Division of Agricultural Sciences 
 UNIVERSITY OF CALIFORNIA 
 
 
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 **S 
 
 ECONOMICS of 
 
 ! FARM FEEDLOTS Hf 
 
 **" in the Rice Area 
 of the 
 Sacramento Valley 
 
 
 
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 : > ^"- JAMES A. PETIT, JR 
 
 " r'w.i GERALD W. DEAN 
 
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 Economics of Farm Feedlots 
 
 in the Rice Area of the Sacramento Valley 
 
 The background: The heavy-soil areas of the Sacramento 
 Valley are well adapted to the production of rice. This crop is usually most 
 profitable and for this reason is grown here extensively. However, govern- 
 ment controls on rice acreage have forced rice farmers to expand acreages 
 of other crop alternatives, such as hay and grain. The question arises 
 whether livestock feeding — and particularly drylot feeding of beef cattle — 
 is economically feasible in this area. 
 
 1 hlS OUllStlTl reports investigations of the economic feasi- 
 bility of incorporating feedlots for beef cattle into the over-all organization 
 of farms located in these heavy-soil areas of the Sacramento Valley. It 
 specifically attempts to answer the following questions: 
 
 * What is the most profitable type of cropping system, and what 
 are the income levels attainable for rice farms without 
 livestock? 
 
 What are the income possibilities available by adding various 
 types of beef feedlot programs to rice farms? 
 
• What type of ration is best suited for cattle feeding in this 
 area? Are the most profitable rations high in forage (con- 
 taining large proportions of silage and haylage), conven- 
 tional alfalfa hay-grain rations, or all-concentrate rations? 
 
 • Which type of storage and feeding facilities best fit these 
 
 situations? Should feeders with relatively small feedlots 
 invest in a feedmill and feed conventional rations or invest 
 in silos and feed rations high in silage? 
 
 • What are the risks and the critical variables which determine 
 the success or failure of the cattle feeding systems studied? 
 
 • When a feedlot program is superimposed on a rice farm, 
 should the cropping system be changed? Should the farm 
 continue to produce rice and other cash crops and buy feeds, 
 or revise its program to furnish the feeds required in the 
 feedlot? 
 
 The main findings of the study are summarized on pages 1 and 2. 
 
 MAY, 1964 
 
 III 
 
''**- ; €} 
 
 CONTENTS 
 
 PAGE 
 
 THE MAIN FINDINGS 1 
 
 GENERAL PROCEDURE 2 
 
 FIXED RESOURCES OF STUDY FARM . 3 
 
 Land 3 
 
 Irrigation Facilities 5 
 
 Machinery, Buildings, and Equipment 5 
 
 Cash Crop Farm 5 
 
 Crop-Livestock Farm Using Silage Rations 5 
 
 Crop-Livestock Farm Using Non-Silage Rations 6 
 
 Labor, Management and Capital 7 
 
 Cost Comparisons 8 
 
 CROP AND LIVESTOCK ALTERNATIVES CONSIDERED 9 
 
 Cropping Alternatives 9 
 
 Livestock Alternatives 9 
 
 METHOD OF ANALYSIS 14 
 
 OPTIMUM CROPPING SYSTEM AND INCOME 
 
 WITHOUT LIVESTOCK 15 
 
 OPTIMUM PLANS AND INCOME LEVELS USING 
 
 SILAGE RATIONS 16 
 
 OPTIMUM PLANS AND INCOME LEVELS USING 
 
 NON-SILAGE RATIONS 18 
 
 OPTIMUM PLAN AND INCOME LEVEL USING A 
 
 COMBINATION OF RATIONS 20 
 
 SENSITIVITY OF CATTLE FEEDING INCOME TO 
 
 PRICE AND GAIN VARIABILITY 21 
 
 Income Variability Resulting from Fluctuations in Cattle Prices 22 
 Effect of Gains Per Day on Income and Relative Advantage of 
 
 Various Rations 26 
 
 Effect of Percentage Shrink and Final Grade on Income from 
 
 Various Rations 31 
 
 APPENDIX A: BASIC DATA 34 
 
 APPENDIX B: OPTIMUM PLAN USING SILAGE 
 
 RATIONS TO CARRY CALVES TO FINISH WEIGHT . 42 
 
 ACKNOWLEDGMENTS 44 
 
 LITERATURE CITED 44 
 
 The Authors: James A. Petit, Jr. was Research Assistant in the Experiment Station and on 
 the Giannini Foundation, Davis. Gerald W. Dean is Associate Professor of Agricultural Economics 
 and Associate Economist in the Experiment Station and in the Giannini Foundation, Davis. 
 
