SMALL GROUP ACTIVITY ON FORAGE ECONOMICS: 3 Options GEOFF BENSON EXTENSION ECONOMIST DEPT. OF AGRICULTURAL & RESOURCE ECONOMICS NORTH CAROLINA STATE UNIVERSITY

GEOFF BENSON, ARE, NCSU 2 Small Group Activity: It is late summer. A farmer comes to you for advice about a winter feeding program for a group of heifers How do you set about answering his question?

GEOFF BENSON, ARE, NCSU 3 What To Do? 1.Determine the number of animals, feeding period, animal performance targets, available forages and feeds 2.Identify alternative feeding strategies

GEOFF BENSON, ARE, NCSU 4 What To Do? 3.For each strategy, develop a detailed feeding program that meets animal goals 4.Estimate costs of each strategy and select the most profitable

GEOFF BENSON, ARE, NCSU 5 Small Group Activity: Farm Scenario Plan to feed 32 heifers for a 120 day winter feeding period Heifers need 15 lb. DM/day The farmer has 20 acres of fescue with 2,000 lb. of dry matter per acre

GEOFF BENSON, ARE, NCSU 6 3 Alternatives 1. Stockpile fescue, graze intensively – daily moves 2. Stockpile fescue, graze extensively – move cattle every 14 days 3. Make and feed fescue hay

GEOFF BENSON, ARE, NCSU 7 Instructions Grazing Groups: 1. Pasture Budget Worksheet to calculate grazing days & cost 2. Cost of managing the grazing 4. Amount & cost of hay 5. Cost of putting out hay 6. Total $$, cost/head, cost/day

GEOFF BENSON, ARE, NCSU 8 Instructions Hay Group 1. Budget the amount of own hay available to feed & cost 2. Estimate total hay needs, amount to be bought & cost 3. Cost of putting out hay 4. Total $$, cost/head, cost/day

GEOFF BENSON, ARE, NCSU 9 Instructions Stockpiled fescue will not feed the cattle for the entire period Buy additional hay at $80 per ton. Quality is similar to stockpiled fescue & own hay

GEOFF BENSON, ARE, NCSU 10 Instructions Select a discussion leader, recorder & reporter Review the worksheets & other materials Consult the roving helpers Report to the whole group using overhead transparency

GEOFF BENSON, ARE, NCSU 11 Your Turn

GEOFF BENSON, ARE, NCSU 12

GEOFF BENSON, ARE, NCSU 13 Standardized Example Labor cost of $9.00 per hour Trip time is 30 minutes to move cattle on the grazing systems. Truck is used 15 minutes Trip time to put out hay is 45 minutes

GEOFF BENSON, ARE, NCSU 14 Standardized Results

GEOFF BENSON, ARE, NCSU 15 Standardized Results

GEOFF BENSON, ARE, NCSU 16 Standardized Example This is only an example! Many factors affect costs on a specific farm  Time and distance to the cattle  Labor cost or charge per hour  Equipment used

GEOFF BENSON, ARE, NCSU 17 Review Set feeding period and animal performance targets Identify alternative feeding strategies that can meet goals Estimate costs of each strategy, +/- income changes

GEOFF BENSON, ARE, NCSU 18 Step 1: Feed Budgeting Estimate feed(s) available for the feeding period, with known nutrients, on a dry matter basis Estimate animal needs, as lb. of dry matter per day & nutrients required Add supplementary feed needs

GEOFF BENSON, ARE, NCSU 19 Step 2: Economic Budgeting Estimate costs of producing and managing pasture & hay:  Cash costs  Fixed (Investment related) costs -- DITI  Labor cost or charge Other cash & fixed costs

GEOFF BENSON, ARE, NCSU 20 Step 2: Budgeting Estimate any differences in revenue or value of production if animal performance changes under the alternative feeding programs

GEOFF BENSON, ARE, NCSU 21 Management factors 1. Intensively managed stockpiled fescue: Less waste -- more pasture is used, grazing period is longer Less hay and hay feeding is needed Takes more time and management May require more investment in fencing and watering systems

GEOFF BENSON, ARE, NCSU 22 Management factors 2. Extensively managed stockpiled fescue: More pasture is wasted, fewer days of grazing More hay must be fed Less time is spent moving cattle but cattle should be checked more often, so real labor savings may not be great

GEOFF BENSON, ARE, NCSU 23 Management factors 3. FALL HAY Hay making is expensive--in investments and time Include risk of bad weather and resulting losses of yield and quality

GEOFF BENSON, ARE, NCSU 24 Hay feeding costs Added Costs: Storage losses and costs of protecting hay against loss Feeding losses Handling costs, including time and equipment Pasture damage

GEOFF BENSON, ARE, NCSU 25 Losses affect true cost For alternative systems  Harvest losses range from 5 to 50% of production  Storage losses -- 5 to 20%  Feeding losses -- 5 to 15%  Combined losses = 15 to 50%

GEOFF BENSON, ARE, NCSU 26 Results Evaluating the economics takes time and effort, but it is critical for improving the financial performance of a farm or justifying a change in farming practices In our example, the difference in cost was $1,763 on 32 heifers for 120 days!

GEOFF BENSON, ARE, NCSU 27 Which system is best? Depends on farm and family situation  Farm & financial resources  Lifestyle goals Economics is important to making wise decisions but may not be the only criterion

GEOFF BENSON, ARE, NCSU 28 Geoff Benson Phone: Fax: Web page: faculty/benson/benson.html