SMALL GROUP ACTIVITY ON FORAGE ECONOMICS:

3 Options

SMALL GROUP ACTIVITY ON FORAGE ECONOMICS:

3 Options

GEOFF BENSONEXTENSION ECONOMIST

DEPT. OF AGRICULTURAL & RESOURCE ECONOMICS

NORTH CAROLINA STATE UNIVERSITY

GEOFF BENSON, ARE, NCSU

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Small Group Activity:Small Group Activity: It is late summer. A farmer comes

to you for advice about a winter feeding program for a group of heifers

How do you set about answering his question?

GEOFF BENSON, ARE, NCSU

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What To Do?What To Do?

1.Determine the number of animals, feeding period, animal performance targets, available forages and feeds

2.Identify alternative feeding strategies

GEOFF BENSON, ARE, NCSU

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What To Do?What To Do?

3.For each strategy, develop a detailed feeding program that meets animal goals

4.Estimate costs of each strategy and select the most profitable

GEOFF BENSON, ARE, NCSU

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Small Group Activity:Small Group Activity:Farm ScenarioPlan to feed 32 heifers for a 120

day winter feeding periodHeifers need 15 lb. DM/dayThe farmer has 20 acres of fescue

with 2,000 lb. of dry matter per acre

GEOFF BENSON, ARE, NCSU

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3 Alternatives3 Alternatives

1. Stockpile fescue, graze intensively – daily moves

2. Stockpile fescue, graze extensively – move cattle every 14 days

3. Make and feed fescue hay

GEOFF BENSON, ARE, NCSU

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InstructionsInstructionsGrazing Groups:

1. Pasture Budget Worksheet to calculate grazing days & cost

2. Cost of managing the grazing

4. Amount & cost of hay

5. Cost of putting out hay

6. Total $$, cost/head, cost/day

GEOFF BENSON, ARE, NCSU

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InstructionsInstructionsHay Group

1. Budget the amount of own hay available to feed & cost

2. Estimate total hay needs, amount to be bought & cost

3. Cost of putting out hay4. Total $$, cost/head, cost/day

GEOFF BENSON, ARE, NCSU

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InstructionsInstructionsStockpiled fescue will not feed

the cattle for the entire periodBuy additional hay at $80 per ton.

Quality is similar to stockpiled fescue & own hay

GEOFF BENSON, ARE, NCSU

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InstructionsInstructionsSelect a discussion leader,

recorder & reporterReview the worksheets & other

materialsConsult the roving helpersReport to the whole group using

overhead transparency

GEOFF BENSON, ARE, NCSU

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Your TurnYour Turn

GEOFF BENSON, ARE, NCSU

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GEOFF BENSON, ARE, NCSU

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Standardized ExampleStandardized ExampleLabor cost of $9.00 per hourTrip time is 30 minutes to move

cattle on the grazing systems. Truck is used 15 minutes

Trip time to put out hay is 45 minutes

GEOFF BENSON, ARE, NCSU

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Standardized ResultsStandardized ResultsOption Cost 1. Intensively grazed

fescue

$3,374

2. Extensively grazed fescue

$4,039

3. Hay $5,137

GEOFF BENSON, ARE, NCSU

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Standardized ResultsStandardized ResultsOption $/Hd/Day

1. Intensively grazed fescue $0.88

2. Extensively grazed fescue $1.05

3. Hay $1.34

GEOFF BENSON, ARE, NCSU

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Standardized ExampleStandardized ExampleThis is only an example!Many factors affect costs on a

specific farm Time and distance to the cattleLabor cost or charge per hourEquipment used

GEOFF BENSON, ARE, NCSU

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ReviewReviewSet feeding period and animal

performance targets Identify alternative feeding

strategies that can meet goalsEstimate costs of each strategy,

+/- income changes

GEOFF BENSON, ARE, NCSU

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Step 1: Feed BudgetingStep 1: Feed Budgeting

Estimate feed(s) available for the feeding period, with known nutrients, on a dry matter basis

Estimate animal needs, as lb. of dry matter per day & nutrients required

Add supplementary feed needs

GEOFF BENSON, ARE, NCSU

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Step 2: Economic BudgetingStep 2: Economic BudgetingEstimate costs of producing and

managing pasture & hay:Cash costsFixed (Investment related) costs --

DITI Labor cost or charge

Other cash & fixed costs

GEOFF BENSON, ARE, NCSU

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Step 2: BudgetingStep 2: BudgetingEstimate any differences in

revenue or value of production if animal performance changes under the alternative feeding programs

GEOFF BENSON, ARE, NCSU

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Management factorsManagement factors1. Intensively managed stockpiled

fescue: Less waste -- more pasture is

used, grazing period is longer Less hay and hay feeding is

needed Takes more time and management May require more investment in

fencing and watering systems

GEOFF BENSON, ARE, NCSU

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Management factorsManagement factors2. Extensively managed stockpiled

fescue: More pasture is wasted, fewer

days of grazing More hay must be fed Less time is spent moving cattle

but cattle should be checked more often, so real labor savings may not be great

GEOFF BENSON, ARE, NCSU

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Management factorsManagement factors

3. FALL HAY Hay making is expensive--in

investments and time Include risk of bad weather and

resulting losses of yield and quality

GEOFF BENSON, ARE, NCSU

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Hay feeding costsHay feeding costsAdded Costs:Storage losses and costs of

protecting hay against lossFeeding lossesHandling costs, including

time and equipment Pasture damage

GEOFF BENSON, ARE, NCSU

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Losses affect true cost

For alternative systemsHarvest losses range from 5 to 50%

of production

Storage losses -- 5 to 20%

Feeding losses -- 5 to 15%

Combined losses = 15 to 50%

GEOFF BENSON, ARE, NCSU

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ResultsResults Evaluating the economics takes

time and effort, but it is critical for improving the financial performance of a farm or justifying a change in farming practices

In our example, the difference in cost was $1,763 on 32 heifers for 120 days!

GEOFF BENSON, ARE, NCSU

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Which system is best?Which system is best?

Depends on farm and family situationFarm & financial resources

Lifestyle goals

Economics is important to making wise decisions but may not be the only criterion

GEOFF BENSON, ARE, NCSU

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Geoff BensonGeoff Benson Phone: 919.515.5184 Fax: 919.515.6268 E-mail: Geoff_Benson@ncsu.edu Web page:

http://www.ag-econ.ncsu.edu/ faculty/benson/benson.html