Transcript No Slide Title

Beef Production in the New
Economic Environment
GEOFF BENSON, PhD
Extension Economist
Dept of Agricultural and Resource
Economics
North Carolina State University
Outline
 Situation and Outlook
Beef Production
Sales
Prices
 Forecasting prices
 Cost of production
 Weathering the Storm
GEOFF BENSON, ARE, NCSU
2
Beef Production, 2001-09F
Source: USDA, WASDE reports
GEOFF BENSON, ARE, NCSU
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Meat Production, 2001-09F
Source: USDA, WASDE reports
GEOFF BENSON, ARE, NCSU
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Consumer Demand
 At Home
 Muscle Meats
 Processed Meats
 Prepared Foods
 Meals Eaten Out
GEOFF BENSON, ARE, NCSU
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Meat Demand Outlook
 Economic Outlook for 2009
 Income: GNP down 2.0% from 2008
 Inflation: 1.2%, down from 2008 (~ 3.8%)
 Unemployment: 8.4% up from 5.8% in 2008
 Population growth: Up ~ 0.9%
 Other -- demographics, diet fads, etc.
 Meat demand down ~ 1.1 lb./person
 Beef down 0.6 lb. per person
 Chicken down 1.1 lb. per person
 Pork up 0.7 lb. per person
GEOFF BENSON, ARE, NCSU
6
PER CAPITA MEAT CONSUMPTION, 1980-2009F
.
90
80
Lb./Person
70
60
50
40
30
BEEF
PORK
BROILER
20
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
GEOFF BENSON, ARE, NCSU
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Prices, 2001-09F
Source: USDA, WASDE reports
GEOFF BENSON, ARE, NCSU
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2009 Price Outlook
 The futures market gives the best
indication of what prices are likely to do
because participants are putting their
money where their mouths are
 BUT, prices do move based on new
information, both expected and
unexpected
 AND an individual producers cattle may
not match the contract specifications, so
projecting prices takes some extra effort
GEOFF BENSON, ARE, NCSU
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Fat Cattle Futures, $/100 lb, 3/6/09
GEOFF BENSON, ARE, NCSU
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Feeder Cattle Futures, $/100 lb, 3/6/09
GEOFF BENSON, ARE, NCSU
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What does all this for me?
 Cow-calf:
Value of your cattle – their
particular characteristics
Time of year of sale
Cost of production
 Stockers:
Buying price and selling price
Cost of gain
GEOFF BENSON, ARE, NCSU
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Feeder Cattle Futures, $/100 lb, 3/6/09
GEOFF BENSON, ARE, NCSU
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Price Forecasting
 Nearby Futures Contract Price for sale
month
 “Basis” = futures price – local cash
market price for similar product
 Use premiums & discounts to estimate
the value of your cattle
 Weight
 Sex
 Frame size
 Muscling
 Breed or cross
 Other, e.g., market channel
GEOFF BENSON, ARE, NCSU
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Price Forecasting
 The most useful comparison for a cow-
calf producer is the NC cash (spot)
price and the feeder cattle futures price
for the closest month past the intended
sale month
 But
 CME feeder cattle futures contract is for
650-849 lb. M&L 1&2 steers in truckload
lots
 NC Auction Prices are for 600 to 799 lb.
M&L1&2 steers
 Contract months are Jan, Mar, Apr, May,
Aug, Sept, Oct, & Nov.
GEOFF BENSON, ARE, NCSU
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“BASIS”
 Basis is the difference between the spot
cattle price in North Carolina and the
price for comparable cattle in the futures
market
 If basis is predictable, then we can use
the futures market to project local North
Carolina prices and use this to make
business decisions
 Some historic basis data are available at
http://www.ncsu.edu/project/arepublication/AREno32.pdf
GEOFF BENSON, ARE, NCSU
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NC Basis, Avg. 1990-2000
J
F
M
A
M
J
J
A
S
O
N
D
0
-2
$ per cwt.
-4
-6
-8
-10
Asheville
Siler City
Smithfield
-12
-14
GEOFF BENSON, ARE, NCSU
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NC Basis, 1990-2000
 Negative
 Seasonal: Smaller in spring,
larger negative differences in
the fall
 Varied by market, west to east
 Updated information is not
available
GEOFF BENSON, ARE, NCSU
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Price Forecasting
 Futures Contract Price for sale month
 “Basis” = futures price – local cash market price for
similar product
 Use premiums & discounts to estimate the
value of your cattle







