agricultural economics by pieter taljaard and andré jooste agri benchmark beef conference 2007
TRANSCRIPT
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
ByPieter Taljaard and André Jooste
Agri Benchmark Beef conference Agri Benchmark Beef conference 20072007
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
OutlineOutline
• Introduction and background• Co-workers and countries• Agri-benchmark Methodology• RSA representative data• Results• Conclusions
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Introduction & Introduction & BackgroundBackground• International farm comparison analysis
– Beef finishing (feedlots)– Cow-calf production system
• Collaboration in RSAUP - NAMC –UFS
• NAMC (Membership sponsor)• UFS (Beef)• UP (Cash crops)
– Dairy (MPO)
• Overall objectives – competitiveness and potentials of regions
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Introduction & Introduction & BackgroundBackground
• 2007 Beef conference and pre-conference training– Braunschweig, Germany– New countries: RSA, Australia and India– Beef finishing - 16 countries, 38 farms
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Participating countriesParticipating countries• Western Europe
– Austria– France– Germany– Italy– Ireland– Spain– Sweden– UK
• Eastern Europe– Hungary– Poland
• North America– Canada– USA
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Participating countriesParticipating countries• South America
– Argentina– Brazil
• Asia & Oceania– Australia– China– India
• Africa– South Africa
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Co-workersCo-workers
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Agri-Benchmark (AB) Agri-Benchmark (AB) methodologymethodology
• AB SOP– Select regions and locations– ID prevailing production system– Determine farm size of typical farm(s)– Data collection (2007) and updating
(2008)• Standard questionnaire (pannel of farmers)
– Farm data - Typical or representative figures
• Prices for inputs and outputs
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
RSA representative dataRSA representative data
• 1 Beef finishing (feedlot)– One time standing capacity 25 000
head (i.e. +/- 75 000 head annual through-put)
• 3 Cow-calve farms– Vryburg (250 cows)– Heibron (300 cows)– Howick (200 cows)
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Beef finishingResults - Beef finishing
Share of market returnShare of market return
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AT-2
5FAT
-35
AT-1
20AT
-150
T
DE-2
30DE
-260
DE-2
80DE
-800
DE-5
25T
FR-4
5FR
-70
FR-9
0AFR
-90B
ES-6
30ES
-940
ES-6
790
IT-91
0IT-
2880
T
IE-18
5
UK-3
5UK
-90
UK-9
8
SE-1
40SE
-230
T
PL-1
2PL
-30
CA-9
600
US-7
200
AR-8
00AR
-220
0
BR-1
40BR
-240
BR-3
40BR
-600
CN-3
00CN
-940
AU-2
7K
ZA-7
5K
Other farm enterprises
Dairy
Cow calf
Cash crops
Beef finishing
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Beef finishingResults - Beef finishingMarket returns and coupled government payments Market returns and coupled government payments
2006 2006 (US$ per 100 kg carcass weight)(US$ per 100 kg carcass weight)
0
50
100
150
200
250
300
350
400
450
500
AT-2
5FAT
-35
AT-1
20AT
-150
T
DE-2
30DE
-260
DE-2
80DE
-800
DE-5
25T
FR-4
5FR
-70
FR-9
0AFR
-90B
ES-6
30ES
-940
ES-6
790
IT-9
10IT
-288
0T
IE-1
85
UK-3
5UK
-90
UK-9
8
SE-1
40SE
-230
T
PL-1
2PL
-30
CA-9
600
US-7
200
AR-8
00AR
-220
0
BR-1
40BR
-240
BR-3
40BR
-600
CN-3
00CN
-940
AU-2
7K
ZA-7
5K
Whole farm payments Organic and environmental payments Livestock payments Crop paymentsBeef price