 it 
 
ECONOMICS 
 
 OF FARM FEEDLOTS 
 
 in the Rice Area of the Sacramento Valley 1 
 
 James A. Petit, Jr. and Gerald W. Dean 
 
 Advantages and disadvantages 
 
 The heavy-soil areas of the Sacramento 
 Valley hold the following advantages for 
 beef-cattle feeding: 
 
 • Availability of surplus feed grains and 
 alfalfa hay, now shipped out of this 
 area; conversion of these feedstuffs to 
 beef within the area would seem to be 
 an alternative for farmers to consider. 
 
 • Availability of feeder cattle — from 
 nearby foothill ranges during part of 
 the year; from other parts of the West 
 in any season. 
 
 • A large nearby market for the finished 
 product because of the expanding 
 population on the Pacific Coast. 
 
 The main disadvantage of the area for 
 cattle feeding is the weather: Daytime 
 summer temperatures are extremely high, 
 sometimes reaching 110°-115°F, while 
 winters tend to be damp and chilly. 
 Essentially the entire annual rainfall, 
 averaging about 18 inches, generally falls 
 during a four-month period from De- 
 
 cember to March, accompanied by tem- 
 peratures dropping occasionally to 15°- 
 20°F. Because of mud and poor climatic 
 conditions for feeding during the winter 
 months, many feedlots in the Sacramento 
 Valley are left vacant at this time. 
 
 Scope of study 
 
 An actual farming operation of about 
 1,000 acres was used to define the basic 
 physical resources and the production 
 possibilities considered. Linear program- 
 ming was used to determine the most 
 profitable crop and livestock programs 
 and the income levels possible for this 
 farm. Plans were developed (1) for a 
 cash crop operation, (2) for operations 
 including a farm feedlot of 1,500-head 
 capacity, silos and silage handling equip- 
 ment, and a choice of six rations using 
 silage, and (3) for operations including 
 the same 1,500-head feedlot, a feed mill 
 and associated equipment, and a choice 
 of four rations, including an all-concen- 
 trate ration (barley + supplement) and 
 three other conventional grain-hay 
 rations. 
 
 THE MAIN FINDINGS 
 
 The main findings of the study are: 
 
 The cash crop farm alone (emphasiz- 
 ing rice production) provided an 
 annual management income of about 
 $10,000. 
 
 1 Submitted September 1962. 
 
 Addition of the various types of cattle 
 feeding programs increased potential 
 management income to $40,000 to 
 ),000 per year. 
 
 The most profitable nonsilage ration 
 was all-concentrate (barley + supple- 
 
 [i] 
 
ment) ; the most profitable silage 
 ration included alfalfa haylage, oats- 
 vetch haylage, and barley. If percent- 
 age shrinks and final grades are as- 
 sumed to be the same for these two 
 rations, the cattle feeding programs 
 based on them ranked almost equal in 
 management income at approximately 
 $80,000 a year. However, if the silage 
 ration gives a higher percentage shrink 
 and a lower percentage of finished 
 cattle grading choice, the advantage 
 of the higher concentrate ration can 
 be substantial. 
 
 In none of the situations analyzed was 
 it profitable to attempt to grow all of 
 the grain required to feed cattle; it 
 was always more profitable to raise 
 the maximum acreage of rice per- 
 mitted by government allotments, sell 
 the rice as a cash crop, and buy part 
 of the grain fed. 
 
 Incomes from the optimum plans in- 
 cluding cattle feeding were very sensi- 
 tive both to the level and the margin 
 of cattle prices. 
 
 If the optimum programs presented 
 actually had been followed over the 
 past 11 years, potential incomes would 
 have been variable (ranging from 
 about $50,000 to $200,000 annually) 
 but in no case as low as from cash 
 crop farming alone. 
 
 The level of profits and the choice of 
 
 the optimum rations also were quite 
 sensitive to the daily gains specified. 
 For example, the all-concentrate ration 
 was most profitable only if gains ob- 
 tained from it exceeded by at least 0.37 
 pounds per day those obtained from the 
 optimum silage ration. More detailed 
 discussion of these and other findings 
 are presented in the text. 
 
