Cost Of Production Beef Backgrounding

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2021 Cost of ProductionBeef Backgrounding

.Guidelines For EstimatingBeef Backgrounding CostsFor Weight Range of 500 - 900 lbsBased on 500 HeadDate:September, 2020This guide is designed to provide you with planning information and a format for calculatingcosts of production of a backgrounding feeder calf enterprise in Manitoba. General ManitobaAgriculture recommendations are assumed in using feed and veterinary inputs. These figuresprovide an economic evaluation of the livestock and estimated prices required to cover allcosts. Costs include labour, investment and depreciation, but do not include managementcosts, nor do they necessarily represent the average cost of production in Manitoba.Backgrounding generally refers to the feeding of calves from weaning until they are put onto ahigh concentrate finishing ration. An example of a typical backgrounding operation would be,feed 500 pound steers to gain 1.5 to 2.5 pounds per day for approximately 100-200 days toproduce 800 to 900 pound backgrounded feeders.These budgets may be adjusted by putting in your own figures. As a producer you areencouraged to calculate your own costs of production. Good management is assumed in thata balanced ration is being fed, livestock are on a herd health program and handling facilitiesare included.This tool is available as an Excel worksheet at: www.manitoba.ca/agricultureor at your local Manitoba Agriculture and Resource Development office.is also available to helpThe Farm Machinery Custom and Rental Rate Guidedetermine machinery costs.Note: This budget is only a guide and is not intended as an in-depth study of the cost of production of this industry.Interpretation and use of this information is the responsibility of the user. If you need help with a budget, contact yourlocal Manitoba Agriculture and Resource Development office.

Guidelines: Background Cattle Production Costs2Backgrounding Cattle Production Cost Summary - September, 2020Based on 500 feeders, weight range 500 to 900 lbs, Corn Silage ration @ 2.5 lbs. ADGA. Operating CostsCost/Head1. Feed Costs1.01 Alfalfa Grass Hay (57.8 % TDN, 13.7 % CP) 40.001.02 Corn Silage (65.2 % TDN, 8.7 % CP) 71.821.03 Barley Silage (63 % TDN, 11 % CP) 0.001.04 Barley Grain (83.1 % TDN, 12.5 % CP) 75.441.05 Greenfeed 0.001.06 Straw 0.001.07 32-20% Feedlot Suppl. (61.7%TDN, 35.6%CP 0.001.08 DDGS Corn/Wheat (77 % TDN, 33.9 % CP) 12.741.09 1:1 Premix 0.001.10 2:1 Premix 32.721.11 Limestone 1.401.12 Other 0.00Total Feed Costs 234.122. Other Operating Costs2.01 Feeder Cost 1,165.252.02 Straw 16.002.03 Veterinary Medicine & Supplies 25.192.04 Annual Fuel & Repair Costs 8.802.05 Utilities 3.252.06 Feeder Selling Cost 30.932.07 Insurance 1.602.08 Manure Removal 12.562.09 Barn & Office Supplies 1.202.10 Death Loss 26.33Subtotal Operating Costs 1,525.222.11 Operating Interest 26.54Total Operating Costs 1,551.76B. Fixed Costs3. Depreciation3.01 Buildings 7.213.02 Machinery & Equipment 17.284. Investment4.01 Buildings 2.424.02 Machinery & Equipment 3.56Total Fixed Costs 30.47Total Operating and Fixed Costs 1,582.23C. Owners - Labour & LivingTotal Cost of ProductionTotal CostYour Cost 20,000 34,930 0 37,585 0 