Wednesday, July 30, 2014

Managing Drought Risk on the Ranch

Finding Feed - Financial Considerations

Evaluating feed options during drought conditions

One of the most difficult parts of drought planning is determining viable feed options. Like many difficult things the process can be better managed by reducing it into a series of steps.

1. Estimate the amount of feed you need to carry all animals through the feeding period.

This would be all animals, young stock, bulls, etc. It is import to be realistic and be honest with yourself about the amount of feed it will really take.

2. Assess your current feed inventories, include all feed sources that you have contracted, bought, or have access to.

It is important to consider the quality as well as the quantity. Having enough forage on hand is great but if the cows end up with health and reproductive problem as a result.

The economic efficiency of supplements declines as the difference between livestock requirements and forage quality increases.

3. Identify all the relevant feeding options and each total cost.

This may include the purchase price, including transportation; harvesting cost if it is a standing crop, including losses; storage cost, including losses; feeding out cost, including losses; and dry matter and nutrient content.

According to Geoff Benson, "Some low quality forages may require supplementation.The important cost to estimate is the total ration cost of what the animals actually eat, including forages and any supplements. If animal performance is expected to be different on different rations, figure the differences in both income and cost, e.g., as income over feed costs.” (Coping with Drought: Evaluating the Economics of Livestock Producers' Options)

What is key to remember here is that it really isn’t what the feed cost, but rather the difference between the cost and revenue, that’s what makes or breaks the bank. Two great tools for doing this are the Feedcost Cow-Q-Lator and the Partial Budgeting Work Sheet found at Ag Manager's Toolbox. Don’t forget any of the grazing management costs and make sure you include fencing and water, moving livestock, land rent, and wasted feed.

4. Evaluate the options available with respect to your goals and business plans, the ranch's resources, other resources you may have access to and available funds and financing.

Other sources of feed may be non-traditional in your area, such as crop residue. Having access to such extra resources may require thinking years in advance and developing those resources over time. Consider all the costs and benefits associated with buying feed from various different sources. Use partial budgeting to help you  understand the economic implications of your decisions.

When to Move Off Pasture

Supplements or replacement feed should not be used to maintain livestock on rangeland when adequate levels of remaining herbage no longer occur. Excessive grazing and mechanical damage of drought weakened perennials, even though dormant, will cause long-term delays in range recovery.

Tools

Ag Manager's Toolbox,includes

  • Feed Cost Cow-Q-Lator
  • Partial Budget Spreadsheet

Drought Arithmetic for Cowboys


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