AGEC 325, Spring 2007
Lab Exercise #5
Assume you are currently running a 200 head stocker steer operation. You purchase the steers in the spring at 400 lbs., pasture them through the summer, and then sell them in the fall at an average of 670 lbs. each. This is according to the following information:
STOCKER STEERS (200 HEAD)
Returns:670 lb. steer @ $89/ cwt.
Costs:400 lb. steer @ $91/cwt.
Hauling Expense$ 6.50 per steer
Vet Expense$10.00 per steer
Feed, Salt and Minerals$ 9.00 per steer
Miscellaneous Expense$ 3.75 per steer
Interestcharged on all costs for the 6 month period at 9% per year
1.Suppose you are thinking of changing to a beef cow-calf operation consisting of 200 head. The average investment would come to $800 per cow. Each year, the calving rate (after death loss) is expected to be 90%. This means that each year your herd produces 180 calves. Out of these, 150 are sold, and 30 are kept as replacements. The 30 cows you replace (cull) are also sold. Using the following information, with the information above, construct a partial budget to analyze the profitability of switching from the stocker steer operation to the beef cow-calf operation.
Beef COW-CALF (200 HEAD)
Background:Average investment$800 per cow
Calving rate (after death loss)90%
Out of the 180 calves:30 are kept to replace culls and 150 are sold
Culled cows per year30
Revenue450 lb calves @ $88/cwt.
1,100 culls @ $59/cwt.
Costs:Hauling Expense180 head @ $ 7.50 per head
Vet Expense200 cows @ $ 7.00 per cow
Feed and Hay200 cows @ $33.00 per cow
Cost of bulls200 cows @ $ 7.50 per cow
Miscellaneous Expense200 cows @ $ 4.50 per cow
Interest: a. charge on the average investment of 200 cows for 1 year at 9% (the cows are owned all year).
b. also charged on all costs for 6 months at 9% interest per year.
2.On closer examination of other cow-calf operations in your area, you discover you have made some mistakes concerning the background assumptions of your proposed cow-calf operation. You decide to change 3 assumptions: herd size, average investment, and calving rate. Using the corrections below with the information from 1, create a new partial budget and compare it to the old one. Did it make a difference?
THINK!!! What is the easiest and quickest way to create the new partial budget after all the work you did for question 1?
Background:Herd Sizereduced to 100 head
Average investment$850 per cow
Calving rate (after death loss)95%
Out of the 95 calves15 are kept to replace culls and 80 are sold
Cull cows sold per year15
- Save both of your questions.