0 0 6,450 0 16,400 704 0 116,069 582,625 8,000 12,595 4,400 1,625 15,463 800 6,278 600 13,165 761,620 13,270 774,890 3,605 8,640 1,210 1,780 15,235 790,125 24.00 1,606.23 12,000 802,125Profitability and Breakeven AnalysisEstimated FarmgateGross Revenue @ 180/cwt market pricePer Head 1,571.40Total 785,700Breakeven PurchasePrice ( /cwt) @ 180/cwt market priceOperating CostsOperating Costs & LabourOperating & Fixed CostsTotal Costs 233.93 229.13 227.83 223.03Cost per lb ofgain sold ( /cwt)Feed CostsOperating CostsOperating Costs & LabourOperating & Fixed CostsTotal CostsReturn on Investment (ROI)Estimated Return on Asset (ROA) 62.77 107.71 114.14 115.88 122.31Breakeven SellingPrice ( /cwt) @ 230/cwt feeder price 177.75 180.50 181.24 183.99Marginal Returns per head@ 180/cwt market price 172.03 19.64( 4.36)( 10.83)( 34.83)(2.2%)(7.7%)Note: This budget is only a guide and is not intended as an in-depth study of the cost of production of this industry. Interpretationand utilization of this information is the responsibility of the user. No liability for decisions based on this publication is assumed.Manitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs3Risk & Sensitivity Analysis (Stress Test)Percent Market Price ChangePercent Feed Cost ChangePercent Feeder Cost Change-10.0%5.0%5.0%Per HeadMarket Price ( per cwt)Feed CostFeeder Cost 162.00 245.83 1,223.51Stress Test Scenario Market Price Down 10%, Feed Price Up 5% and Feeder Cost Up 5%Operating Costs 1,621.73Total Costs 1,676.20Gross Revenue / feeder 1,414.26Marginal ReturnsOver Operating Costs( 207.47)Over Operating & Labour Costs( 231.47)Over Total Costs (Net Profit)( 261.94)Operating Expense Ratio114.7%Estimated Breakeven Canadian Dollar AnalysisEst. Market Price ( /cwt Cdn) @ 0.7550 Cdn per USD 170.00 175.00 180.00 185.00 190.00Breakeven CDN Dollar ( 1 Cdn USD)Operating Costs0.72210.74330.76460.78580.8070Operating & Labour Costs0.71110.73200.75290.77380.7947Operating, Fixed & Labour Costs0.69760.71810.73860.75910.7797Breakeven Canadian Dollar (Est. Market Price ( /lb) x Shrunk Wt. (lbs) x Cdn per USD) / Cost(eg. ( 1.80 x 873 lbs x 0.7550) / 1606.23) 0.7386Note: This budget is only a guide and is not intended as an in depth study of the cost of production of thisindustry. Interpretation and utilization of this information is the responsibility of the user.Manitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs42021 Beef Background Calves - TotalProduction Costs (cost/feeder)Labour, 24 ,1%Fixed Cost Investment, 6, 0%Feed Cost, 234 , 15%Fixed Cost Depreciation, 24 , 2%Winter feed is a significant cost forbackground calves. A balancedration to minimize cost per head perday is an important step in RiskManagement Planning.Feeder Cost, 1,165 , 73%OtherOperatingCost, 152, 9%Manitoba Agriculture and Resource Development2021 Beef Background Calves - OtherOperating Costs (cost/feeder)Utilities, 3.25Fuel,Maintenance &Repairs, 8.80Operating interest and feederselling costs are the mostsignificant other background calfproduction costs.Insurance, 1.60Feeder SellingCost, 30.93ManureRemoval, 12.56 Barn & OfficeSupplies, 1.20VeterinaryMedicine &Supplies, 25.19Straw, 16.00Death Loss, 26.33OperatingInterest, 26.54Manitoba Agriculture and Resource Development2021 Beef Backgrounding - Costs Not Covered (900 lb. steers) 160.00 140.00 120.00 100.00 /Steer 140Market prices of 181/cwt and lower do notcover both operating and fixed costs. Thiscan indicate the potential need for WLPIPcoverage and is an important step in RiskManagement Planning). 