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Meat Goat Economic$. GEOFF BENSON, PhD Extension Economist Dept. of Ag. & Resource Economics N.C. State University August, 2009. Outline. Why do you want to have goats? Who will buy your goats or goat meat? How will you produce your goats or goat meat? - PowerPoint PPT Presentation

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  • Meat Goat Economic$GEOFF BENSON, PhD Extension EconomistDept. of Ag. & Resource Economics N.C. State University

    August, 2009

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*OutlineWhy do you want to have goats?Who will buy your goats or goat meat?How will you produce your goats or goat meat?Are goats a good fit for your farm and family?Will it be profitable? -- Running the numbers

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*WHAT IS SUCCESS?WHEN THE MOST IMPORTANT FAMILY AND BUSINESS GOALS ARE BEING METHow will meat goats contribute to your definition of success?

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*1. Why Have Goats?ORFUN OR MONEY?

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Why Have Goats?Are Goats a Good Fit With:Your Personal GoalsYour Business GoalsGoals of other family members

    GEOFF BENSON, ARE-NCSU

  • Why Have Goats?How much money do you want to make from selling live goats or goat meat?How much time and money are you willing to invest?Write it down!Your answer helps determine the size and type of enterpriseGEOFF BENSON, ARE, NCSU*

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Income PotentialThere is little published information from actual meat goat operations To base planning decisions on To use as benchmarks for evaluating farm performanceSeveral Universities have developed goat enterprise budgets

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Meat Goat Enterprise Budgets, $ per Doe per yearaNet = Returns to Land, Management, Risk, & Farm Overhead

    DoesRev.CostNetaS. Carolina 180%Head50$91$116$-25Ohio:1.5 X 130% kid25123132-9Ohio:1.5 X 170% kid2516513530Ohio:1.5 X 210% kid2520713869Kentucky-Low Int.--77752Kentucky-Med Int.--9598-3Kentucky-High Int.--111124-13

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Why the differences?Based on different production systemsDifferences in animal performanceDifferences in the cost categories includedThere is no standard budget methodology user beware!

    GEOFF BENSON, ARE-NCSU

  • Farm Financial Performance Varies from Farm to FarmNet Returns over Total Expense, Minnesota FINBIN dataCow-Calf, per cow, 2008: Top 20% = +$46, Bottom 20% = -$688Stockers, per head, 2007: Top 20% = +$65, Bottom 20% = -$223Dairy Net Farm Income per cow, Cornell University, 2007 Top 10% = $1,985, Bottom 10% = $67

    GEOFF BENSON, ARE, NCSU*

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Size & IncomeLarger farm operations may be truly profitableSmaller operations canDepend on non-farm income either from choice of lifestyle or financial necessityGet bigger More of the sameDevelop value added activitiesAll sizes -- Manage for profitability if net income is the primary motivation, especially cost control

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Economies of SizeIf you double the size of your goat herd It doesnt take twice as much time to feed or move goats from one field to the next, time and expense to take your goats to market, fencing, equipment, facilities, etc. You spread your fixed costs & overheadYou might get volume discounts on purchasesBut there can be diseconomies too, especially in marketing your product(s)Prediction Meat goats will become more like other commercial farm enterprises

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Value-added?Sell meat or meat products instead of the live goatWholesaleRestaurantsDirect to consumerFarmers MarketsOn-farm salesEvent CateringCSAs, etc.

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Value-addedThere are also Added Costs!ProcessingWrapping, packaging, labelingStorageSales and distribution costsRecord keeping, office, etc.Cost of complying with regulationsMore of your time or cost of extra hired helpAn opportunity, not a magic bullet!Run the numbers!

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Other Financial BenefitsTax advantages for farmersPreferential sales tax ratesAgricultural Use property tax ratesFarm income tax rulesAll farming tax advantages have qualification requirementsDo you qualify as a farm/farmer (acreage, gross income)?Are you farming for profit?Do you materially participate?