Weight
Sex
Frame
Muscle
Breed
Time of year/seasonality
Other, e.g., market channel
GEOFF BENSON, ARE, NCSU
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Graded Sales, M1 Steers,
1991-2001
W e ig h t,
lb .
F a ll C a lf
S p rin g
S to c k e r
4 0 0 -4 9 9
+ 4 .5 ¢
+ 3¢
5 0 0 -5 9 9
B ase
B ase
6 0 0 -6 9 9
- 3¢
- 11¢
7 0 0 -7 9 9
- 7¢
- 19¢
.
GEOFF BENSON, ARE, NCSU
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Graded Sales, M1 Steers,
1991-2001
.
Weight,
lb.
400-499
Fall Calf
Fall Calf
+ 4.5¢
+ 11.5¢
500-599
Base
+ 7¢
600-699
- 3¢
+ 4¢
700-799
- 7¢
Base
Price relationships using different bases.
7-weight base is appropriate for comparing
your cattle to the futures price.
GEOFF BENSON, ARE, NCSU
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Graded Sales, M1 Heifers v.
Steers, 1990-2001
W e ig h t, lb .
F a ll
S p r in g
4 0 0 -4 9 9
-1 2 ¢
-1 5 ¢
5 0 0 -5 9 9
-8 .5 ¢
-1 4 ¢
6 0 0 -6 9 9
-8 ¢
-1 2 ¢
7 0 0 -7 9 9
-6 .5 ¢
-6 ¢
GEOFF BENSON, ARE, NCSU
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Graded Sales, 500-599 lb.
Steers, 1990-2001
G ra d e
F a ll
S p rin g
M1
B ase
B ase
S1
-1 1 ¢
-1 6 .5 ¢
-6 ¢
-9 .5 ¢
LM S2
GEOFF BENSON, ARE, NCSU
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Selected Breeds










Angus
Braford
Brahman
Brangus
Braunveih
Charolais
Chianina
Devon
Galloway
Gelbveih
Hereford
Holstein (dairy)
Jersey (dairy)
Limousin
Longhorn
Maine Anjou
Nellore
Piedmontese
Pinzgaur
Polled Hereford