122 105 87 80.00 70 52 60.00 35 40.00 17 20.00 0.00 0 0 0 0 190 188 186 184 182 180 178 176 174 172 170 168Market Price ( /cwt)Operating Costs 1552Fixed Costs 30Labour Cost 24Manitoba Agriculture and Resource DevelopmentManitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs5Backgrounding Feeder Cattle Production CostsAssumptions1. This budget outlines the cost of production for backgrounding cattle.2. Buildings and equipment are valued at new cost.3. All feed is purchased.Herd ProfileNumber of Feeders PurchasedFeeder Cattle Mortality RateFeeder Purchased WeightFeeder Cattle PriceFinish Weight (Maximum 900 lbs.)Feeder Selling Price (WLPIP insured value) 1 Canadian Dollar( 1.3245 CDN )WLPIP Insurance PremiumPercent Shrink at SaleAverage Daily GainType of Feed RationWeight Range500 to 600 lbs.600 to 700 lbs.700 to 800 lbs.800 to 900 lbs.TOTAL5002.00500 230.00900 180.00 0.7550 0.003.002.50 lbs/dayCorn SilageDays on Feed40404040160Total Feed Cost per SteerAverage Feed Cost per DayFeed Cost per lb. of Gain Sold (shrunk weight)Feed Cost /Steer/Day 1.365 1.539 1.726 1.882 234.12 /head 1.46 0.628Total Pounds of GainTotal Pounds of Gain (Shrunk Weight)Feed CostsAlfalfa Grass HayCorn SilageBarley SilageBarley GrainGreenfeedStraw32-20% Feedlot Suppl.DDGS Corn/Wheat1:1 Premix2:1 PremixLimestoneOtherhead%lbs/cwtlbs/cwt/ 1 USD/cwt% /unit 100.00 35.00 40.00 4.40 100.00 50.00 475 215 40.00 40.00 5.50 0.00400 lbs373 55552,000 7270.1000.000(Analysis 5%61.7%77.0%35.6%33.9%FOOTNOTE: 1 bushel (bu) barley 48 lbs 21.8 kg1 kilogram (kg) 2.2046 pounds (lbs)1 tonne (t) 1,000 kgManitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs6Other Operating CostsFeeder Purchase CostsBuying CommissionTrucking-inInsurance fee 5.00 /head 1.70 /cwt 1.75 /headStraw Beddinglbs/daycost4.00 /head 50.00 /tonVeterinary Medicine & SuppliesCattle MedicationIBR,BVD,PI3,BRSV, PasteurellaVitamin A-DExternal & Internal ParasitesBlackleg & HaemophilusGrowth ImplantsAntibiotics 4.90 0.50 0.72 1.26 1.65 15.00Herd Health ProgramProfessional ServicesTotal Yearly HoursRateTransportationTotal Kilometres (round trip)RateNumber of Yearly VisitsAnnual Fuel & Repair Costsa) Machinery Fuel Costs - Winter FeedingTractor with Loader PTO hpDiesel Fuel CostTractor Hours Per Day (average)b) Machinery Repair (% of investment cost)c) Building maintenance (% of investment cost)UtilitiesHydro - Rate12 kWh per feeder2 1000 watt watererTotal HydroTelephoneTrucking CostAverage WeightDistanceRateTruck CapacityNumber of head per load - calvesMarketing CostMBP/NCO Levy /HeadCommission on SalesMarket Value/head/head/head/head/head/head3.00 hours 150.00 /hour80.0 km 0.80 /km2120 0.901.501.22.2/litrehours%% 0.08730 / kWh 523.80 502.85 1,026.65 600.0090075 5.5054,00060lbs/headmiles/loaded milelbs/loadper load 5.50 /head 18.00 /head 180.00 /cwtManitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs7Manure RemovalManure volume producedManure volume shrinkageCost for manure removal & applicationInsuranceCost