denise schwab isu extension beef program specialist
DESCRIPTION
2013 Beef Production SPA Lab. Denise Schwab ISU Extension Beef Program Specialist. www.iowabeefcenter.org. All whole farm! What about the cow herd or the forage base???. Enterprise Analysis. What is SPA?. S tandardized P erformance A nalysis - PowerPoint PPT PresentationTRANSCRIPT
Denise SchwabDenise Schwab
ISU Extension Beef Program SpecialistISU Extension Beef Program Specialist
2013 Beef Production2013 Beef Production
SPA LabSPA Lab
www.iowabeefcenter.org
All whole
farm!
What about
the cow herd
or the forage
base???
Enterprise Analysis
What is SPA?
• Standardized Performance Analysis
• Developed by National Cattleman’s Association in cooperation with USDA Extension Service.
• To assist producers with analyzing herd economic and production records.
So we all calculate records the same waySo we all calculate records the same wayWhy??
What Can Standardized Performance Analysis (SPA) Do?
SPA can SPA can keep you in businesskeep you in business!!!!
• Know your OWN economic & reproductive productivity
• Analyze your operation by enterprise
• Compare to benchmarks!
The Value of InformationThe Value of InformationProducers on the program for 5 years have reduced annual production costs by nearly
$175 per cow.
Total Cost per Cow
Illinois
What Records are Needed?• Balance Sheet• Net Worth Statement• Tax Forms (Schedule F)• Cattle Inventories (Jan. 1)• Feed Records• Pasture In/Out Dates
• Pasture/Hay acreage and rental values
• Breeding stock deaths, sales, and purchases
• Calf weaning or sales weights and prices
• Hay Produced (Bale number & average wt.)
Financial AnalysisEvaluate assets at their cost or depreciated value (book value)
Dunn, BIF 2002
Preg Test
Bull Purchase
Cross FenceWater
WellIncreased Herd 30%
Land Inheritance
Tractor Purchase
Land Purchase
Baler Purchase
Bull Turnout
2010
Built New Silo
Silage Harvest Equip
Fiscal year being evaluated
Cumulative affect of management decisions on current fiscal year.
Economic Analysis
Evaluate assets at their current market value.
Dunn, BIF 2002
Investment in the Business on a per Cow Basis – ISU SPA
FinancialEconomic
Breeding Stock $604 $668Equipment & Structures $152 $287Real Estate $677 $969Current Assets $133 $182
TOTAL $1566 $2106
Capital Intensive Business!!!Assets valued at
cost or depreciated value
Assets valued at market value or what they could be sold for
Management efficiency
Exit strategy
Financial vs. Economic Cost Example
Pasture Land – Example 1– 40 acres being purchased with an $800/acre debt at 8% contract,
land taxes of $12/acre, fertilized at $10/acre, depreciation on improvements at $3/acre and a current rental value of $35/acre
Financial
Land cost $64
Taxes $12
Operating $10
Deprec. $ 3
Total $89
Economic
Land cost $35
Taxes $ 0
Operating $10
Deprec. $ 0
Total $45
DeprInsRepairsTaxInt
Financial vs. Economic Cost Example
Pasture Land – Example 2– 40 acres purchased 20 years ago with no debt, land taxes of
$12/acre, fertilized at $10/acre, all improvements are depreciated out and a current rental value of $35/acre
Financial
Land cost $ 0
Taxes $12
Operating $10
Deprec. $ 0
Total $22
Economic
Land cost $35
Taxes $ 0
Operating $10
Deprec. $ 0
Total $45
You need to understand BOTH!!
IRM/SPA Production Cost Areas• Feed
– Stored (purchased or raised)– Grazed (owned or leased)
• Operating • Depreciation
– Cattle– Equipment
• Labor– Hired– Family (Only in Economic costs)
• Interest (allocated to cattle)
Iowa BCBR Data Correlation to RLMHerd Size .04
Calf weaning weight .28% Calf crop weaned .10Calf weight sold/cow .23Weight produced/cow .18
Cull breeding weight sold/cow -.06Cattle value sold/cow .14Calf price .01Cull breeding stock price.04
Strohbehn, 1995 ISU Beef Research Report
Ability to
predict return
to labor and
management
Production and price are lowly correlated to profit
What Drives Profit?