Red Poll
Sahiwal
Salers
Santa Gertrudis
Shorthorn (dual)
Simmental
South Devon
Tarentais
Zebu
+ Crosses &
Composites
GEOFF BENSON, ARE, NCSU
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Graded Sales, 500-599 lb. M1
Steers, 1991-2001
B re e d
F a ll
S p r in g
B la c k
Base
Base
B&W
+ 0 .5 ¢
+ 0 .5 ¢
E x o tic X
- 6¢
- 6¢
H e r e fo r d
- 10¢
- 3¢
S tr . C o n t.
- 12¢
- 14¢
GEOFF BENSON, ARE, NCSU
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Marketing Options
 Regular auction = Base
 Graded sale
 Special programs, e.g., Southeast
Pride, pre-conditioned sales
 Direct sale
 Truckload lots
 Retained ownership
GEOFF BENSON, ARE, NCSU
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Marketing Options
 Choices are affected by
Number of cattle for sale
Uniformity of cattle
 Market premiums vary with method
of sale
 Marketing cost varies with method
of sale
 Consider risk
GEOFF BENSON, ARE, NCSU
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Price Outlook
 Use futures price, basis, and
information on premiums and
discounts to estimate local
prices as part of your production
and marketing decisions
 But what about cost of
production…
GEOFF BENSON, ARE, NCSU
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.
Source: USDA, “World Agricultural Supply & Demand Situation
GEOFF BENSON, ARE, NCSU
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Prices Paid Index for Selected Inputs
USDA Index
1990-92 = 100
Jan
2006
Jan
2007
Jan
2008
Jan
2009
%
(06/07)
to ‘09
Nitrogen fert.
236
202
283
380
+ 74%
P & K fert.
168
149
257
353
+ 126%
Diesel fuel
236
241
332
232
- 3%
Field Crop
Seeds
177
191
218
287
+ 56%
Source: Agricultural Prices, NASS, USDA, January 2009
GEOFF BENSON, ARE, NCSU
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Forage Production Costs, NCSU
Enterprise Budgets, $/ton of DM
Crop
2006
2008
Perennial cool season pasture
60
86
Per. grass - clover pasture
45
64
Cool season grass hay, Lge Rnd Bale
124
164
Warm season perennial pasture
63
90
Warm season per. hay, Lge Rnd Bale
90
124
Summer annual
66
101
Winter annual
60
110
Corn silage
67
101
Small grain silage
101
137
GEOFF BENSON, ARE, NCSU
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Beef Production Costs, NCSU Enterprise
Budgets, 2008, $/head sold
Enterprise
2006
2008
Cow-calf (88% calf crop)
858
1,136
Back-grounding on winter
annual pasture*
794
967
Summer grazing on spray
field pasture @ $0 fertilizer*
769
921
Finishing on grain*
1,152
1,432
Finishing on pasture*
1,007
1,168
* Includes cost of cattle
GEOFF BENSON, ARE, NCSU
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Outlook Summary
 Outlook for US production, sales and
prices is poor:
 Production @ 26,110 mil. lb. 
 Consumption @ 61.6 lb. per person 
 Fed cattle prices @ $89.00/cwt. =
 Feeder cattle prices at $102.00/cwt 
 Feeder calf prices next fall are expected
to be similar to 2008 and still good
relative to historic prices
 Higher cost of production
 Stocker profits depend heavily on
anticipating price movements correctly or
hedging
GEOFF BENSON, ARE, NCSU
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Where are Costs & Profits Headed?
 Forage Production
 Continued higher fertilizer prices and tight supplies
 Temporary relief then higher fuel prices
 Longer term, general cost increases resulting from
higher energy costs
 Cattle
 Higher forage costs
 Continued higher purchased feed prices
 Longer term, general cost increases resulting from
higher energy costs
 Little change in cattle prices in 2009
 Losses for many producers in 2009
GEOFF BENSON, ARE, NCSU
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Economics works!
 When production costs increase
 Producers’ profits shrink
 Producers respond by buying and using
less and/or looking for alternatives
 If adjustments in production practices fail
to return the business to profitability
producers cut back and some quit entirely
 Reduced supplies tighten up the market
and prices increase to the point where
producers can make adequate returns
 A new market balance is achieved
GEOFF BENSON, ARE, NCSU
35
Economics works!
 When demand falls
Markets are oversupplied, prices fall
Buyers respond to lower prices by
buying more and by switching away
from substitutes or alternatives, which
lowers their prices too
Producers respond to lower prices by
producing less, which helps moderate
the price reductions long term
A new market balance is achieved
GEOFF BENSON, ARE, NCSU
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US BEEF PRODUCTION AND FED CATTLE
PRICES, 1975-2009F
35,000
$100
$90
PRODUCTION, MIL. LB.
$80
$70
25,000
$60
20,000
$50
$40
15,000
$30
PRODUCTION
$20
10,000
PRICE
FED CATTLE PRICE, $/CWT.
30,000
$10
5,000
$0
1975 1979 1983 1987 1991 1995 1999 2003 2007
GEOFF BENSON, ARE, NCSU
37
US BEEF PRODUCTION AND FED CATTLE
PRICES, 1975-2009F
35,000
$100
$90
PRODUCTION, MIL. LB.
$80
$70
25,000
$60
20,000
$50
$40
15,000
10,000
PRODUCTION
$30
PRICE
$20
PRICE TREND
$10
5,000
FED CATTLE PRICE, $/CWT.
30,000
$0
1975 1979 1983 1987 1991 1995 1999 2003 2007
GEOFF BENSON, ARE, NCSU
38
35,000
$120
30,000
$100
25,000
$80
20,000
$60
15,000
$40
PRODUCTION
10,000
PRICE
$20
FEEDER CATTLE PRICE, $/CWT.
PRODUCTION, MIL. LB.
US BEEF PRODUCTION AND FEEDER
CATTLE PRICES, 1975-2009F
PRICE TREND
5,000
$0
1975 1979 1983 1987 1991 1995 1999 2003 2007
GEOFF BENSON, ARE, NCSU
39
Cattle Cycles
 Low prices force liquidation of breeding
stock, adding to beef supplies and reducing
prices further
 Reduced production leads to higher prices
encouraging heifer retention for breeding,
reducing beef supplies and raising prices
further
 Lags causing the 10 to 12 year cycle
 Decision making
 15 months to raise a heifer to breeding age
 Breeding seasonality & 9-month gestation
 14-18 month birth to slaughter
GEOFF BENSON, ARE, NCSU
40
Beef Product & $$ Flows
$ CONSUMER $
RETAILER
PROCESSOR
WHOLESALER
PACKER
FINISHING
COW-CALF
STOCKER
GEOFF BENSON, ARE, NCSU
41
The Big Picture Message
 In the near term, the US meats sector – poultry, pork




