Integration of Crops and Livestock to Reduce Risk

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Integration of Crops and Livestock to Reduce
Risk
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USDA Research Results and Technology
ConferenceFebruary 21, 2006Steve MetzgerFBM
Instructor at Carrington, NDND Region 3
Coordinator for ND Farm Business Management
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North Dakota Farm Business Management Programs
are located in four regions across North Dakota
North Central
RRV
West
South Central
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Main Program Areas

• Accounting and Recordkeeping
• Goal Setting Annual Long Term
• Business Planning Balance Sheets, Budgeting,
  Marketing and Analysis
• Integration of Business Production
• Analyzing the Business Adjusting goals and
  plans accordingly

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Why Integrate Crops and Livestock?

• 1. To enhance economic outcomes.
• 2. To make better use of natural resources.
• 3. To take advantage of newly created
  resources.
• 4. To make the individual agricultural
  operation more sustainable.

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What is happening to farm size and makeup?
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Acres per Farm, NDND Farm Business Mgmt.,
Excluding RRV
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Gross Cash Income/Farm, ND ND Farm Business
Mgmt., Excluding RRV
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Farm Expense/Farm, ND ND Farm Business Mgmt.,
Excluding RRV
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Money Borrowed and Repaid per Farm in Region 3 of
N.D.
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Average Net Farm Income, NDND Farm Business
Mgmt., Excluding RRV
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Net Farm Income Excluding Govt Pymts.ND Farm
Business Mgmt., Excluding RRV
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Return on Assets per FarmRegion 2 ND Farm
Business Management(North Central North Dakota)
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Why do we raise the crops and livestock units (or
enterprises) that we do?

• For profitability.
• For cash flow availability. (Seasonal needs)
  
  
• The enterprises fit together for resource and
  time management.
• We have the physical resources to raise them.
• We have the needed skills and expertise.
• To distribute risk, both production financial.
• To meet new and existing marketing opportunities.
• We have always done it that way.

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Spring Wheat Costs per Acre, NDND Farm
Management Education Program, excluding
RRVExcluding Disaster Direct Gov Pay Return
on Labor
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Barley Costs per Acre, NDND Farm Management
Education Program, excluding RRVExcluding
Disaster Direct Gov Pay Return on Labor
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Pinto Bean Costs per Acre, NDND Farm Management
Education Program excluding RRVExcluding
Disaster Direct Gov Pay and Return on Labor
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Soybean Costs per Acre, NDND Farm Management
Education Program excluding RRVExcluding
Disaster Direct Gov Pay and Return on Labor
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Corn Costs per Acre, NDND Farm Management
Education Program, excluding RRVExcluding
Disaster Direct Gov Pay Return on Labor
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Selected Crop Expenses/Farm ND Farm Business
Mgmt., Excluding RRV
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Crop Income Expenses per Acre 2001-2004, Region
3 of ND on Cash Rented Land, Includes 11/Acre
of Direct andCounter-Cyclical Payments.
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ND Avg Crop Income/A (1999-2004)ND Farm Business
Mgmt., Excluding RRVExcluding Disaster Direct
Gov Pay Return on Labor
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ND Avg Crop Expense/A (1999-2004)ND Farm
Business Mgmt., Excluding RRV Excluding Disaster
Direct Gov Pay Return on Labor
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ND Avg Net Crop Income/A (1999-2003)ND Farm
Business Mgmt., Excluding RRVExcluding Disaster
Direct Gov Pay Return on Labor
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Livestock Costs and Production Numbers
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Beef production is a very important part of our
states livestock industry.
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Beef Cow-Calf Profitability

• What does it really cost to operate a beef
  cow-calf unit? Per Cow? Per cwt.?
• What differences are there between high profit
  and low profit beef cow-calf herds?
• How can a producer project profitability based on
  given costs and levels of production?