What Drives Profit? Correlation to RLM
Feed cost / cow -.41Operating cost / cow -.25Depr, tax & insur / cow -.30Total capital charge / cow -.27Total cost / cow -.47
Feed cost / cwt -.49Operating cost / cwt -.42Depr, tax & insur / cwt -.40Total capital charge / cwt -.41Total cost / cwt -.61
Best
predictors
of profits
Strohbehn, 1995 ISU Beef Research Report
Variation in Return to Labor & Management
-8 financial measures explain over 82% of farm-to-farm variation
-Cost factors were far more influential than production or marketing factors.
Bottom line: Feed cost is the Bottom line: Feed cost is the most important factor in most important factor in
determining profit!determining profit!
Dependent Variable R2
Feed Cost .567
Depreciation Cost .086
Operating Cost .049
Calf weight .046
Capital charge .024
Calf price .027
Weaning percentage.017
Herd size .007
Total .8231996-99: 225 herd observations Iowa and Illinois SPA records
Biggest Value of SPAReturn and Cost Summary for Cow Herd
2003 2004 2005 2006 2007Financial Financial Financial Financial Financial
Costs for Cow-Calf EnterprisesJanuary 1 Number of Cows in Herd 249 266 263 261 250a. Pasture Cost per Cow $48.83 $53.43 $57.33 $43.97 $42.85 b. Crop Residues per Cow $1.81 $1.69 $1.52 $1.23 $2.20 c. Harvested Forages per Cow $150.72 $44.21 $70.00 $55.52 $32.34 d. Non-Purchased Raised Feed Fed per Cow $41.18 $67.86 $82.43 $42.18 $81.86 e. Purchased Feed per Cow $21.17 $32.49 $10.34 $21.01 $18.51 f. Total Feed Cost per Cow $263.70 $199.68 $221.62 $163.91 $177.76 a. Operating Cost per Cow $76.78 $61.96 $94.84 $128.02 $101.74 b. Vet Med Cost per Cow $16.77 $14.04 $11.69 $17.61 $8.88 Depreciation Cost per Cow $52.29 $27.82 $20.67 $22.33 $14.26 Capital Charge per Cow $0.00 $0.00 $0.00 $0.00 $7.72 Hired Labor Cost per Cow $59.38 $22.26 $20.85 $24.92 $17.88 Family & Operator Labor Charge per Cow xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxxTotal Cost per Cow in Herd, January 1 $452.16 $311.72 $357.98 $339.18 $319.35
Biggest Value of SPA2003 2004 2005 2006 2007
Reproduction & Production MeasuresPregnancy Percentage 91.6% 94.1% 92.9% 93.8% 92.9%Pregnancy Loss Percentage 4.1% 3.0% 8.5% 10.7% 9.4%Calving Percentage 87.5% 91.1% 84.5% 83.1% 83.5%Calf Death Loss 0.0% 0.0% 0.0% 0.0% 0.0%Calf Crop or Weaning Percentage 87.5% 91.1% 84.5% 83.1% 83.5%Female Replacement Rate 19.6% 15.3% 15.3% 16.1% 18.5%
Calving Distribution:Beginning Calving Date: 03/06/03 03/12/04 03/14/05 03/03/06 03/20/07 Calves Born During 1st 21 Days 48.7% 44.3% 46.0% 21.2% 43.0% Calves Born During 1st 42 Days 82.4% 76.5% 75.7% 57.6% 78.3% Calves Born During 1st 63 Days 93.3% 91.4% 99.2% 84.0% 97.1% Calves Born After 1st 63 Days 6.7% 8.6% 0.8% 16.0% 2.9%
Three Producers
• Son/Father
• Young Producer
• Established Producer
Today’s Task: Consultant
• Strengths
• Weaknesses
• Oreos
• Recommendations
Assignment
• Paper comparing the strengths and weaknesses of the three operations
• Include recommendations for them to improve their operation
Thank YouAre there any
questions?www.iowabeefcenter.org
Denise SchwabBenton County Extension Office
501 First AveVinton, IA 52349
Phone 319-472-4739email: [email protected]