and beef – must shrink so meat prices can increase.
“Shrink” = fewer livestock marketed and, probably,
fewer producers
The cow-calf producer takes more of a hit in a
downturn and gets more of the gravy on the upswing
An unanswered question is how the new cost
structure affects regional competitiveness
Eventually, prices must adjust to higher costs of
production so that enough producers can make an
acceptable profit to stay in business
There is wide variation in financial performance
among farms
GEOFF BENSON, ARE, NCSU
42
Cow-calf returns over operating expense, US & regions, 2006-7
+$62
+$153
-$169
N/A
-$111
+$55
-$70 N/A
+$1
US avg. net income over operating expense/cow for 2006-7 =
-$/10/cwt. Regional differences from US average are shown
GEOFF BENSON, ARE, NCSU
43
MN Cow-calf Cost & Returns, 2007
Low
Profit
Avg.
Profit
High
Profit
Revenue
$394
$524
$710
Operating cost
$481
$437
$376
Margin over op. cost
-$87
$87
$334
Fixed & O/H cost
$149
$115
$79
Labor & Mgt charge
$83
$84
$102
Total cost
$713
$836
$556
Net Return
-$319
-$112
$154
Source: MN Farm Business Management database
GEOFF BENSON, ARE, NCSU
44
MN Stocker Cost & Returns, 2007
Low
Profit
Avg.
Profit
High
Profit
Revenue, net
$110
$207
$252
Operating cost
$200
$179
$149
Margin over op. cost
-$90
$28
$103
Fixed & O/H cost
$59
$25
$21
Labor & Mgt charge
$75
$19
$16
Total cost
$333
$223
$187
Net Return
-$223
-$16
$65
Source: MN Farm Business Management database
GEOFF BENSON, ARE, NCSU
45
Two Issues NC Producers Face
 All producers are not
alike & affect longer
term financial
prospects for each
individual producer –
i.e., competitiveness
 Can you survive?
 If so, do you want to?
 Short term survival
strategies
GEOFF BENSON, ARE, NCSU
46
1. Long term: Why do you have Cattle?
OR
FUN
OR
MONEY?
GEOFF BENSON, ARE, NCSU
47
Do you know your production cost?
 Operating cost - out of pocket
expenses, e.g. forage production,
other feed, vet, fuel, repairs
 Fixed/Ownership/Investment costs
Depreciation
Interest
Taxes & insurance
 Labor cost or charge for the value
of your time
GEOFF BENSON, ARE, NCSU
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Are You Financially Healthy?
 Farm is profitable most years by return on
investment & to management
 Producer has cash flow to meet operating
expenses, debt service, family living needs in
a timely manner
 Business is solvent – has low debt load and
high equity as collateral for loans and as a
reserve
Financial performance cannot be predicted
from farm performance
There are relatively few practices that can be
recommended in all situations
GEOFF BENSON, ARE, NCSU
49
2. Short-term:
Coping with Higher Costs
 Forage production costs
 Fertilization
 Choice of forage crop
 Renovation
 Forage utilization costs
 Pasture management
 Stored forages
 Risk (drought) management
 Cattle options
GEOFF BENSON, ARE, NCSU
50
Fertilization
 Fertilizer cost
Shop around and price nutrients by the lb.
Consider alternative sources, e.g., broiler
litter
Substitute legumes for bought N
“Mine” P and pH -- if the farm has a future
Rent more pasture
 Change the forage mix – type of
pasture, grazing v. stored forages
 Cut waste and losses
GEOFF BENSON, ARE, NCSU
51
Pasture Fertilization
 Five Issues related to Nitrogen
Production response to nitrogen
and soil fertility status
Cost of additional production
Cost to graze an animal
Effect on carrying capacity
Effect on profitability
GEOFF BENSON, ARE, NCSU
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Nitrogen Response in Tall Fescue
Source: Mueller & Green, NCAES, AG 338
GEOFF BENSON, ARE, NCSU
