SMALL GROUP ACTIVITY ON FORAGE ECONOMICS: 3 Options

1. SMALL GROUP ACTIVITY ON FORAGE ECONOMICS:3 Options GEOFF BENSON EXTENSION ECONOMIST DEPT. OF AGRICULTURAL & RESOURCE ECONOMICS NORTH CAROLINA STATE UNIVERSITY

2. 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

3. 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

4. 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

5. Small Group Activity: Farm Scenario • Plan to feed 32 heifers for a 120 day winter feeding period • Heifers need 15 lb. DM/day • The farmer has 20 acres of fescue with 2,000 lb. of dry matter per acre GEOFF BENSON, ARE, NCSU

6. 3 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

7. Instructions • Grazing 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

8. Instructions • Hay 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 hay 4. Total $$, cost/head, cost/day GEOFF BENSON, ARE, NCSU

9. Instructions • Stockpiled fescue will not feed the cattle for the entire period • Buy additional hay at $80 per ton. Quality is similar to stockpiled fescue & own hay GEOFF BENSON, ARE, NCSU

10. Instructions • Select a discussion leader, recorder & reporter • Review the worksheets & other materials • Consult the roving helpers • Report to the whole group using overhead transparency GEOFF BENSON, ARE, NCSU

11. Your Turn GEOFF BENSON, ARE, NCSU

12. GEOFF BENSON, ARE, NCSU

13. Standardized Example • Labor cost of $9.00 per hour • Trip 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

14. Standardized Results GEOFF BENSON, ARE, NCSU

15. Standardized Results GEOFF BENSON, ARE, NCSU

16. Standardized Example • This is only an example! • Many factors affect costs on a specific farm • Time and distance to the cattle • Labor cost or charge per hour • Equipment used GEOFF BENSON, ARE, NCSU

17. Review • Set feeding period and animal performance targets • Identify alternative feeding strategies that can meet goals • Estimate costs of each strategy, +/- income changes GEOFF BENSON, ARE, NCSU

18. Step 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

19. Step 2: Economic Budgeting • Estimate costs of producing and managing pasture & hay: • Cash costs • Fixed (Investment related) costs -- DITI • Labor cost or charge • Other cash & fixed costs GEOFF BENSON, ARE, NCSU

20. Step 2: Budgeting • Estimate any differences in revenue or value of production if animal performance changes under the alternative feeding programs GEOFF BENSON, ARE, NCSU

21. Management factors 1. 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

22. Management factors 2. 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

23. Management 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

24. Hay feeding costs Added Costs: • Storage losses and costs of protecting hay against loss • Feeding losses • Handling costs, including time and equipment • Pasture damage GEOFF BENSON, ARE, NCSU

25. Losses affect true cost • For alternative systems • Harvest 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

26. Results • 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

27. Which system is best? • Depends on farm and family situation • Farm & financial resources • Lifestyle goals • Economics is important to making wise decisions but may not be the only criterion GEOFF BENSON, ARE, NCSU

28. Geoff 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 GEOFF BENSON, ARE, NCSU