- Typically, retained ownership refers to a producer sending calves/feeders to a feedlot and owning some percentage of them. The calves/feeders can be.

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Presentation transcript:

- Typically, retained ownership refers to a producer sending calves/feeders to a feedlot and owning some percentage of them. The calves/feeders can be either purchased or raised. The weight of the calves/feeders being sent to the feedlot does not change the definition of retained ownership. Retained Ownership

Beef Production Segments Cow/Calf (Birth to Weaning) Stockers (Weaning up to 800 lbs.) Retained Ownership (Calf or Feeders to Fed)

Why Retained Ownership? 1. Learn more about calves-- Performance  Shrink  Days of Feed  Average Daily Gain  Pound of Feed Per Pound of Gain (DM)  Quality Grade  Pound of Feed Per Head of Per Day (DM)  Backfat  Hot Carcass Weight  Ribeye Area  Yield Grade

Increase net income  Cow/Calf  Backgrounding  Finishing

Steps in Deciding to Retain Ownership 1. Complete a financial analysis 2. Decide on risk management strategies * Basis Contracts* Options * Forward Contract * Futures Contracts

Select a feedlot Offer line-of-creditType of cattle preferred All-in and all-out production Carcass data availabe Yardage & other expenses Location Health program Years in business CleanlinessMarketing assistance References availableFinancing

Economic Analysis Tools for Evaluating Retained Ownership Break-even Analysis Total costs divided by sale weight

Feedlot Break-even Example Calf weight: 1200 lbs. Total Costs Per calf: $800/hd. Break-even: $800 ÷ 1,200 lbs. X 100 = $66.66 cwt. Sale Price: $70/cwt. Net income: $ $66.66 = $3.34 per cwt. or $3.34 x 12 cwt. = $40.08/hd.

Returns and Cost of Gain Analysis (Sale Price x Sale Weight) Minus (Purchase Price x Purchase Weight) Divided by (Sale weight - Purchase Weight) Equals Returns per Pound of Gain

Costs of Gain (*Total Costs) Divided by (Sale weight - Purchase Weight) *Excluding purchase cost of calf Equals Cost of Gain

Gain Analysis Example Total Costs Per Calf (Less Cost of Calf): $215 per head Sale Price: $70 per cwt. Sale Weight: 1200 lbs. Cost of Calf: 90 per cwt. Purchase weight: 650 lbs. Pounds gain: 550 lbs. Returns Per cwt. of Gain $70per cwt. x 1200 lbs. = $840 Less $90 per cwt. x 650 lbs. = $585 Revenue per Pound of Gain: ($255 ÷ 550 lbs.) x 100= $46.36 per cwt. $255 per head

Returns Per CWT of Gain Total Cost *Per Head $215 ($215 ÷ 550 lbs.) x 100 = $39.09 per cwt. *Excluding cost of calf Net Returns Per cwt. Gain Revenue $ Cost $ Net $ 7.27 Net per head = $7.27/cwt. x 5.5 cwt. = $40.08/hd.

CLICK HERECLICK HERE for the retained ownership spreadsheet