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Nitrogen Response, lb. DM/per acre
 Fescue: From Mueller & Green
N applied, Production, AveInclb/acre
lb of DM/ac erage rease
0
1,500-2,100 1,800
--
100
4,200-5,450 4,825
3,025
150
6,000-8,100 7,050
2,225
GEOFF BENSON, ARE, NCSU
54
Soil Fertility
 Response to N depends on soil
type, pH and availability of other
nutrients such as P and K
 Lime and other nutrients are needed
to maintain fertility now and long
term – affects cost of the fertilization
program
 Example: Lime, P, K, etc. needed at
a cost of $60 per acre, applied + N at
$.50, $.75 and $.90 per lb of N
GEOFF BENSON, ARE, NCSU
55
Average Cost per lb of DM
 Fescue yields from Mueller & Green
 Average response ~ 30 lb DM/1 lb. N
 +/- $60/acre of lime, P, K, etc.
Cost:
0 lb. N 100 lb N 150 lb N
$/lb of N no P,K + P, K
+ P, K
$0.50
0
2.3¢
1.9¢
$0.75
0
2.8¢
2.4¢
$0.90
0
3.1¢
2.8¢
GEOFF BENSON, ARE, NCSU
56
Average Cost/Cow, N + $60/acre
 If cow needs 30 lb DM per day
 180 days of grazing/acre (no hay)
 Grazing loss = 50% of production
N Cost
0 Fert.
100 lb N 150 lb N
$0.50/lb
$0
$246
$207
$0.75/lb
$0
$302
$264
$0.90/lb
$0
$336
$299
GEOFF BENSON, ARE, NCSU
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Carrying Capacity, Fescue e.g.
 Cow needs 30 lb DM per day X 180 days of
grazing/acre (no hay) with grazing loss of
50% = 10,800 lb DM production/cow
0 Fert. 100 lb N 150 lb N
DM prod/ac
1,800
4,825
7,050
Acres/cow
6.0
2.2
1.5
Cows per
100 acres
17
45
65
GEOFF BENSON, ARE, NCSU
58
Fertilization strategy
 Soil Test! Apply only what is needed
to maintain soil fertility – pH, P, K,
etc.
 Fertilizer cost affects grazing cost
per cow – no or low N may not be the
most profitable strategy
Pasture response to N levels
affects pasture carrying capacity 
joint decision about fertilization and
number of cattle on the farm
GEOFF BENSON, ARE, NCSU
59
Forage Production Costs, NCSU
Enterprise Budgets, $/ton of DM
Crop
2008
Perennial cool season pasture
86
Perennial grass - clover pasture
64
Cool season grass hay, Lge Round Bale
164
Warm season perennial for grazing
90
Warm season perennial hay, LR Bale
124
Summer annual
101
Winter annual
110
Corn silage
101
Small grain silage
137
GEOFF BENSON, ARE, NCSU
60
Losses: Grazing Management
 Use controlled grazing to reduce waste
 Loss ~ 25% with strip or rotational grazing
 Loss ~ 50% if cattle are grazed for, say, three
weeks in the same pasture
 Controlled Grazing Example
 10 acres at 2 tons DM/acre
 Permanent fencing & water exist
 It costs $15 per move X 12 moves = $180
 Cattle eat 15 tons v. 10 tons if set stocked
 Cost of saved feed = $180/5 tons = $36/ton DM
 Add any cost of transporting cattle, etc.
GEOFF BENSON, ARE, NCSU
61
Grazing Management Cost
 New investment in fencing, water,
etc. is a major cost – full economic
cost can be up to $200 per acre for a
rotational grazing set up
 Time & equipment to move livestock
Example:
¾ Ton Pick-up @ $19.81 /hour
Labor
@ $ 9.40 /hour
Total =
$29.21 /hour
(4-wheeler cost is less than $10/hour)
GEOFF BENSON, ARE, NCSU
62
Hay Making Cost, DM basis
 Small square bales -- $89/ton of DM ($76 as made)
 Large round bales -- $78/ton of DM ($66 as made)
 Add cost of growing the hay crop to this
Hay costs $164/ton of DM for LRB ($139 as made)
Add to this the risk of rain & losses in storage
and feeding plus feeding costs
 What are your hay costs?
 What are your alternatives -- Can you buy it
cheaper? Can you change your crop
management to reduce hay needs, e.g., by
changing fertilization, stockpiling?
GEOFF BENSON, ARE, NCSU
63
Bale Feeding Costs
2008 Tractor, 55 HP, +
spear