per 100 Capital Invested ina) Livestockb) Building & EquipmentAdditional Coverage for LiabilityBarn & Office SuppliesTotal yearly expense relating to barnOperating Interest RateInvestment Interest Rate30.024 m /feeder/day75 % 10.00 /cubic yard 0.00 / 100 0.40 / 100 49.00 /year 600.004.50 %2.75 %FOOTNOTE: cwt hundred-weight 100 lbsCapital Corrals & Water SystemWindbreak fencePensHandling FacilitiesWaterersGatesFeedersBunk FeedersWell & Pressure SystemGrain BinLandscapingTotal 6,300 5,300 7,500 6,000 2,000 1,500 21,000 8,000 5,000 17,500 80,10010101010101010101010Machinery & EquipmentTractors & Loader ( 160,000 @ 30%)Miscellaneous 48,000 60,00020 %20 %Total InvestmentLabour CostsHours/HeadLabour earsyearsyearsyearsyearsyearsyears10 years10 years 188,100Total1.0 hours 24.00 /hourManitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs8Feed Costs & Requirements WorksheetTotal Days on Feed 160 days @ 2.5 lbs. Average Daily Gain (ADG) Per DayBarley Silage RationWeight Range (lbs)Days on FeedFeed NameAlfalfa Grass Hay /unit lbs/Unit500 to 600600 to 700700-800800-90040404040Total lbs/steer /lbAs Fed Lbs/Head/DayFeed Cost /steerTotal UnitsRequired(500 steers)Total FeedCost(500 steers) 100.002000 0.050332.52420 21.00105Corn Silage 35.002000 0.01800000 0.000Barley Silage 40.002000 0.0202325.7529.2532.54,420 88.401,105 44,200.00 47,669.60Barley Grain 0.0048 0.09256781,040 95.6810,834 100.002000 0.05000000 0.000 50.002000 0.02500000 0.000 0.0032-20% Feedlot Suppl. 475.002205 0.21500000 0.000 0.00DDGS Corn/WheatGreenfeedStraw 4.40 10,500.00 215.002205 0.09800000 0.0001:1 Premix 40.0055 0.7270.250.270.30.3246 33.444192:1 Premix 40.0055 0.72700000 0.000Limestone 5.5055 0.1000.060.0850.110.1315 1.50137Other 0.002000 0.0000 0.000 /head/day0000 1.258 1.422 1.583 1.732500 to 600600 to 700700-800800-90040404040 240.02 0.00 0.00 16,760.00 0.00 753.50 0.00 119,883.10Corn Silage RationWeight Range (lbs)Days on FeedFeed NameAlfalfa Grass Hay /unit lbs/Unit /lbAs Fed Lbs/Head/DayTotal lbs/steerFeed Cost /steerTotal UnitsRequired(500 steers)Total FeedCost(500 steers) 100.002000 0.0505555800 40.00200 20,000.00Corn Silage 35.002000 0.01819222731.753,990 71.82998 34,930.00Barley Silage 40.002000 0.02000000 0.000Barley Grain 4.4048 0.092455.56820 75.448,542 100.002000 0.05000000 0.000 50.002000 0.02500000 0.000 0.0032-20% Feedlot Suppl. 475.002205 0.21500000 0.000 0.00DDGS Corn/Wheat 6,450.00GreenfeedStraw 0.00 37,584.80 0.00 215.002205 0.098110.750.5130 12.74301:1 Premix 40.0055 0.72700000 0.0002:1 Premix 40.0055 0.7270.250.280.2850.31545 32.72410 16,400.00Limestone 5.5055 0.1000.0650.090.090.10514 1.40128 704.00Other 0.002000 0.00000000 0.000 1.246 1.417 1.532 1.662500 to 600600 to 700700-800800-90040404040Total lbs/steer /head/day 234.12 0.00 0.00 116,068.80Alfalfa Grass Hay RationWeight Range (lbs)Days on FeedFeed NameAlfalfa Grass Hay /unit lbs/Unit /lbAs Fed Lbs/Head/DayFeed Cost /steer2000 0.05011.2512.514152,110Corn Silage 35.002000 0.01800000 0.000Barley Silage 40.002000 0.02000000 0.000Barley Grain 4.4048 0.0926.757.88.79.71,318 100.002000 0.05000000 0.000 0.00 50.002000 0.02500000 0.000 0.0032-20% Feedlot Suppl. 