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Financial and Performance Benchmarks for the Heifer Operation

Financial and Performance Benchmarks for the Heifer Operation. Normand St-Pierre, Ph.D. Department of Animal Sciences The Ohio State University (614) 292-6507 st-pierre.8@osu.edu. Benchmarks: a PARADOX. Very useful for comparing yourself to your peers.

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Financial and Performance Benchmarks for the Heifer Operation

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  1. Financial and Performance Benchmarks for the Heifer Operation Normand St-Pierre, Ph.D. Department of Animal Sciences The Ohio State University (614) 292-6507 st-pierre.8@osu.edu

  2. Benchmarks: a PARADOX • Very useful for comparing yourself to your peers. • But can just as easily lead you in the wrong direction.

  3. Benchmarks • Empirical • Survey of producers • Who – Representative sample • Data Validation • Definitions

  4. The Chicken and the Egg • Are the benchmarks driving the producers? or Are the producers driving the benchmarks?

  5. Benchmarks • Empirical • Expert-based • Assumptions • Says who? • The chicken and the egg

  6. An Expert Benchmark – The OSU Budget

  7. An Expert Benchmark – The OSU Budget

  8. An Expert Benchmark – The OSU Budget

  9. Questions • What if you feed more corn silage or haylage as opposed to hay?

  10. Questions • Where are the dead heifers?

  11. Questions • What year?

  12. Financial Benchmarks:The Sweet 16 • 16 measures of profitability, solvency, liquidity, repayment capacity and financial efficiency • 3 Solvency ratios: • Debt to Asset ratio • Debt to Equity ratio • Equity to Asset ratio

  13. The Sweet 16 • 3 Solvency ratios: • Debt to Asset ratio (D/A) • Debt to Equity ratio (D/E) • Equity to Asset ratio (E/A) • However, Asset = Debt + Equity • If D/A = 0.40 then • E/A = 0.60 and • D/E = 0.66 • So why use three ratios when one captures 100% of the available information?

  14. Cost of Raising Replacements

  15. Cost of Raising Replacements 110% annual discount rate

  16. Land

  17. Land Price and Feed Costs

  18. Land Price and Feed Costs

  19. Benchmarking Nutrient Costs

  20. Benchmarking Nutrient Costs (ADG = 0.8 kg/d 1.75 lb/d)

  21. Benchmarking Nutrient Costs ME = $0.052/Mcal; RDP = $-0.031/kg; RUP = $0.303/kg

  22. Benchmarking Nutrient Costs

  23. Benchmarking Nutrient Costs400 kg, 880 lbs ME = $0.052/Mcal; RDP = $-0.031/kg; RUP = $0.303/kg

  24. Question the Authority • Who pays for the dead animals? • What is the value of time? • What is the relationship between the different elements of the benchmarks? • Is there a free lunch?

  25. The End

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