Annual ownership cost
$ 4.41/hr

Operating cost
$ 11.95/hr

Total Machine cost
$ 16.36/hr

+ Labor
$ 9.40/hr

Total cost
$ 25.76/hr
GEOFF BENSON, ARE, NCSU
64
Losses Add to Feed Costs

Harvest losses – range from 5% to 50%
of harvestable production

Storage losses – 5% to 20% of feed made

Feeding losses – 5 to 15% of feed
available

Combined losses – 15 to 50%
Evaluate cost effective ways of trimming
losses
Source: Sustainable Dairy Systems Manual, UT & UK
GEOFF BENSON, ARE, NCSU
65
What is Your Total Ration Cost?
 Yields & quality vary for different forages --
Figure the nutritional needs of the animal to
achieve desired performance
 Figure total ration cost when comparing
alternative forages including:
 Supplementary feeds, minerals, etc.
 Storage and feeding losses
 The cost of putting out feed(s)
 If different rations produce different levels of
in animal performance, figure both income
and cost, e.g., income over feed cost
GEOFF BENSON, ARE, NCSU
66
Drought (Risk) Management


Carry a hay reserve (made or bought)
Plan for more acres than needed normally



Diversify



Harvest and store any surplus
Harvest and sell any surplus
Grow more than one type of forage
Spread production geographically
In years when yields are poor