 It must be recognized that these con- 
 clusions are based on near-peak efficiency 
 as to crop yields, production costs, cattle 
 feeding efficiency, death losses, and gen- 
 eral operation of the farm business. In 
 particular, not every farm operator is 
 qualified to assume the managerial re- 
 sponsibilities which accompany an effi- 
 cient feedlot operation. Special skills, 
 aptitude, and judgment are especially im- 
 portant for buying and selling cattle at 
 the most advantageous terms as to price, < 
 quality and uniformity, and maintaining 
 cattle on feed and gaining at optimum 
 rates throughout the feeding period. 
 Therefore, the income levels shown from 
 the livestock plans presented in this report 
 are levels attainable under superior rather 
 than typical management. However, for 
 operators with sufficient capital and the ^ 
 managerial capacity to make the major 
 shift from cash crops to a crop-livestock 
 program, cattle feeding appears to be an 
 alternative worthy of careful considera- 
 tion in many parts of the rice area. 
 
 GENERAL PROCEDURE 
 
 The study farm of approximately 1,000 
 acres had been operated as a typical rice 
 farm, with no livestock. This report ac- 
 cepts the land, irrigation facilities, and 
 the basic crop machinery of the farm as 
 given or fixed in the analyses to follow. 
 However, two general alternative types 
 of livestock feeding and storage systems 
 arc hypothetically superimposed on these 
 basic ranch resources: (1) A 1,500-head 
 capacity feedlot, 13 air-tight silos, spe- 
 
 cialized forage handling equipment and 
 feeding equipment adapted to silage 
 rations (rations with a high percentage 
 of silage) ; and (2) a 1,500-head capacity 
 feedlot, a feed mill and feeding equip- 
 ment adapted to conventional types of 4 
 hay-grain rations. 
 
 The report uses the following pro- 
 cedure: First, the basic resources of the 
 study farm and the over-all assumptions 
 of the report are discussed. Next, efficient 
 
 [2 
 
crop and livestock programs are de- 
 termined for the basic resource situa- 
 tions, and income comparisons made 
 among alternative plans. Finally, the 
 
 plans including livestock are examined 
 in detail to show the dependence of cattle 
 feeding profits on price and gain relation- 
 ships. 
 
 FIXED RESOURCES OF STUDY FARM 
 
 Land 
 
 The farm contains a net cropland 
 acreage of 974 acres, composed of three 
 grades of soils, designated as A, B and 
 C. The A soil is medium-to-fine textured 
 with good drainage and no alkali, well- 
 adapted to a wide range of field crops. 
 The predominant soil type is Marvin 
 silty clay loam, with lesser amounts of 
 Codora silty clay loam. The B soil also 
 is Marvin silty clay loam, but contains 
 some slight alkali deposits. The C soils 
 are heavy textured, with a high water 
 table, poor structure and alkali spots. 
 These soils are composed of Marvin silty 
 clay (slight alkali), Marvin silty clay 
 loam (slight alkali), Sidds silty clay 
 loam (slight alkali), and Quint silty clay 
 (slight alkali) . The A, B, and C soils 
 total 209, 335, and 430 acres, respectively 
 (a ratio of soil classes of 0.22 : 0.34 : 
 0.44) . The land on the study farm is 
 valued at an average of about $300 per 
 acre. Table 1 shows the annual fixed 
 costs associated with the land investment. 
 
 In evaluating the results of this study 
 it is important to understand how the 
 study farm compares in basic soil re- 
 sources and cropping possibilities with 
 other farms in the rice area (Sitton, 
 1958) . In general, the study farm has a 
 greater proportion of the higher-grade 
 soils and therefore a wider range of crop- 
 ping possibilities than is found in a large 
 part of the rice area. Sitton (1958, pages 
 2—3) divides rice soils into three major 
 natural divisions. 
 
 1. Alluvial fan and flood plain soils 
 adjacent to rivers and streams. 
 They are generally deep, permeable, 
 well-drained, coarse-textured soils 
 
 adapted to a wide range of crops. 
 The A soils on the study farm are 
 of this general type. 
 
 2. Basin soils in the bottom of the 
 troughs. They are fine-textured, 
 poorly-drained soils and more 
 limited in cropping possibilities. 
 The poorest of these soils are used 
 only for rice or pasture. Others are 
 adapted for wider use, including 
 grain and forage. The B and C soils 
 on the study farm are of this general 
 type, but tending toward those with 
 a wider range of crop possibilities. 
 
