Retaining Ownership

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Retaining Ownership of Beef Calves into the
Feedlot
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-Typically, retained ownership refers to a
producer sending calves/feeders to a feedlot and
owning some percentage of them. The
calves/feeders can be either purchased or raised.
The weight of the calves/feeders being sent to
the feedlot does not change the definition of
retained ownership.
Retained Ownership
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Beef Production Segments

• Cow/Calf (Birth to Weaning)
• Stockers (Weaning up to 800 lbs.)
• Retained Ownership (Calf or Feeders to Fed)

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Why Retained Ownership?
1. Learn more about calves-- Performance
?Shrink
?Days of Feed
?Average Daily Gain
?Pound of Feed Per Pound of Gain (DM)
?Pound of Feed Per Head of Per Day (DM)
?Quality Grade
?Yield Grade
?Ribeye Area
?Backfat
?Hot Carcass Weight
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Increase net income
?Cow/Calf
?Backgrounding
?Finishing
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Steps in Deciding to Retain Ownership
1. Complete a financial analysis
2. Decide on risk management strategies
Basis Contracts
Options
Futures Contracts
Forward Contract
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Select a feedlot

• Offer line-of-credit

• Type of cattle preferred

• All-in and all-out production

• Carcass data availabe

• Yardage other expenses

• Location

• Years in business

• Health program

• Cleanliness

• Marketing assistance

• References available

• Financing

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Economic Analysis Tools for Evaluating Retained
Ownership
Break-even Analysis
Total costs divided by sale weight
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Feedlot Break-even Example
Calf weight 1200 lbs. Total Costs Per calf
800/hd. Break-even 800 1,200 lbs. X
100 66.66 cwt. Sale Price 70/cwt. Net
income 70.00 - 66.66 3.34 per cwt. or
3.34 x 12 cwt. 40.08/hd.
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Returns and Cost of Gain Analysis
(Sale Price x Sale Weight)
Minus (Purchase Price x Purchase Weight)
Divided by (Sale weight - Purchase Weight)
Equals Returns per Pound of Gain
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Costs of Gain
(Total Costs)
Divided by (Sale weight - Purchase Weight)
Equals Cost of Gain
Excluding purchase cost of calf
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Gain Analysis Example
Total Costs Per Calf (Less Cost of Calf) 215
per head
Sale Price 70 per cwt. Sale Weight 1200
lbs. Cost of Calf 90 per cwt.
Purchase weight 650 lbs.
Pounds gain
550 lbs.
Returns Per cwt. of Gain
70per cwt. x 1200 lbs.
840
Less 90 per cwt. x 650 lbs. 585
255 per head
Revenue per Pound of Gain
(255 550 lbs.) x
100 46.36 per cwt.
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Returns Per CWT of Gain
Total Cost Per Head 215
(215 550 lbs.) x 100 39.09 per cwt.
Net Returns Per cwt. Gain
Revenue 46.36
Cost 39.09
Net 7.27
Net per head 7.27/cwt. x 5.5 cwt.
40.08/hd.
Excluding cost of calf
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CLICK HERE for the retained ownership spreadsheet