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Calculating Profitability in Manitoba Cattle Industry

Farm Enterprise Management Specialist

$755.66

$112.03 $172.83

-100

0

100

200

300

400

500

600

700

800

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Dol

lars

per

Cal

f

Manitoba Cow-Calf Estimated Returns Covering Operating & Labour, 1990-2016

Returns over Operating & Labour

Average Returns 2000-2015

Calf Price (500-600 lb) $/cwt

Manitoba Agriculture, Market Intelligence Data Source: Canfax, Manitoba Agriculture

274.96

-202.63

-87.18

-250

-150

-50

50

150

250

350

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

DO

LLAR

S PE

R C

ALF

YEAR

MANITOBA BEEF CATTLE BACKGROUNDING 500-900lb STEERS, ESTIMATED RETURNS, 1997-2016E

Margin after Operating and Labour

Average

Data Source: Canfax, Manitoba Agriculture

-56.64

Manitoba Agriculture, Market Intelligence

-705.12

-164.70

-800

-600

-400

-200

0

200

400

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

DO

LLAR

S PE

R H

EAD

YEAR

MANITOBA BEEF CATTLE ESTIMATED FINISHING RETURNS, 650-1400 LB STEERS SOLD IN ALBERTA, 1997-2016E

Margin after Operating and Labour Average

Data Source: Canfax, Manitoba Agriculture

-95.12

Data Source: Canfax Manitoba Agriculture,Market Intelligence

Cow-Calf COP - Input Assumptions 1. This budget outlines the cost of production for a cow-

calf operation. 2. Buildings and equipment are valued at new cost. 3. All feed is purchased. 4. Manure removal is contracted out. 5. Replacement heifers are valued at fair market value 6. This budget assumes an average weaning weight of

575 lbs. (steer calves 600 lbs and heifer calves 550 lbs.)

Input Assumptions

• This budget outlines the cost of production for backgrounding cattle.

• 500 hd steers • Buildings and equipment are valued at

new cost. • All feed is purchased in at fair market

value- allows costs to only be allocated to backgrounding enterprise

Cost Breakdown

• Operating • Fixed costs

– Depreciation – Investment

• Labour

New Feeding Options

• Barley Silage • Corn Silage • Alfalfa Grass • Rate of Gain options • 1.5 • 2 • 2.5

Corn Silage Ration

Take Home Message

• Take out the risk with BRM Programs – Western Livestock Price Insurance – Agristability

• Calculate your own cost of production – It will Calculate

• Total cost, Breakeven purchase price, Breakeven selling price, and cost per lb of gain sold

• Get a nutritionist to balance a ration to get the desired gains

Tools and Calculators http://www.gov.mb.ca/agriculture/business-and-economics/financial-management/farm-software-and-worksheets.html

Cost of Production Budgets http://www.gov.mb.ca/agriculture/business-and-economics/financial-management/cost-of-production.html#beef

Questions?

Contact me: Ben Hamm

Farm Enterprise Management Specialist 204-392-9350 benjamin.hamm@gov.mb.ca http://www.gov.mb.ca/agriculture/business-and-economics/farm-

business-management-contacts.html