475.002205 0.21500000 0.000 0.00DDGS Corn/Wheat 215.002205 0.09800000 0.0001:1 Premix 40.0055 0.7270.250.270.310.3346 33.444192:1 Premix 40.0055 0.72700000 0.000 0.00Limestone 5.5055 0.10000000 0.000 0.00Other 0.002000 0.00000000 0.000 1.365 1.539 1.726 1.882Straw /head/day 121.26528Total FeedCost(500 steers) 100.00Greenfeed 105.50Total UnitsRequired(500 steers)13,730 260.20 52,800.00 0.00 0.00 60,412.00 0.00 16,760.00 0.00 129,972.00Feed Summary - 160 DaysTotal Feed Costper SteerAverage Feed Cost/DayFeed Cost per lb. of Gain Sold (shrunkweight)Barley Silage Ration 240.02 1.500 0.6435Corn Silage Ration 234.12 1.463 0.6277Alfalfa Grass Hay Ration 260.20 1.626 0.6976Note: The suggested feed rations above were formulated using Cowbytes Beef Ration Balancer software with no included allowance for wastage during feeding.Feed ration quantity and costs should be adjusted accordingly. If you need help with a budget, contact your local Manitoba Agriculture office.Manitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs9Backgrounding Cattle Production Cost WorksheetAssumptions1. Average daily gain (ADG) was assumed to be 2.5 lbs/day.2. It was assumed the feeder steer weighed in at 500 lbs shrunk weight,and was raised to 900 lbs (873 lbs after 3 % shrink).3. Days on feed was 160.4. Investment in facilities and equipment was assumed to handle 500 head.A. Operating CostsYour Cost1. Feed Costs1.01 Alfalfa Grass Hay (57.8 % TDN, 13.7 % CP)800.0lbs/feeder /lbx 0.050 40.00/feeder1.02 Corn Silage (65.2 % TDN, 8.7 % CP)3,990.0lbs/feederx 0.018 /lb 71.82/feeder1.03 Barley Silage (63 % TDN, 11 % CP)0.0lbs/feeder 0.020 /lbx 0.00/feeder1.04 Barley Grain (83.1 % TDN, 12.5 % CP)820.0lbs/feederx0.092 /lb 75.44/feeder1.05 Greenfeedx 0.00.050 0.00lbs/feeder /lb/feeder0.00.025 0.00lbs/feeder /lb/feeder1.06 Strawx 1.07 32-20% Feedlot Suppl. (61.7%TDN, 35.6%CP)0.0lbs/feederx0.215 /lb 0.00/feeder1.08 DDGS Corn/Wheat (77 % TDN, 33.9 % CP)130.0lbs/feederx0.098 /lb 12.74/feeder1.09 1:1 Premixx0.00.727lbs/feeder /lbManitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs 0.0010/feeder1.10 2:1 Premix45.00.727 32.72lbs/feeder /lb/feeder14.00.100 1.40lbs/feeder /lb/feeder0.00.000 0.00lbs/feeder /lb/feeder 5.00 1.75/feeder/feeder 1.70500100 8.50/cwtlbs/feederlbs/cwt/feederx 500 230.00100 1,150.00lbs/feeder/cwtlbs/cwt/feederTotal 1,165.25/feederx 1.11 Limestonex 1.12 Otherx 2. Other Operating Costs2.01 Feeder Cattle CostCommissionInsuranceTrucking-inx Feeder2.02 Strawxx 4.00160.00 50.00 16.002.03 Veterinary Medicine & SuppliesCattle Medication 4.90 0.50 0.72 1.26 1.65 15.00 24.03lbs/feeder/daydays on feed/ton/feederIBR,BVD,PI3,BRSV,PasteurellaVitamin A-DExternal & Internal ParasitesBlackleg & HaemophilusGrowth ImplantsAntibiotics/feederHerd Health ProgramProfessional Servicesx 150.003.00500.00 0.90/hour chargehoursfeeder cattle/feederManitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs11Transportation Costsxx 0.80802500 0.26Total 25.192.04 Annual Fuel & Repair CostsMachinery fuel cost120 2.5x0.1665576x1.5x 0.90x160 1,726.87 500.00 3.45Machinery repair & maintenance 108,000x1.20 1,296.00 500.00 2.59Building repair & maintenance 62,600x2.20 1,377.20 500.00 2.75 8.80/km chargekilometresvisitsfeeder cattle/feeder/feederPTO hpavg HP requiredlitres fuel/hour/hphours per daydiesel / litredays on feedannual fuel costfeeders/feedermachinery capital