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*2. Lots of Market OpportunitiesPeople: NC = 9.2 million, VA = 7.8 mil.Personal Income: NC = $318 bil., VA = $333 bil. Consumer trends: Buy less on price, more on convenience Care how food is produced no GMOs, no added hormones, no antibiotics, organic, natural,Value special characteristics locally produced, sold direct, fresh, type or variety, heritage/nostalgia, etc.Demographic trends: Changing racial & ethnic mix, population growth, aging, more two-wage earner families, single head of households, etc.

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*Who Are Your Customers?

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*Know Your CustomersWhen planning a new enterprise:Helps you identify opportunities and challenges more clearlyHelps you develop your product & a marketing strategy to sell your product to the consumerHelps you develop a farm production planFor an existing business: Helps you see new opportunities, see if your operation is meeting, exceeding or falling short of your customers expectations, helps you fine tune your marketing efforts

    GEOFF BENSON, ARE-NCSU

  • Know Your CustomersLive SalesWhere will you sell your animals?What kind of animals does this market want? What premiums are available for certain characteristics frame size, weight, fleshiness, breed, sex, kosher or halal, number of head, etc.When does the market want them is there a seasonal pattern to prices? Are their ethnic holiday opportunities?G. A. BENSON, ARE-NCSU*

    GEOFF BENSON, ARE-NCSU

  • Selling Meat Who are Your CustomersFour Characteristics:They want or need your type of productThey have the ability to buy what you are sellingThey have decision making power over purchasesThey have ready access to your product or service

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*Selling meat Some Key Questions1. What type of person will buy my product?Race or ethnicityAttitudes towards food, health, production methods and animal welfareIncomeAgeMarital StatusEducation

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*Selling meat Some Key Questions2. What are their buying habits?Who makes the purchasing decisions?Where do they make their purchases?How often do they buy?How much do they buy?What form of product do they preferlive, meat package size, type?3. How much can or will they pay?

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*How many potential customers are there in my market area?

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*More Marketing Questions5. Who is my competition?Operations selling the same productSellers with a similar product in a different market channelSellers of a competing product that is a substitute6. How will I compete?PriceProduct ServiceQuantity X Price = Your revenue

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*Competitor AnalysisIf you dont have a competitive advantage, dont compete

    Jack Welch Former CEO of General Electric

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*3. How will you produce goats, meat?RevenueType and number of animalsSale weight and formTime(s) of yearOperating expensesFeed forages and supplementsHealth careLaborProcessing &/or MarketingOther utilities, repairs, services

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*How will you produce goats, meat?What will you invest?Animals does, bucks, kidsBuildings and facilities feeding, shelter & handling, storageFencing, water, lanesCash flow is it feasible?Operating income and expensesNew investments and asset salesBorrowing and debt repaymentNon-farm income and family living needsNew operations -- Make quarterly estimates through the start-up phase

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*Fitting the pieces togetherCustomers & MarketsResourcesMarketing, Distribution$ $ $Production

    GEOFF BENSON, ARE-NCSU

  • GEOFF BENSON, ARE, NCSU*Planning for SuccessSuck it and seeThis can work if the business venture is small in scope and the cost of failure is not significantif not, then more effort is requiredExperience is the name everyone gives to their mistakes -- Oscar Wilde

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Planning for Success=If you cant make a profit with a pencil, you cant make a profit with a plowAnonymous

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Revenue Sources & AmountsKids sold live and/or as meatKids sold for breedingCull does & bucksDoes & bucks sold as breeding stockValue of inventory changes, +/-Calculate revenue per doe based on number of does exposed to the buck

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*Goat Enterprise ExpensesOperating or Variable Costs (Vary with scale of production)Feed Costs -- Pasture & hay, Supplements -- (Number of head X days fed X lb./day X cost/lb.)Health care -- (No of head X no. of treatments X cost per treatment)Hired labor -- (hours per day X 365)Processing &/or Marketing -- (time, travel, advertizing, etc.)Other utilities, repairs, office, professional services

    GEOFF BENSON, ARE-NCSU

  • G. A. BENSON, ARE-NCSU*More ExpensesFixed or ownership costs annual charges to recoup your investments in your goat enterprise, including buildings, equipment, facilities, fencing, pasture improvements, and br

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