 3. Terrace soils lying between the 
 rolling foothills and the flat basins. 
 These soils are more variable than 
 the above types, with crop uses 
 ranging from nonirrigated pasture 
 and grain to rice and irrigated for- 
 age crops. The study farm contains 
 none of these soils. 
 
 Depending primarily on the combina- 
 tions of these soils, the crops grown on 
 specific rice farms may range from rice 
 alone, to rotations of rice and other crops 
 on the same fields, to combinations of 
 rice and other crops not grown in the same 
 fields. In a 1950 survey of 49 rice farms 
 in Colusa County, Sitton (1958. pages 30- 
 34) reports that 20 per cent of the farms 
 produced rice only, 43 per cent produced 
 rice and one or more small grains (mainly 
 barley) , 29 per cent produced rice, other 
 grains and some other crop (usually 
 alfalfa or ladino clover) . and 6 per cent 
 produced rice and alfalfa or ladino clover 
 but no other grains. Other crops included 
 oats and vetch, barley and vetch, milo. 
 and sudan grass for seed. While cropping 
 
 [3] 
 
Table 1 
 CAPITAL INVESTMENT AND ASSOCIATED ANNUAL FIXED COSTS FOR CASH CROP FARM 
 
 Item 
 
 Land (1,018 acres at $300). 
 
 Buildings 
 
 2 Implement sheds 
 
 Foreman's house. 
 Machine shed. 
 
 Total buildings. . 
 
 Irrigation equipment 
 
 Well and pump.... 
 2 pumps 
 
 Total irrigation equipment. 
 
 Ranch vehicles 
 
 Pickup (used) 
 
 Pickup 
 
 Jeep 
 
 Bankout wagon 
 
 2 ton truck 
 
 V/i ton truck 
 
 Total ranch vehicles 
 
 Cultural equipment 
 
 115 HP tracklayer 
 
 75 HP tracklayer 
 
 2 50-HP tracklayer 
 
 45 HP diesel-wheel 
 
 40 HP diesel-wheel 
 
 2 25-HP gas-wheel 
 
 Landplane 14' x 60' 
 
 5 sections of harrow and heavy duty 
 
 drawbar 
 
 2 tillers 
 
 2 bottom plow 
 
 2-way plow (4 bottom) 
 
 20' springtooth harrow 
 
 30' spiketooth harrow 
 
 2 12' disc harrows 
 
 15' disc harrow 
 
 8' seeder 
 
 6-row planter 
 
 4-row planter 
 
 6-row cultivator 
 
 Ditcher 
 
 Ridger 
 
 Side-delivery rake 
 
 Rear-mounted mower 
 
 Baler 
 
 Bale loader 
 
 150-gal. sprayer 
 
 Total cultural equipment 
 Miscellaneous 
 
 Office equipment 
 
 Desk and file 
 
 Total miscellaneous. 
 Grand total 
 
 Initial 
 cost 
 
 dollars 
 
 305,500 
 
 10,000 
 
 15,300 
 
 3,000 
 
 28,300 
 
 1,625 
 6,100 
 
 7,725 
 
 1,000 
 2,200 
 1,600 
 1,000 
 3,400 
 3,200 
 
 12,400 
 
 25,000 
 14,700 
 17,200 
 6,000 
 5,300 
 4,000 
 3,600 
 
 350 
 
 1,000 
 450 
 
 4,000 
 630 
 320 
 
 2,800 
 
 2,000 
 900 
 900 
 600 
 
 1,000 
 800 
 500 
 700 
 185 
 
 1,120 
 225 
 
 2,500 
 
 96,780~ 
 
 1,400 
 200 
 
 1,600 
 452,305 
 
 Estimated 
 useful life 
 
 years 
 
 15 
 15 
 15 
 10 
 10 
 10 
 20 
 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 10 
 
