Putting It All TogetherFor 2006

Tim Hewitt

University of Florida

Information Given:

– outlook– budgets (costs)– marketing

Putting It Together:

– manage costs– know markets– set price objective– evaluate your situation

Cattle Revenue: Rank and Value

AL 2 $362 M

FL 7 $358 M

GA 6 $252 M

SC 6 $ 86 M

Total Farm and Forestry Receipts,$5.5 B, Alabama, 2004

Percents By Commodity

Cotton, 4%

Greenhouse & Nursery, 5%

Eggs, 5%

Other, 8%

Cattle & Calves, 9%

Forestry, 18%

Broilers, 44%

Livestock & Poultry Receipts, $3.4 B, Alabama, 2004

Broilers, 71%

Catfish, 3%Dairy, 1%

Eggs, 9%

Cattle & Calves, 14%

Other, 2%

Cattle Operations By Herd Size, Alabama, 2002

1-49 Hd69%

50-99 Hd17%

100+ Hd14%

Cattle Inventory By Herd Size, Alabama, 2002

1-49 Hd26%

100+ Hd53%

50-99 Hd21%

Risk Management

– budgeting– marketing alternatives– obtaining outlook– asking price– decision analysis– financing

Production Planning

– have a production plan

– have a marketing plan

– know production costs

– developing an asking price

– be aware of break-even price

Budgeting

–planning tool

–helps with farm decisions

–way of looking at alternatives

–helps with price setting

35 Cow Herd Costs

Variable $13,700

Fixed $7,500

Total Costs $21,200

Asking Price

Variable Costs

+ Fixed Costs

+ Management + Growth

= Asking Price

Asking Price

Variable Costs $.64 lb

Fixed Costs $.40 lb

Management/Growth Fee $.20 lb

Asking Price $1.24 lb

550 lb. Calf

Marketing Problems

– uniformity

– lack of cattle for group sales

– quality

– market knowledge

Follow Markets

– know supply/demand concepts

– know cow numbers

– obtain outlook information

– develop confidence in your abilities

– evaluate alternatives

Outlook Accuracy

– time horizon is important

– 15 to 20% margin of error

– all sources are similar

Try to Give Market What It Desires(talk to buyers and market managers)

– type

– breed

– grade

Value Determining Factors

– sex

– frame

– weight

– condition

– muscling

– color

– horns

– vaccinations

– breed

Production Practices That Pay

(have marketing implications)– breed choice

– dehorning

– castration

– de-worming

– vaccinations

– feeding programs

Does It Pay?

Research has shown that

these practices add

$4 to $8 per cwt

Cost Comparison of Hay andWinter Grazing

Hay Winter Grazing

Hay Cost $60 per ton

Pasture Cost $110 per acre

Total cost per/lb D.M. $.055 $.04

Total cost per ton D.M. $110 $80

Hay Feeding CostsHay costs $60

Storage and feeding cost $10

Losses 20%

Hay Consumption per ton 1600

Total cost per ton $88

Total cost per lb D.M. $.055

Total cost per ton D.M. $110

Farm Management

– pull a net worth statement– evaluate last year– determine the why’s for the goods and bads– budget for the enterprises considered– study outlooks– look at markets– communicate with lender, market personnel,

and suppliers

Helping Cow-Calf Producers Manage Price Risk

Thank you for your attendance and attention.

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