Buy supplementary forages
Buy commodities and by-products to stretch
supplies
All incur cost. Which is least costly with
your farm history?
GEOFF BENSON, ARE, NCSU
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Cattle Options
 Change cattle types, numbers,
management practices
Cow numbers (fewer?), selling fewer
calves taken to heavier weights?
Improving animal performance
Marketing -- prices & premiums related to
sale weight, frame, breed/color, season,
choice of market etc.
For stockers, buying and selling prices
Value-added, e.g., finishing cattle & direct
marketing beef
GEOFF BENSON, ARE, NCSU
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MN Cow-calf Cost & Returns, 2007
Low
Profit
Avg.
Profit
High
Profit
Revenue
$394
$524
$710
Operating cost
$481
$437
$376
Margin over op. cost
-$87
$87
$334
Fixed & O/H cost
$149
$115
$79
Labor & Mgt charge
$83
$84
$102
Total cost
$713
$836
$556
Net Return
-$319
-$112
$154
Source: MN Farm Business Management database
GEOFF BENSON, ARE, NCSU
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Beef Production Costs, NCSU Enterprise
Budgets, 2008, $/head sold
Enterprise
2008
Cow-calf (88% calf crop)
1,136
Back-grounding on winter
annual pasture*
967
Summer grazing on spray field
pasture @ $0 fertilizer*
921
Finishing on grain*
1,432
Finishing on pasture*
1,168
* Includes cost of cattle
GEOFF BENSON, ARE, NCSU
70
Whole Farm Issues
 Financial decisions depend on the
whole farm and family situation
 Other farm enterprises, e.g., cattle on
poultry and hog farms, supplementary
enterprises on crop farms
 Farm overhead costs
 Farm tax benefits


Ag Use valuation for property taxes
Filing taxes as a farmer
 Non-farm income and lifestyle
GEOFF BENSON, ARE, NCSU
71
Summary
 Higher production costs will persist
 Livestock production and prices will adjust
eventually so the remaining producers can
make adequate returns. Who will survive?
 Livestock producers are a diverse group
 Family goals differ
 Type of operation, scale and production
practices differ
 Profitability and financial health varies among
farms
GEOFF BENSON, ARE, NCSU
72
Summary
 Long-term Questions
 Can your operation meet family goals and
needs with increased costs of production?
 Do you have the financial resources to make
it through the adjustment period?
 Making adjustments
 Know your cost of production and profit
(loss) margin
 Identify alternative production systems and
practices
 Evaluate the effects on income and/or costs
GEOFF BENSON, ARE, NCSU
73
Summary

Evaluate forage options

Growing your own forages
 Evaluate
fertilizer sources and unit prices
 Evaluate optimum fertilizer use -- Consider
fertilization and carrying capacity jointly





Soil test and selectively “Mine” P & pH
Include more legumes
Reduce losses-- Substitute time and
management for cost
Change forage mix
Rent pasture
GEOFF BENSON, ARE, NCSU
74
Summary

Estimate impact of forage choices on total
feed cost, including supplements, year round

Evaluate cattle options -- Include the effects
of changes in livestock type, numbers and
performance on income

How does the bottom line change? IS IT
ENOUGH?
There is nothing new in these ideas but the
current economic environment creates added
incentives to re-evaluate livestock enterprise
and adopt proven profitable practices
GEOFF BENSON, ARE, NCSU
75
Summary




No $ilver Bullet$
No $imple an$wer$!!
Sometimes there are no solutions, just
tough decisions
Seek help with the economics if you are
not comfortable doing it
+
=
GEOFF BENSON, ARE, NCSU
76
Geoff Benson
 Phone: (919) 515-5184
 Fax: (919) 515-6268
 E-mail: [email protected]
 Web page:
http://www.ag-econ.ncsu.edu/
faculty/benson/benson.html
 NCSU Enterprise Budgets web site:
http://www.ag-econ.ncsu.edu/
extension/Ag_budgets.html
GEOFF BENSON, ARE, NCSU
77