 Average in- 
 vestment* 
 
 5.000 
 7,650 
 1,500 
 
 14,150 
 
 812 
 3,050 
 
 3,862 
 
 500 
 
 1,100 
 
 800 
 
 500 
 
 1,700 
 
 1,600 
 
 6,200 
 
 12,500 
 7,350 
 8,600 
 3,000 
 2,650 
 2,000 
 1,800 
 
 175 
 500 
 225 
 
 2,000 
 315 
 160 
 
 1,400 
 
 1,000 
 450 
 450 
 300 
 500 
 400 
 250 
 350 
 92 
 560 
 112 
 
 1,250 
 
 48,390 
 
 700 
 100 
 
 800 
 73,402 
 
 Annual de- 
 preciationf 
 
 Taxes and Interest on 
 insurance} investments 
 
 dollars 
 
 500 
 765 
 150 
 
 1,415 
 
 162 
 610 
 
 772 
 
 200 
 440 
 320 
 100 
 340 
 320 
 
 1,720 
 
 1.667 
 980 
 
 1,147 
 600 
 530 
 400 
 180 
 
 35 
 
 100 
 45 
 
 400 
 63 
 32 
 
 280 
 
 200 
 90 
 90 
 60 
 
 100 
 80 
 50 
 70 
 18 
 
 112 
 22 
 
 250 
 
 7,601 
 
 140 
 20 
 
 160 
 11,669 
 
 3,055 
 
 100 
 
 153 
 
 30 
 
 283 
 
 16 
 61 
 
 77 
 
 10 
 22 
 16 
 10 
 34 
 32 
 
 124 
 
 250 
 147 
 172 
 60 
 53 
 40 
 36 
 
 4 
 
 10 
 4 
 
 40 
 6 
 3 
 
 28 
 
 20 
 9 
 9 
 6 
 
 10 
 8 
 5 
 7 
 2 
 
 11 
 2 
 
 25 
 
 968 
 
 16 
 4,523 
 
 18,330 
 
 350 
 536 
 105 
 
 990 
 
 57 
 214 
 
 270 
 
 35 
 77 
 56 
 35 
 119 
 112 
 
 434 
 
 875 
 514 
 602 
 210 
 186 
 140 
 126 
 
 12 
 35 
 16 
 140 
 22 
 11 
 98 
 70 
 32 
 32 
 21 
 35 
 28 
 18 
 24 
 6 
 39 
 
 3,387 
 
 49 
 7 
 
 56 
 23,468 
 
 Hole. Occasional discrepancy in final digit from rounding original computations to nearest dollar. 
 
 [4] 
 
systems in the area undoubtedly have 
 changed in the past ten years, such as 
 the introduction of safflower as a major 
 crop, this survey indicates that the crop- 
 ping possibilities on a large proportion 
 of rice farms undoubtedly are more re- 
 stricted than on the study farm. The 
 cropping systems, livestock programs 
 and income levels reported in this study 
 reflect this fact and should be so in- 
 terpreted. 
 
 Irrigation facilities 
 
 Approximately 544 acres on the study 
 farm are irrigated by surface water from 
 the irrigation district, the remainder be- 
 ing serviced from wells located on the 
 farm. As in other parts of the rice area, 
 water from the district is relatively in- 
 expensive, costing a flat $11.00 per acre 
 for rice and $1.50 per acre-foot for other 
 crops. The variable cost of pumping water 
 for the remainder of the farm is low be- 
 cause of the high water table, and also 
 is assumed to equal $1.50 per acre-foot. 
 
 The investment and annual fixed costs 
 associated with the irrigation system on 
 the study farm are detailed in table 1, 
 along with the other investment items for 
 a cash crop operation. 
 
 Machinery, buildings, equipment 
 
 Cash crop farm. Table 1 gives the 
 description, investment, and annual fixed 
 costs of the land, buildings, irrigation 
 equipment, and machinery used pri- 
 marily for cash crop production on the 
 study farm. This list corresponds closely 
 to the expected inventory on a rice farm 
 which contracts rice harvesting, raises 
 no livestock, and sells all crops. 
 
 Crop-livestock farm using silage 
 rations. Expanding a cash crop opera- 
 tion to include a farm feedlot operation 
 utilizing silage rations requires certain 
 changes in machinery and facilities (see 
 table 2). The specialized equipment for 
 baling hay is deleted from the machinery 
 inventory and replaced by additional 
 forage handling equipment for bringing 
 
 the forage from the fields and blowing it 
 into the silos. A 1,500-head capacity 2 
 feedlot and 13 air-tight silos constitute 
 the major investment items in converting 
 from the cash crop to the farm feedlot- 
 silage operation. The feedlot costs are 
 high because the entire lot is concreted 
 to permit year-around feeding; heavy 
 winter rains and poor natural drainage 
 necessitate this step. The silos, with a 
 capacity of about 170 tons of forage each, 
 are located near the feedlot. They can be 
 used for moist as well as dry grain and 
 for silage or haylage — a green chop 
 which is field-wilted to 40-50 per cent 
 moisture and then ensiled. 
 
