce input cost One of the common One of the common pitfalls is pitfalls is
increased expenses.increased expenses. If income goes up and expenses also If income goes up and expenses also
increase we have lost a profit increase we have lost a profit opportunityopportunity
Grazing EconomicsGrazing Economics
Grazing EconomicsGrazing Economics
Cow /calf economic factors areCow /calf economic factors are• Reproductive efficiencyReproductive efficiency• Weaning weightWeaning weight• Sales priceSales price• Feed CostFeed Cost• Market CycleMarket Cycle• Fixed CostsFixed Costs
Grazing EconomicsGrazing Economics
Managed Intensive Grazing (MIG) Managed Intensive Grazing (MIG) • Offers greater management FlexibilityOffers greater management Flexibility• Comes at an added costComes at an added cost
– FenceFence– Water systemsWater systems– LaborLabor– Higher level of management requiredHigher level of management required– Greater investment per animalGreater investment per animal
Fencing CostFencing Cost
One of the largest expenses in GrazingOne of the largest expenses in Grazing Many different options but some rules Many different options but some rules
applyapply• Have secure perimeter fenceHave secure perimeter fence• Use temporary or portable fence in cells Use temporary or portable fence in cells • Use the lay of the land to your advantage Use the lay of the land to your advantage • Be flexible in cell sizingBe flexible in cell sizing
Cost of FencingCost of Fencing• 48” woven wire, one barb-----------$1.07/foot48” woven wire, one barb-----------$1.07/foot• 5 barbed wire fence------------------$0.83/foot5 barbed wire fence------------------$0.83/foot• High tensile 8 strand 12.5 gauge---$0.56/footHigh tensile 8 strand 12.5 gauge---$0.56/foot• High tensile 5 strand electric-$0.14/footHigh tensile 5 strand electric-$0.14/foot• Polywire fence(interior use only)--$0.03/footPolywire fence(interior use only)--$0.03/foot• Plastic Electric 4 Tape Wide--$0.89/footPlastic Electric 4 Tape Wide--$0.89/foot• Electric Rope, steel, 3 strand-$0.16/footElectric Rope, steel, 3 strand-$0.16/foot• Plastic Coated non electric, 3 tapes--$2.46/footPlastic Coated non electric, 3 tapes--$2.46/foot
Shape effect on Fencing Shape effect on Fencing RequirementsRequirements
744 feet 836 feet1007 feet 951 feet
Length=2 X Width888 feet
Length=4 X width1,040 feet
Cost of ReseedingCost of Reseeding
Most sources recommend frost Most sources recommend frost seeding as the best and most cost seeding as the best and most cost effective method of establishing effective method of establishing and improving pasturesand improving pastures
With frost seeding the costs are With frost seeding the costs are primarily the cost of the seedprimarily the cost of the seed
What about EquipmentWhat about Equipment
One of the primary benefits of One of the primary benefits of Grazing is the Machinery Grazing is the Machinery necessarynecessary• Many producers limit themselves to a:Many producers limit themselves to a:
– Tractor with loaderTractor with loader– Manure spreaderManure spreader– One hay making set of equipment(square One hay making set of equipment(square
bales or round baler)bales or round baler)
Time RequirementsTime Requirements
Remember Cattle Need to be Remember Cattle Need to be MovedMoved• Make sure you have the time and Make sure you have the time and
labor to move cattle to new paddocklabor to move cattle to new paddock• You must learn to know when is it You must learn to know when is it
time to move themtime to move them• Timing will vary with the amount of Timing will vary with the amount of
available pastureavailable pasture
Winter Feed SupplyWinter Feed Supply
Winter feeding often accounts for 70 Winter feeding often accounts for 70 % of the total feed cost for a beef % of the total feed cost for a beef cow-calf operationcow-calf operation
As a grazer our goal is to reduce the As a grazer our goal is to reduce the amount of feed brought to the cow amount of feed brought to the cow and to have the cow go get it herselfand to have the cow go get it herself• this reduces coststhis reduces costs• gets the manure in the fieldgets the manure in the field
Wintering CostsWintering Costs
Stockpiling forage is recommendedStockpiling forage is recommended• Set pastures aside for late fall and Set pastures aside for late fall and
winter grazingwinter grazing• Consider corn stalk grazing or other Consider corn stalk grazing or other
refuse grazingrefuse grazing• Consider windrowing in Nov and let Consider windrowing in Nov and let
the cows eat the forage out of the the cows eat the forage out of the windrow when snow is presentwindrow when snow is present
