Guidelines for Estimating 2003 Backgrounding Costs - Manitoba Agriculture, Food and Rural Initiatives

Livestock values in this document may be subject to change as the market responds to the BSE situation. Howerver, it is important to base your decisions not only on market information, but also on the cost of production for your particular operation.

The following is an estimate of the costs of production associated with backgrounding feeder calves. The purpose of this budget is to assist Manitoba livestock producers to calculate their own costs and take into consideration the factors that should be included when budgeting to determine breakeven prices.

Backgrounding generally refers to the assembling, feeding and managing of calves from weaning until they are put onto a high concentrate finishing ration. In general calves fed from weaning to 800-900 pounds are referred to as background feeders. An example of a typical backgrounding operation would be, feed 500 pound steers to gain 1.75-2.75 pounds per day for approximately 100-200 days to produce 800-900 pound backgrounded feeders.

The assumptions on which costs are calculated are clearly defined in the supporting pages. When interpreting these costs for an individual situation, adjustments may be required. Note that on farm feed costs are based on market prices at the farm. It is assumed that all feed is grown on the farm, except for the supplements. Each assumption must be examined and adjustments made where necessary, to apply to the producer's own situation.

Disclaimer: This budget is only a guide and is not intended as an in depth study of the cost of production of the Manitoba cattle industry. Interpretation and utilization of this information is the responsibility of the user. If you require assistance with developing your individual budget, please contact your local MAF Farm Management Specialist or Livestock Specialist.

BACKGROUNDING CATTLE PRODUCTION COSTS SUMMARY - 2003
A.	OPERATING COSTS		Cost/Head	Total	Your Farm
1.	Feed Costs
	1.01	Ground Barley	54.17	27,085	__________
	1.02	Barley Silage	76.16	38,080	__________
	1.03	Hay	2.8	1,400	__________
	1.04	Supplement	20.32	10,160	__________
	Total Feed Costs		$153.45	$76,725	__________

2.	Other Operating Costs
	2.01	Feeder Cost	561.25	280,625	__________
	2.02	Straw	7.04	3,520	__________
	2.03	Veterinary Medicine & Supplies	16.12	8,060	__________
	2.04	Annual Fuel & Repair Costs	4.66	2,332	__________
	2.05	Utilities	3.60	1,800	__________
	2.06	Feeder Selling Cost	27.00	13,500	__________
	2.07	Insurance	5.06	2,530	__________
	2.08	Manure Removal	6.00	3,000	__________
	2.09	Barn & Office Supplies	0.40	200	__________
	2.10	Death Loss	9.89	4,946	__________
	Subtotal Operating Costs		794.48	397,238	__________
	2.11	Operating Interest	16.34	8,171	__________
TOTAL OPERATING COSTS			$810.82	$405,409	__________

B.	FIXED COSTS
3.	Depreciation
	3.01	Buildings	5.29	2,645	__________
	3.02	Machinery & Equipment	12.00	6,000	__________
4.	Investment
	4.01	Buildings	1.62	810	__________
	4.02	Machinery & Equipment	2.25	1,125	__________
TOTAL FIXED COSTS			$21.16	$10,580	__________

TOTAL OPERATING AND FIXED COSTS			$831.98	$415,989	__________

C.	LABOUR COSTS		$20.00	$10,000	__________

TOTAL COST OF PRODUCTION			$851.98	$425,989	__________

Cost per lb of gain sold			$/cwt
	Feed Costs		$44.35		__________
	Operating Costs		$75.38		__________
	Operating & Fixed Costs		$81.50		__________
	Total Costs		$87.28		__________

Breakeven Selling Price
	Operating Costs		$95.84		__________
	Operating & Fixed Costs		$98.34		__________
	Total Costs		$100.71		__________

Breakeven Purchase Price
	Operating Costs		$117.04		__________
	Operating & Fixed Costs		$112.80		__________
	Total Costs		$108.80		__________

Click here for Detailed Backgrounding Cattle Production Cost Worksheet. ASSUMPTIONS Average daily gain (ADG) was assumed to be 2.5 lbs/day. It was assumed the feeder steer weighed in at 500 lbs. shrunk weight, and was raised to 900 lbs (846 lbs after 6 % shrink). Days on feed was 160. Investment in facilities and equipment was assumed to handle 500 head.

Guidelines for Estimating 2003 Backgrounding Costs For Weight Range of 500-900 lbs. Based on 500 Head

BACKGROUNDING CATTLE PRODUCTION COSTS SUMMARY - 2003

ASSUMPTIONS

Guidelines for Estimating
2003 Backgrounding Costs
For Weight Range of 500-900 lbs.
Based on 500 Head