Feeder Calf Price: Setting Your Financial Objective for Maximum Profit

1. Setting a Feeder Calf Price Objective Max Runge Extension Economist Auburn University

2. What is your feeder calf price objective?

3. What is your feeder calf price objective?All that I can get!!

4. Is that enough?

5. Is that enough to… • cover cost of production?

6. Is that enough to… • cover cost of production? • allow for growth/expansion?

7. Is that enough to… • cover cost of production? • allow for growth/expansion? • contribute to retirement/savings account?

8. Is that enough to… • cover cost of production? • allow for growth/expansion? • contribute to retirement/savings account? • provide a personal (financial) reward?

9. Is that enough to… • cover cost of production? • allow for growth/expansion? • contribute to retirement/savings account? • provide a personal (financial) reward? • cover other items?

10. Is that enough to… • meet your Goals and Objectives?

11. Your Goals & Objectives • What do you want to accomplish with your cow-calf operation?

12. Feeder Calf Price ObjectiveSee Table 1 • Feeder Calf Production Cost, UCOP • Growth/Investment Capital • Retirement/Savings • Personal Reward

13. Feeder Calf Production Cost • What does it cost me to produce feeder calves?

14. Feeder Calf Production Cost • What does it cost me to produce feeder calves? • Accurate and Detailed Records • Production • Financial • Schedule F Form

15. Feeder Calf Production CostSee Table 2 • Animal Production Information • Exposed Cows (Beginning Inventory) - Head • Total Number of Weaned Calves - Head • Total Weight of Weaned Calves - Pounds

16. Feeder Calf Production CostSee Table 2 • Animal Production Information • Financial Information • Purchased Feed Costs • Raised Feed Costs • Grazing Costs • Cattle Costs • Interest Costs • Indirect Costs

17. Feeder Calf Production CostSee Table 2 • Adjustments to Financial Information • Other Enterprise Expenses • Non-calf revenue • Opportunity Cost on Owned Capital • Unpaid Labor/Management

18. Feeder Calf Production CostSee Table 3 • Example Feeder Calf Production Cost: • $91.67 per cost hundredweight (UCOP)

19. Feeder Calf Price ObjectiveSee Table 3 • Feeder Calf Production Cost (UCOP) $ 91.67 • Growth/Investment Capital $ 10.00 • Retirement/Savings $ 5.00 • Personal Reward $ 5.00 • Feeder Calf Price Objective $111.67 $ / Cwt.

20. Feeder Calf Price Objective • Heifer Price Objective • Steer Price Objective

21. Feeder Calf Price Objective • Heifer Weight Ratio • Total Heifer Weight/Total Feeder Weight • Steer Weight Ratio • Total Steer Weight/Total Feeder Weight • Steer - Heifer Price Difference • Steer Price minus Heifer Price

22. Feeder Calf Price Objective • Heifer Price Objective = • Feeder Calf Price Objective MINUS • Steer-Heifer Price Difference TIMES • Steer Weight Ratio

23. Feeder Calf Price Objective • Steer Price Objective = • Feeder Calf Price Objective PLUS • Steer-Heifer Price Difference TIMES • Heifer Weight Ratio

24. Feeder Calf Price ObjectiveSee Table 3 • Heifer Price Objective = • $111.67/cwt – ($4.00 cwt. X .54) • $109.50/cwt • Steer Price Objective = • $111.67/cwt + ($4.00 cwt. X .46) • $113.50/cwt

25. Some Items That May Skew The Feeder Calf Price Objective Estimate • Accelerated Depreciation • Buying inputs for future time periods • Weaning earlier or later than normal • Adverse weather (droughts, floods, etc.) • Herd health situation • And others…..

26. Feeder Calf Price ObjectiveSummary Developing A Feeder Calf Price Objective Will: • Help you set Goals and Objectives • Help you know your costs and production performance measurements • Help you understand the sensitivity of the feeder calf price objective • Help you improve the profitability of your operation