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Beef finishingResults - Beef finishingPurchase prices (US$ per 100 kg live weight)Purchase prices (US$ per 100 kg live weight)
0
100
200
300
400
500
600
700
800
900
AT-2
5FAT
-35
AT-1
20AT
-150
T
DE-2
30DE
-260
DE-2
80DE
-800
DE-5
25T
FR-4
5FR
-70
FR-9
0AFR
-90B
ES-6
30ES
-940
ES-6
790
IT-9
10IT
-288
0T
IE-1
85
UK-3
5UK
-90
UK-9
8
SE-1
40SE
-230
T
PL-1
2PL
-30
CA-9
600
US-7
200
AR-8
00AR
-220
0
BR-1
40BR
-240
BR-3
40BR
-600
CN-3
00CN
-940
AU-2
7K
ZA-7
5K
Calf price Weaner price Backgrounder price
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Beef finishingResults - Beef finishingTotal cost by cost items (US$ per 100 kg carcass Total cost by cost items (US$ per 100 kg carcass
weight)weight)
0
200
400
600
800
1000
1200
AT-2
5FAT
-35
AT-1
20AT
-150
T
DE-2
30DE
-260
DE-2
80DE
-800
DE-5
25T
FR-4
5FR
-70
FR-9
0AFR
-90B
ES-6
30ES
-940
ES-6
790
IT-9
10IT
-288
0T
IE-1
85
UK-3
5UK
-90
UK-9
8
SE-1
40SE
-230
T
PL-1
2PL
-30
CA-9
600
US-7
200
AR-8
00AR
-220
0
BR-1
40BR
-240
BR-3
40BR
-600
CN-3
00CN
-940
AU-2
7K
ZA-7
5K
Total capital cost Total land cost Total labour cost Non-factor costs incl. depreciation
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Beef finishingResults - Beef finishingNon-factor costs by animal purchases and other cost Non-factor costs by animal purchases and other cost
(US$ per 100 kg carcass weight)(US$ per 100 kg carcass weight)
0
100
200
300
400
500
600
700
AT-2
5FAT
-35
AT-1
20AT
-150
T
DE-2
30DE
-260
DE-2
80DE
-800
DE-5
25T
FR-4
5FR
-70
FR-9
0AFR
-90B
ES-6
30ES
-940
ES-6
790
IT-9
10IT
-288
0T
IE-1
85
UK-3
5UK
-90
UK-9
8
SE-1
40SE
-230
T
PL-1
2PL
-30
CA-9
600
US-7
200
AR-8
00AR
-220
0
BR-1
40BR
-240
BR-3
40BR
-600
CN-3
00CN
-940
AU-2
7K
ZA-7
5K
Animal purchases Other
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Beef finishingResults - Beef finishingNon-factor costs excluding animal purchases (US$ per Non-factor costs excluding animal purchases (US$ per
100 kg carcass weight)100 kg carcass weight)
0
50
100
150
200
250
300
350
400
AT-2
5FAT
-35
AT-1
20AT
-150
T
DE-2
30DE
-260
DE-2
80DE
-800
DE-5
25T
FR-4
5FR
-70
FR-9
0AFR
-90B
ES-6
30ES
-940
ES-6
790
IT-91
0IT-
2880
T
IE-18
5
UK-3
5UK
-90
UK-9
8
SE-1
40SE
-230
T
PL-1
2PL
-30
CA-9
600
US-7
200
AR-8
00AR
-220
0
BR-1
40BR
-240
BR-3
40BR
-600
CN-3
00CN
-940
AU-2
7K
ZA-7
5K
Other inputs
Other inputs beef enterprise
Insurance, taxes
Vet & medicine
Buildings (maintenance, depreciation)
Fuel, energy, lubricants, water
Machinery (maintenance, depreciation, contractor)
Feed (purchase feed, fertiliser, seed, pesticides)
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Beef finishingResults - Beef finishingShort and medium term profitability (US$ per 100 kg Short and medium term profitability (US$ per 100 kg
carcass weight)carcass weight)
-400
-300
-200
-100
0
100
200
AT-2
5FAT
-35
AT-1
20AT
-150
T
DE-2
30DE
-260
DE-2
80DE
-800
DE-5
25T
FR-4
5FR
-70
FR-9
0AFR
-90B
ES-6
30ES
-940
ES-6
790
IT-91
0IT-
2880
T
IE-18
5
UK-3
5UK
-90
UK-9
8
SE-1
40SE
-230
T
PL-1
2PL
-30
CA-9
600
US-7
200
AR-8
00AR
-220
0
BR-1
40BR
-240
BR-3
40BR
-600
CN-3
00CN
-940
AU-2
7K
ZA-7
5K
Short-term: Total returns less cash cost
Medium-term: Total returns less cash cost+depreciation
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results – Cow-calf farmsResults – Cow-calf farms
Share of market returnShare of market return
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40 AU-
ZA-2
00ZA
-250
ZA-3
00
Cow calf Beef finishing Cash crops Other farm enterprises (forestry, manure, etc.)