 The feedlot is designed for feeding by 
 automatic unloading trucks, which are 
 loaded by an auger conveyor from the 
 silos. Ingredients of the rations are de- 
 livered automatically from the respective 
 silos into a central auger, where the 
 ration is mixed and delivered to the 
 truck. Proportions of ingredients for the 
 various rations are controlled by varying 
 the unloading time for the particular 
 components; the truck itself rests on a 
 scale permitting control of the total 
 quantity of a ration fed to each pen. The 
 feeding operation is highly mechanized, 
 requiring only one man to feed the 1,500- 
 head lot. 
 
 Despite the large investment in silos, 
 some of the rations studied require more 
 silage during the winter months than can 
 be stored. To permit year-around feeding, 
 it is possible to buy baled alfalfa hay and 
 "reconstitute" it to haylage by chopping 
 it, adding water to bring the moisture 
 level up to haylage content, and blowing 
 it into the silo. This process permits year- 
 around feeding on haylage without re- 
 stricting livestock numbers because of 
 limited storage capacity or quantity of 
 home-grown haylage. However, because 
 
 2 The 1,500-head figure is a "practical" ca- 
 pacity taking into account the unavoidable de- 
 lays and time lapses between lots of cattle. At 
 any given time the physical capacity of the lot 
 is slightly over 1,700 head. 
 
 [5 
 
Table 2 
 
 ADDITIONS AND DELETIONS OF MACHINERY AND FACILITIES FOR CONVERTING FROM 
 
 CASH CROP OPERATION TO FARM FEEDLOT, SILAGE RATIONS 
 
 Item 
 
 Initial 
 cost 
 
 dollars 
 
 Estimated 
 useful life 
 
 years 
 
 Average in- 
 vestment* 
 
 Annual de- 
 preciation! 
 
 Taxes and 
 insurance! 
 
 Interest on 
 investments 
 
 dollars 
 
 Delete 
 
 Rear-mounted mower. 
 Side-delivery rake... . 
 
 Baler 
 
 Bale loader 
 
 Total deletions. 
 
 Add 
 
 Livestock equipment and facilities 
 
 Feedlot, wiring, plumbing and 2 
 
 scales 
 
 13 air-tight silos 
 
 3 forage unloaders 
 
 2 grain unloaders 
 
 Crimper 
 
 Auger 
 
 Squeeze 
 
 3 trucks 
 
 4 feeder kits 
 
 Total. 
 
 Cultural equipment 
 
 Swather (14') 
 
 Forage chopper 
 
 Accessories for chopper . 
 Blower 
 
 Total 
 
 Total additions. 
 
 Net additions 
 
 185 
 
 700 
 
 1,120 
 
 225 
 
 2,230 
 
 90,000 
 
 157,274 
 
 5,250 
 
 3,850 
 
 1,200 
 
 3,000 
 
 500 
 
 10,200 
 
 6,531 
 
 277,805 
 
 4,705 
 
 8,154 
 
 2,294 
 
 885 
 
 16,038 
 293,843 
 
 291,613 
 
 92 
 350 
 560 
 112 
 
 1,115 
 
 45,000 
 
 78,637 
 
 2,625 
 
 1,925 
 
 600 
 
 1,500 
 
 250 
 
 5,100 
 
 3,266 
 
 138,902 
 
 2,352 
 
 4,077 
 
 1,147 
 
 442 
 
 8,019 
 146,922 
 
 145,806 
 
 18 
 
 2 
 
 70 
 
 7 
 
 112 
 
 11 
 
 22 
 
 2 
 
 223 
 
 22 
 
 4,500 
 
 900 
 
 7,864 
 
 1,573 
 
 525 
 
 52 
 
 385 
 
 38 
 
 120 
 
 12 
 
 300 
 
 30 
 
 50 
 
 5 
 
 1,020 
 
 102 
 
 653 
 
 65 
 
 15,417 
 
 2,778 
 
 470 
 
 47 
 
 815 
 
 82 
 
 229 
 
 23 
 
 88 
 
 9 
 
 1,604 
 
 160 
 
 17,021 
 
 2,938 
 
 16,798 
 
 2,916 
 
 * Computed assuming no salvage value. 
 
 t Straight-line method. 
 
 | Figured at 1 per cent of original cost. 
 
 § Seven per cent of average investment. 
 