Reducing Winter Feed Reducing Winter Feed CostCost
Purchase cheap hay not suitable for dairy Purchase cheap hay not suitable for dairy and horse owners during the summerand horse owners during the summer
Substitute cheap corn and oats for forageSubstitute cheap corn and oats for forage Remember 10 lbs of a 50/50 corn oats Remember 10 lbs of a 50/50 corn oats
mix is only $.60 with today's grain pricesmix is only $.60 with today's grain prices Look at cheap alternatives, i.e. potato Look at cheap alternatives, i.e. potato
waste, sweet corn silage, candy wastewaste, sweet corn silage, candy waste
Cutting Winter Feed CostCutting Winter Feed Cost
Figure out a way to feed a cow for Figure out a way to feed a cow for $150 or less from Nov-April$150 or less from Nov-April
Have some pasture available for Have some pasture available for April 15 grazingApril 15 grazing
Try to keep the manure out of the Try to keep the manure out of the feeding area and in the pastures feeding area and in the pastures where it will fertilize next years where it will fertilize next years forage supplyforage supply
Fertilizer Costs and Fertilizer Costs and PasturesPastures
Very high pricesVery high prices UWRF Research shows fertilize May 1UWRF Research shows fertilize May 1stst
Only fertilize improved grassesOnly fertilize improved grasses• ?? Bluegrass?? Bluegrass
Work to establish legumes in pasturesWork to establish legumes in pastures• Frost seed-red & white clover, Frost seed-red & white clover,
orchardgrass, Italian rye grassorchardgrass, Italian rye grass• Drill into grass sod-legumesDrill into grass sod-legumes
Make it ProfitableMake it Profitable
Stocking Rate Is CriticalStocking Rate Is Critical• Goal is to maximize production per Goal is to maximize production per
acre and production per headacre and production per head• Greatest profits are not generated by Greatest profits are not generated by
the greatest productionthe greatest production• Economically optimum stocking rate Economically optimum stocking rate
will occur somewhere between the will occur somewhere between the point of maximum output and point of maximum output and maximum per head performancemaximum per head performance
Calf gain under various Calf gain under various grazing systems—Iowa grazing systems—Iowa State UniversityState University
Using a 100 cow herd for the analysisUsing a 100 cow herd for the analysis Return to operator labor, capital and Return to operator labor, capital and
management per acremanagement per acre• BromeBrome
– $99.53 w/high, 51.30 w/low intensity$99.53 w/high, 51.30 w/low intensity
• Mixed grass/legumeMixed grass/legume– $140 w/high, $119 w/low and $108 w/continuous$140 w/high, $119 w/low and $108 w/continuous– $99.53 w/high, 51.30 w/low intensity$99.53 w/high, 51.30 w/low intensity
Importance of individual Importance of individual animal performanceanimal performance
Stocker cattle rule of thumbStocker cattle rule of thumb
It takes 150 lbs of gain for a stocker It takes 150 lbs of gain for a stocker to cover it’s coststo cover it’s costs
200 lbs of gain returns 75 lbs of profit200 lbs of gain returns 75 lbs of profit
250 lbs of gain returns 125 lbs of 250 lbs of gain returns 125 lbs of profitprofit
Calf gain under various Calf gain under various grazing systems—Iowa grazing systems—Iowa State UniversityState University
Two grazing intensitiesTwo grazing intensities
-high with one cow/calf pair per -high with one cow/calf pair per acreacre
-low or continuous with 1.67 -low or continuous with 1.67 acres per cow/calf pairacres per cow/calf pair
Two pastures-mixed legume and Two pastures-mixed legume and bromebrome
Calf gain under various grazing Calf gain under various grazing systems—Iowa State University systems—Iowa State University and Nebraskaand Nebraska
Results:Results:
-on mixed grass/legume, ADG was -on mixed grass/legume, ADG was similar but gain per acre was 100 similar but gain per acre was 100 lbs higher with MIG pasturelbs higher with MIG pasture
-on brome grass , ADG was greater -on brome grass , ADG was greater for low intensity but gain/ac was for low intensity but gain/ac was 60 lbs higher for MIG pasture60 lbs higher for MIG pasture
University of Missouri University of Missouri Forage Research DataForage Research Data
Comparison of 3 vs. 12 vs. 24 Comparison of 3 vs. 12 vs. 24 paddock system for cow /calf paddock system for cow /calf productionproduction
Greatest return from 12 Greatest return from 12 paddock system—the 24 had paddock system—the 24 had the highest production but this the highest production but this advantage was offset by more advantage was offset by more labor and material costlabor and material cost