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					Strategies for Beef Cattle Herds During Times of Drought, v2011
by: Jeffrey E. Tranel, ABM Economist                                   www.coopext.colostate.edu/ABM/

   This 'decision aid' is designed to help beef cow-calf producers compare the financial consequences of five
alternative management strategies during times of limited grazing forage, e.g. drought.
   It is a guide only. Producers should consult with their lenders, tax practioners, attorneys, and/or other
professional before making any final decisions.
   Data can be entered into any cell with a yellow background and blue colored numbers.

Cows                                                                      Calves
  Herd Size (head)                                              100         Number (head)                                       89
  Normal Number Culled (head)                                    15         Average Weight Currently (lbs)                    375
  Average Cow Weight (pounds)                                 1,200         Price Currently (per lb)                         $1.45
  Current Value of Cows (per cow)                             $650          Average Weight at Weaning (lbs)                   600
Interest Rates                                                              Price At Weaning (per lb)                        $1.32
  On Borrowed Operating Monies                                 7.25%        Expected Price Next Year (per lb)                $1.25
  For Invested Monies                                          2.15%      Income Taxes and Capital Gains
                                                                            Total Income Tax Rate (U.S. & State)               19%

OPTION 1: PURCHASE ADDITIONAL FEED
                                  Price                        Cost                    Days of                    Additional Costs
Ration 1             lbs/day     Per Ton                    Per Day                   Add'l Feed                Per Cow Per Herd
Hay                   22.00       $220                          2.42                     30                           73      7,304
Other                 0.00         $0                           0.00                     60                          147     14,695
Other                 0.00         $0                           0.00                     90                          222     22,175
Total                 22.00                                     2.42                    120                          297     29,742

OPTION 2: TRUCK ANIMALS (PAIRS) TO RENTED PASTURE
Distance to/from Pasture (miles)                  300                     Trucking Pairs to Pasture               48.00      4,800
Trucking Cost (per loaded mile)                 $4.00                     Trucking Cows to Home                   36.00      3,600
Pasture Rent (per AUM)                         $25.00                     Pasture Rent                            75.00      7,500
Days on Pasture                                    90                     Fencing                                  3.00        300
Total Fencing Costs                              $300                     Other Costs                              3.00        300
Other Costs (per day)                              $0                     Interest                                 2.99        299
Other Costs (total)                              $300                     Total                                  167.99     16,799

OPTION 3: EARLY WEAN & SELL CALVES, KEEP COWS
Reduced Operating Costs This Year (per cow)                     $50       Change in Operating Costs              (50.00)    (5,000)
Other Costs (per cow)                                            $0       Other Operating Costs                    0.00          0
Reduced Revenues from Calves (per hd)                          $248       Reduced Revenues                       248.25     24,825
                                                                          Total                                  198.25     19,825

OPTION 4: SELL PAIRS & REPLACE COWS (Section 1033e)
Reduced Operating Costs This Year (per cow)         $100                  Revenues from Cow Sales               (650.00)   (55,250)
Reduced Operating Costs Next Year (per cow)         $500                  Reduced Calf Sales This Year           248.25     22,094
Additional Marketing Costs (per cow)                                      Reduced Calf Sales Next Year           750.00    281,250
   Marketing, Yardage, Feed, Etc.                    $12                  Change in Operating Costs             (600.00)   (51,000)
   Brand Inspection                                   $2                  Marketing Costs for Cows                14.00      1,190
   Other                                              $0                  Interest Earnings (18 months)          (20.96)    (1,782)
Cost of Replacement Animals (per head)              $800                  Replacement Animals                    800.00     68,000
                                                                          Total                                  541.29    264,502

				
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posted:8/11/2011
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