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Cow-calf farms Results - Cow-calf farms Weight at weaning per head (kg live weight per head)Weight at weaning per head (kg live weight per head)
0
50
100
150
200
250
300
350
400
450
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40 AU-
ZA-2
00ZA
-250
ZA-3
00
Male Female Av. male & female
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Cow-calf farms Results - Cow-calf farms Weaner prices per head (US$ per head)Weaner prices per head (US$ per head)
0
200
400
600
800
1000
1200
1400
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40 AU-
ZA-2
00ZA
-250
ZA-3
00
Male Female Av. male & female
R2800/head
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Cow-calf farms Results - Cow-calf farms Weaner prices per 100kg live weight (US$ per 100kg Weaner prices per 100kg live weight (US$ per 100kg
live weight)live weight)
0
50
100
150
200
250
300
350
400
450
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40 AU-
ZA-2
00ZA
-250
ZA-3
00
Male Female Av. male & female
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Cow-calf farms Results - Cow-calf farms Total returns (US$ per 100 kg live weight sold)Total returns (US$ per 100 kg live weight sold)
0
100
200
300
400
500
600
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40 AU-
ZA-2
00ZA
-250
ZA-3
00
Government payments
Weaner and transfer to beef receipts
Breeding livestock receipts Cull animals and slaughter receipts
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Cow-calf farms Results - Cow-calf farms Total cost by factor and non-factors costs (US$ per 100 Total cost by factor and non-factors costs (US$ per 100
kg live weight sold)kg live weight sold)
0
100
200
300
400
500
600
700
800
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40 AU-
ZA-2
00ZA
-250
ZA-3
00
Total capital cost
Total land cost
Total labour cost
Non-factor costs incl. depreciation
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Cow-calf farms Results - Cow-calf farms Labour intensity (hours per suckler-cow and year)Labour intensity (hours per suckler-cow and year)
0
10
20
30
40
50
60
70
80
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40AU
-190
0
ZA-2
00ZA
-250
ZA-3
00
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Cow-calf farms Results - Cow-calf farms Total returns and costs by cash and non-cash costs Total returns and costs by cash and non-cash costs
(US$ per 100 kg live weight sold)(US$ per 100 kg live weight sold)
0
100
200
300
400
500
600
700
800
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40 AU-
ZA-2
00ZA
-250
ZA-3
00
Opportunity cost Depreciation Cash cost Weaner + transfer + cull + breeding + government payments Weaner + transfer to beef + cull animals + breeding Weaner and transfer to beef receipts
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Cow-calf farms Results - Cow-calf farms Short and medium term profitability (US$ per 100 kg Short and medium term profitability (US$ per 100 kg
live weight sold)live weight sold)
-100
-50
0
50
100
150
200
250
300
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40 AU-
ZA-2
00ZA
-250
ZA-3
00
Short-term: Total returns less cash cost
Medium-term: Total returns less cash cost+depreciation
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Results - Cow-calf farms Results - Cow-calf farms Whole farm profitability (‘000 US$ per farm)Whole farm profitability (‘000 US$ per farm)
-200,000
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
200,000
250,000
300,000
AT-2
5CAT
-30
DE-1
100
DE-1
400
FR-6
5FR
-80
FR-8
5
ES-9
0ES
-160
IE-2
5
UK-4
0UK
-60
SE-1
50
HU-1
50T
HU-8
80T
CA-1
70
US-2
40US
-500
AR-7
30AR
-130
0
BR-4
00BR
-107
0
CN-2
AU-5
40 AU-
ZA-2
00ZA
-250
ZA-3
00
Net cash farm income (NCFI)
Farm income (profit)
+ 1,125,604+ 1,102,136
+ 727,126+ 384,322
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
20082008
• Annual update – expand• Local network (regional)• Emissions benchmarking• Quarterly price info• Trade profiles• Beef conference (Brazil)
– Bio-energy and beef production– SA farm story (case farm)
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
ConclusionConclusion
• Larger representation in SA• Useful info• Further analysis
– Comparative advantage analysis
• Involvement of industry
AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS
Thank you!Thank you!