By Shane Ellis, Lee Schulz
Producers find budgeting for cost and returns summarized in new publication
Careful budgeting is key when making purchases for livestock operations. A new publication by Iowa State University Extension and Outreach, Livestock Enterprise Budgets for Iowa – 2015 (File B1-21), contains estimates of production costs for common livestock enterprises in Iowa. Estimates are intended to reflect average or above-average levels of management using common types of technology.
“Livestock investment summaries are available for beef herds, sheep flocks, Grade A dairies and swine production litters,” said author Shane Ellis, farm management specialist with ISU Extension and Outreach. “Inputs such as price of grain, silage and vitamins, or price per pound for livestock weights are averaged during the year and listed for helping producers develop their farm livestock operation budgets."
The 22-page booklet is available online at Ag Decision Maker's site, www.extension.iastate.edu/agdm/ and includes various budget tables for livestock enterprises. For example: a budget for beef cattle production is measured by a “cow/calf” unit. Information for the entire herd is then computed by multiplying the input’s price by the size of the herd.
Each budget tool contains estimates for fixed and variable costs. Most costs occur each year such as depreciation, interest, taxes, and insurance on facilities, breeding livestock, and livestock equipment and facilities. An example of cost estimates for interest averages one-half the original value of facilities over its lifetime, or 5 percent annually. Other costs vary according to the level of production. For these types of estimating, interest may be calculated on feed and other variable costs for one-half the production period.
Lee Schulz, assistant professor and Extension and Outreach livestock economist with Iowa State University, explained how operating costs like labor and feed needs are used to calculate and analyze budgets for finding a value of production returns. “Producers can enter projected estimates for these types of inputs and the sale price of the animal to calculate the complete enterprise cost," he said. "Even if producers don’t have the prices readily available, the publication offers suggestions for calculating returns."
Page 2 of the publication offers estimates for prices of operation inputs and suggested sale prices for livestock are available on the Ag Decision Maker website as Livestock Planning Prices. Producer teaching activities and decision tool spreadsheets for specific livestock also are available for making computer calculations or to calculate individual situations and can be printed.
Data were drawn from farm record summaries, feed consumption research and price projections and are intended to be used for planning purposes only. For individual farms, expected costs and input requirements based on past results should be substituted whenever possible.
Source:iastate.edu