cost% repair rateoil, repairs & maintenancefeeders/feederbuilding capital cost% repair rateoil, repairs & maintenancefeeders/feeder/feeder2.05 Utilities 1,626.65500 3.252.06 Feeder Selling CostTruckingCalvesx 75.00 5.50490.009.00500.00 7.43cost/yearfeeder cattle/feedermiles/loaded milefeedersloadsfeeders/feederMBP levy, WLPIP, selling commission 5.50 0.00 18.00 23.50MBP LevyWLPIP Insurance Premiumcommission/feederTotal /feeder 30.93Manitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs122.07 Insurancex 188,100 0.40100500 1.50building & equipment investment/ 100 capital/ 100feeder cattle/feederx 692,500 0.00100500 0.00herd investment/ 100 capital/ 100feeder cattle/feeder 49.00500 0.10Total 1.602.08 Manure Removal x xxx 1600.0243.84751.30795 10.00 12.562.09 Barn & Office Supplies 600.00 500 1.20additional coverage for liabilityfeeder cattle/feeder/feederdays on feedm3/feeder/daym3 manure volume% volume shrinkyd3 per m3yd3 manure removal cost/feedertotal barn expensesfeeder cattle/feeder2.10 Death Loss x 1,165.25 1,498.89 30.932.002.00 26.33feeder cattle costmaximum valueselling costsaverage% mortality rate/feeder2.11 Operating Interest(Operating interest is charged on one half the subtotal operating costs) xx 1,165.25 179.994.50160.00365.00 26.54feeder cost½ of feed & other costs% operating interestdays on feeddays /year/feederCapital CostsBuildings,Corrals & Water SystemWindbreak fencePens 6,300 5,300Manitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs13Handling FacilitiesWaterersGatesFeedersBunk FeedersWell & Pressure SystemGrain BinLandscapingTotal 7,500 6,000 2,000 1,500 21,000 8,000 5,000 17,500 80,100Machinery & EquipmentTractor & LoaderMiscellaneousTotal 48,000 60,000 108,000Total Investment 188,100B. Fixed Costs3. Depreciation Original Cost - Salvage ValueUseful Life3.01 Buildings 80,100original cost 8,010salvage value 20.00years useful life 500.00feeder cattle 7.21/feeder3.02 Machinery & Equipment 108,000 21,600 10.00 500.00 17.28original costsalvage valueyears useful lifefeeder cattle/feederOriginal Cost Salvage Value x Investment Rate24.01 Buildings 80,100original cost 8,010salvage value 2.00averagex2.75% investment rate 500.00feeder cattle 2.42/feeder4. Investment4.02 Machinery & Equipment 108,000 21,600 2.00x2.75 500.00 3.56original costsalvage valueaverage% investment ratefeeder cattle/feederC. Labour 1.0 24.00 24.00hours/feeder/year/hour/feederManitoba Agriculture and Resource Development

Guidelines: Background Cattle Production Costs14Breakeven CalculationsCost per lb of gain sold (shrunk weight)Feed Costs 234.12373 0.63feed costlbs gained weight/lb (gain sold) 1,551.76 1,150.00373 1.08operating costsfeeder costlbs gained weight/lb (gain sold) 1,575.76 1,150.00373 1.14operating costsfeeder costlbs gained weight/lb (gain sold) 1,582.23 1,150.00373 1.16oper. & fixed costsfeeder costlbs gained weight/lb (gain sold) 1,606.23 1,150.00373 1.22t

2021 Cost of Production Beef Backgrounding . encouraged to calculate your own costs of production. Good management is assumed in that a balanced ration is being fed, livestock are on a herd health program and handling facilities . Backgrounding Cattle Production Cost Summary - September, 2020 .

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