1. Does Grazing Lower My Cost of Production? Kenny Burdine University of Kentucky

2. Economic Nature of the Cow-calf Business l Only sector of livestock market that is not a margin business  Costs, productivity, overall price level l Cyclical in nature  Multi-year periods of profit and loss l Wide range of production costs  Production cost are crucial to profitability

3. What does it cost to maintain a cow for one year?

4. KY Auction Prices 500 to 600 lb steers (Med /Large #1)

5. Where are the costs? l Feed  Purchased concentrates and hay  Home grown feeds l Non-feed cash costs  Vet, fuel oil, repairs, hired labor, etc l Non-feed non-cash costs  Depreciation, unpaid labor, non-cash interest

6. KFBM Records (1996-2003) 30% 45% 25%

7. Breaking Down Feed Costs Home grown feed is the single biggest cost for most cow-calf operations!!

8. Home-grown Feed? l Hay production  Seed, fertilizer, labor, machinery, depreciation, and interest l Pasture Maintenance  Renovation, fertilizer, machinery l Both require significant time and financial resources

9. Hay Production What is the most economically efficient forage harvesting machine on your farm?

10. Hay in the cow-calf operation l Hay is an expensive feed on cost basis l Primary winter feed for the cow-calf operation l There is always loss / additional costs associated with feeding hay  Cutting  Harvest  Storage  Feeding  Labor

11. Hay Production Costs l Variable Costs  Seed, fertilizer, hired labor, etc. l Non-cash costs  Depreciation, Interest, etc. l Operator labor

12. Hay Dependency (2006 Survey) l 87% fed more than 3 rolls of hay per animal during winter l 61% fed more than 4 rolls of hay per animal during winter l 62% fed hay 120 days or more l 82% fed hay 100 days or more

13. A Basic Cow-Calf Scenario l 200 acres Grass / legume hay fed annually l 3 ton per acre yield l Equipment  2 tractors (25%)  2 wagons (50%)  Mower, rake, tedder, baler (100%)  No truck!! l 3 hours of family labor per acre @ $10 / hr.

14. Hay Production Cost Calculator l Estimates hay production cost l User inputs  All variable costs of production (seed, fertilizer, fuel, hired labor)  All equipment used in hay enterprise  Other fixed costs l Calculator will estimate hay production costs on a per ton basis l This can be compared to market price of hay in your area

15. Breaking Down the Costs l Variable cost (seed, fert, fuel) - $141 per acre l Family labor (3 hours / acre @ $10 / hr) -$30 per acre l Interest on Investment (6% / yr.) -$5 per acre l Depreciation on Investment -$16 per acre  Variable cost per ton - $46.87  Total cost per ton - $64.07

16. Hay versus Pasture l 1200 lb cow consumes 25 lbs DM per day through winter (31 lbs hay AFB) (NRC) = 1.86 tons over 120 days (winter feeding) l At $64.07 per ton, that is a cost of $119 to winter cows on hay l About $0.99 per day

17. Pasture Maintenance Budget

18. Hay versus pasture l Assuming renovated pastures  $61 per acre pasture maintenance  $122 per cow (2 acres per cow) l If we graze 240 days per year:  $0.51 per grazing day, compared to  $0.99 per day on produced hay

19. Increasing Grazing Days l For every grazing month, we save $14.40 per cow l If we can increase our grazing season by 60 days per year, we save $28.80 per cow l This equates to more than $5 per cwt on a 500 calf!!!

20. Stockpiling Fescue l Common way to increase grazing days l Cost per day likely higher than grazing average, but less than stored feed l Key Considerations  Nitrogen costs  Timing of application  Time forage is unavailable

21. Cost per day on Stockpiled Fescue $0.45$0.50$0.55 20 : 1 $0.80$0.89$0.98 25 : 1 $0.64$0.71$0.79 30 : 1 $054$0.59$0.65 Lbs of DM per lb of N Cost per lb of Nitrogen

22. More Information Kenny Burdine (859) 257-7273 kburdine@uky.edu www.uky.edu/ag/agecon/burdine.php -> click on publications