Denise Schwab ISU Extension Beef Program Specialist 2013 Beef Production SPA Lab 2013 Beef Production SPA Lab

All whole farm! What about the cow herd or the forage base??? Enterprise Analysis

What is SPA? S tandardized P erformance A nalysis Developed by National Cattleman’s Association in cooperation with USDA Extension Service. To assist producers with analyzing herd economic and production records. So we all calculate records the same way Why??

What Can Standardized Performance Analysis (SPA) Do? SPA can keep you in business!! Know your OWN economic & reproductive productivity Analyze your operation by enterprise Compare to benchmarks!

The Value of Information Producers on the program for 5 years have reduced annual production costs by nearly $175 per cow. Total Cost per Cow Illinois

What Records are Needed? Balance Sheet Net Worth Statement Tax Forms (Schedule F) Cattle Inventories (Jan. 1) Feed Records Pasture In/Out Dates Pasture/Hay acreage and rental values Breeding stock deaths, sales, and purchases Calf weaning or sales weights and prices Hay Produced (Bale number & average wt.)

Financial Analysis Evaluate assets at their cost or depreciated value (book value) Dunn, BIF 2002

Economic Analysis Evaluate assets at their current market value. Dunn, BIF 2002

Investment in the Business on a per Cow Basis – ISU SPA FinancialEconomic Breeding Stock$604$668 Equipment & Structures$152$287 Real Estate$677$969 Current Assets$133$182 TOTAL$1566$2106 Capital Intensive Business!!! Assets valued at cost or depreciated value Assets valued at market value or what they could be sold for Management efficiency Exit strategy

Financial vs. Economic Cost Example Pasture Land – Example 1 –40 acres being purchased with an $800/acre debt at 8% contract, land taxes of $12/acre, fertilized at $10/acre, depreciation on improvements at $3/acre and a current rental value of $35/acre Financial Land cost$64 Taxes$12 Operating$10 Deprec.$ 3 Total$89 Economic Land cost$35 Taxes$ 0 Operating$10 Deprec.$ 0 Total$45 Depr Ins Repairs Tax Int

Financial vs. Economic Cost Example Pasture Land – Example 2 –40 acres purchased 20 years ago with no debt, land taxes of $12/acre, fertilized at $10/acre, all improvements are depreciated out and a current rental value of $35/acre Financial Land cost$ 0 Taxes$12 Operating$10 Deprec.$ 0 Total$22 Economic Land cost$35 Taxes$ 0 Operating$10 Deprec.$ 0 Total$45 You need to understand BOTH!!

IRM/SPA Production Cost Areas Feed –Stored (purchased or raised) –Grazed (owned or leased) Operating Depreciation –Cattle –Equipment Labor –Hired –Family (Only in Economic costs) Interest (allocated to cattle)

Iowa BCBR Data Correlation to RLM Herd Size.04 Calf weaning weight.28 % Calf crop weaned.10 Calf weight sold/cow.23 Weight produced/cow.18 Cull breeding weight sold/cow -.06 Cattle value sold/cow.14 Calf price.01 Cull breeding stock price.04 Strohbehn, 1995 ISU Beef Research Report Ability to predict return to labor and management Production and price are lowly correlated to profit What Drives Profit?

Correlation to RLM Feed cost / cow-.41 Operating cost / cow -.25 Depr, tax & insur / cow-.30 Total capital charge / cow -.27 Total cost / cow-.47 Feed cost / cwt -.49 Operating cost / cwt -.42 Depr, tax & insur / cwt-.40 Total capital charge / cwt -.41 Total cost / cwt -.61 Best predictors of profits Strohbehn, 1995 ISU Beef Research Report

Variation in Return to Labor & Management -8 financial measures explain over 82% of farm-to-farm variation -Cost factors were far more influential than production or marketing factors. Bottom line: Feed cost is the most important factor in determining profit! Dependent Variable R 2 Feed Cost.567 Depreciation Cost.086 Operating Cost.049 Calf weight.046 Capital charge.024 Calf price.027 Weaning percentage.017 Herd size.007 Total : 225 herd observations Iowa and Illinois SPA records

Biggest Value of SPA Return and Cost Summary for Cow Herd Financial Costs for Cow-Calf Enterprises January 1 Number of Cows in Herd a. Pasture Cost per Cow$48.83$53.43$57.33$43.97$42.85 b. Crop Residues per Cow$1.81$1.69$1.52$1.23$2.20 c. Harvested Forages per Cow$150.72$44.21$70.00$55.52$32.34 d. Non-Purchased Raised Feed Fed per Cow$41.18$67.86$82.43$42.18$81.86 e. Purchased Feed per Cow$21.17$32.49$10.34$21.01$18.51 f. Total Feed Cost per Cow$263.70$199.68$221.62$163.91$ a. Operating Cost per Cow$76.78$61.96$94.84$128.02$ b. Vet Med Cost per Cow$16.77$14.04$11.69$17.61$8.88 Depreciation Cost per Cow$52.29$27.82$20.67$22.33$14.26 Capital Charge per Cow$0.00 $7.72 Hired Labor Cost per Cow$59.38$22.26$20.85$24.92$17.88 Family & Operator Labor Charge per Cowxxxxxxx Total Cost per Cow in Herd, January 1$452.16$311.72$357.98$339.18$319.35

Biggest Value of SPA Reproduction & Production Measures Pregnancy Percentage91.6%94.1%92.9%93.8%92.9% Pregnancy Loss Percentage4.1%3.0%8.5%10.7%9.4% Calving Percentage87.5%91.1%84.5%83.1%83.5% Calf Death Loss0.0% Calf Crop or Weaning Percentage87.5%91.1%84.5%83.1%83.5% Female Replacement Rate19.6%15.3% 16.1%18.5% Calving Distribution: Beginning Calving Date:03/06/0303/12/0403/14/0503/03/0603/20/07 Calves Born During 1st 21 Days48.7%44.3%46.0%21.2%43.0% Calves Born During 1st 42 Days82.4%76.5%75.7%57.6%78.3% Calves Born During 1st 63 Days93.3%91.4%99.2%84.0%97.1% Calves Born After 1st 63 Days6.7%8.6%0.8%16.0%2.9%

Three Producers Son/Father Young Producer Established Producer

Today’s Task: Consultant Strengths Weaknesses Oreos Recommendations

Assignment Paper comparing the strengths and weaknesses of the three operations Include recommendations for them to improve their operation

Thank You Are there any questions? Denise Schwab Benton County Extension Office 501 First Ave Vinton, IA Phone