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The following livestock data is from the
Carrington Area Farm Business Management Program.
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Number of Cows per Herd, Carrington
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Culling Percentage
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Calving Percentage
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Calf Death Loss Percentage
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Weaning Percentage
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Weaning Weights per Calf
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Pounds Produced per Cow
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Weaning Weights vs. Pounds Weaned per Exposed
Female
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Total Feed Costs/Cow
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Veterinary Supplies/Cow
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Total Direct Costs/Cow
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Overhead Cost Breakdown/Cow
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Direct Overhead Costs/Cow
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Net Inventory Change

• The change in real dollars of value in the beef
  herd due to such things as lesser cull sale
  values, uninsured death loss and other items.
• Usually measured per head or per cwt. of
  production.

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Net Inventory Change/Cow
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Direct, Overhead Net Inventory Change Costs/Cow
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Direct, Overhead Net Inventory Change Costs/Cwt.
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Gross Income Expenses(Direct Overhead) per
Cow
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Gross Income Expenses per Cwt. without
Inventory Change
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Gross Income with Net Inventory Change Other
Expenses/Cow
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Gross Income, Inventory Change Other
Expenses/Cwt. of Prodn.
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Net Return per Cow, Carrington Area
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Net Return per Cwt.
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Operator Labor Management Charge per Cow
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Net Return per Cow with Operator Labor Charge
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Net Return per Beef Cow in Region 3 of North
Dakota.

• Beef Cow/Calf
• 1994 47.67
• 1995 -40.46
• 1996 -50.16
• 1997 20.21
• 1998 8.52
• 1999 92.51
• 2000 114.80
• 2001 101.03
• 2002 62.82
• 2003 117.38
• 2004 187.63

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High Profit or Low Profit HerdsWhat difference
is there in profitability?
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Comparing High and Low Profit Beef Cow Herds in
Region 3 of East-Central, ND

• Herd data from 1995-1999
• 57 to 81 herds per year, total of 326
• 6,030 to 8,578 cows per year
• Total of 35,252 cows in the five years.
• 20 High Profit Group, 6,384 head.
• 20 Low Profit Group, 6,556 head.

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Weaning Wts. And Pounds Weaned per Exposed Female
Based on Profitability Levels, Region 3, ND
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Value Produced and Costs (without Inventory
Change) Based on Profitability Levels
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Inventory Change Based on Profitability Levels
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Net Return per Cow Based on Profitability Levels,
1995-1999
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Comparison of High Profit to Low Profit Herds,
1995-1999

• Decrease in total expenses
  50.89
• Decrease in Net Inventory Chg. 62.60
• Increase in value of production 60.13
• Total annual average economic
• advantage per cow in the high
• profit herds over the low profit.
  173.62

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Goals for High Profit Beef Cow-Calf Producers

• Pregnancy rate of 99
• Culling rate of 12-14
• Calving rate of 97 to 98
• Weaning rate of 94
• Calf death loss of less than 5
• Average Weaning Weight 580 600 lbs. minimum
• Pounds Weaned per Exposed 550 lbs. minimum
• Direct and Overhead costs 305-325 maximum
• Feed cost of 200 to 220 per cow.
• Net Inventory Change of -40 or less.

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Beef Backgrounding, Net Return per Head, Region
3, South Central N.D.

• Per Calf
• 1994 39.35
• 1995 21.43
• 1996 .56
• 1997 26.71
• 1998 26.62
• 1999 34.56
• 2000 16.23
• 2001 15.52
• 2002 17.37
• 2003 -4.35
• 2004 4.29

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Considerations for adding crop or livestock
enterprises to an existing unit.

• Will the addition enhance the farm or ranch
  profitability?
• What unused or under-used resources might be
  available to a new enterprise?
• What new resources might make the additional
  enterprises functional and economical?
• Will the integration of a new enterprise make the
  farm or ranch unit more sustainable?

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The presenter would like to acknowledge the
efforts of the other North Dakota FBM
Coordinators and Instructors, as well as Andy
Swenson, Extension Ag. Economist at NDSU, for
their work in putting together some of these
materials and slides.
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For additional information

• www.ndfarmmanagement.com
• www.finbin.umn.edu

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An Educational Program of the North Dakota
Department of Career and Technical Education
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Thank you.