1. Chapter 17: How Will Needed Products and Services Be Acquired? © 2005 Thomson Delmar Learning. All rights reserved.

2. Key Chapter Concepts: Considering custom operators Facility and equipment costs Animal costs

3. Considering Custom Operators Purpose Existing assets fully utilized Necessary services at lower average cost Minimizes employee training Specialized Enterprises Milking cows Animal estrus detection Heifer-raising Crop raising Manure hauling Equipment rental

4. Facility and Equipment Costs — Equipment Rental Lease Rate Calculation Fixed costs Variable costs Expected depreciation Interest rate Insurance rate Taxes Determining Fair Lease Rates Reference old equipment costs University of Wisconsin Extension Web site

5. Facility and Equipment Costs — Building Rental Lease Rate Calculation Interest Tax rate Insurance rate Expected repair costs Average Lease Rates Old dairy facilities: $10–18/cow/month New dairy facilities: $25+/cow/month Heifer facilities: $2–6/head/month

6. Animal Costs — Forage Contracts Calculating Feed/Inventory Amounts Number of animals Intake requirements Nutritional needs Wastage Dry matter percentage

7. Animal Costs — Forage Contracts Developing Forage Contracts Price based on average cost Price based on dry matter/quality Remedies for substandard feed specified Handling fees specified Payment methods specified Late payment and interest specified Written and signed Verified by lawyer Advantage/Disadvantage Neither party can benefit from market highs/lows

8. Animal Costs — Heifer-Raising Modernization Considerations New housing required Financial resources required for raising Financial resources required for modernization Custom operator charges Phasing plan