 Note: Occasional discrepancy in final digit from rounding original computations to nearest dollar. 
 
 78 
 
 3,150 
 
 5,505 
 
 184 
 
 135 
 
 42 
 
 105 
 
 18 
 
 357 
 
 229 
 
 9,723 
 
 165 
 
 285 
 
 80 
 
 31 
 
 561 
 10,285 
 
 10,206 
 
 the quality of reconstituted haylage is 
 lower than haylage harvested directly, 
 the two forages should be blended for 
 late-winter feeding. 
 
 Crop-livestock farm using non- 
 silage rations. In addition to the basic 
 machinery in table 1, a feedlot operation 
 using conventional grain-hay rations re- 
 
 quires the machinery and facilities listed 
 in table 3 (see also King, 1962). Of 
 course, the required amount of hay stor- 
 age and handling facilities varies depend- 
 ing on the ration fed. The investment in 
 table 3 provides sufficient hay storage for 
 a daily ration including up to eight 
 pounds of hay per head. An all-concen- 
 
 [6] 
 
Table 3 
 
 ADDITIONS OF MACHINERY AND FACILITIES FOR CONVERTING FARM CASH CROP OPERATION 
 
 TO FARM FEEDLOT, NONSILAGE RATIONS 
 
 Item 
 
 initial 
 cost 
 
 Estimated 
 useful life 
 
 Average in- 
 vestment* 
 
 Annual de- 
 preciation! 
 
 Taxes and 
 insurance! 
 
 Interest on 
 investment§ 
 
 
 dollars 
 
 years 
 
 dollars 
 
 Add 
 
 Livestock equipment and facilities 
 Feedlot, wiring, plumbing, 2 scales 
 Feed mill and storage facilities ... 
 Components for all-concentrate 
 
 rations 
 
 Additional components for rations 
 using alfalfa-hay|| 
 
 90,000 
 77,120 
 
 (53,150) 
 
 (23,970) 
 500 
 1,633 
 169,253 
 
 20 
 20 
 
 (20) 
 
 (20) 
 10 
 10 
 
 45,000 
 38,560 
 
 (26,575) 
 
 (11,985) 
 250 
 816 
 
 84,626 
 
 4,500 
 3,856 
 
 (2,658) 
 
 (1,198) 
 
 50 
 
 163 
 
 8,569 
 
 900 
 771 
 
 (532) 
 
 (240) 
 5 
 
 16 
 1,693 
 
 3,150 
 2,699 
 
 (1,860) 
 
 (839) 
 
 Squeeze 
 
 18 
 
 Self-unloading feeder kit 
 
 57 
 
 Net additions 
 
 5,924 
 
 
 
 * Computed assuming no salvage value. 
 t Straight-line method. 
 t Figured at 1 per cent of initial cost. 
 § Seven per cent of average investment. 
 
 || Assumes sufficient hay storage facilities for daily rations including up to 8 pounds of alfalfa-hay per head for a 1500-head 
 capacity feedlot. For additional details on feed mill costs see: King (1962). 
 
 Note: Occasional discrepancy in final digit from rounding original computations to nearest dollar. 
 
 trate ration could eliminate hay handling 
 facilities and reduce the initial cost by 
 approximately $24,000. The correspond- 
 ing corrections in annual fixed costs are 
 made in later comparisons of incomes 
 among plans. The feed-mill operation 
 represents a typical layout and feeding 
 procedure for a feedlot with a small mill. 
 It takes about three men to run the mill 
 and feed the cattle on the conventional 
 hay-grain rations, but only two men for 
 the all-concentrate ration since there is no 
 hay to handle. Before mixing, the hay 
 component of the rations is unbaled and 
 ground in a hay mill, and the grain is 
 rolled. The mixed feed can be stored in 
 feed bins or loaded directly on the feed- 
 ing truck. The truck is self-unloading so 
 that feeding is accomplished by driving 
 along the bunkers. 
 
 Labor, management, and capital 
 
 The full-time labor and management 
 force on the ranch consists of a manager- 
 owner and a crop foreman. The crop 
 foreman supervises field crews and keeps 
 
 time cards on the labor and machinery 
 inputs to different crops and fields. Costs 
 are summarized and other records and 
 accounts are kept by a bookkeeper work- 
 ing about one-half time. When the feed- 
 lot is added, additional men are needed 
 year-around for feeding. As mentioned 
 above, the silage programs require one 
 man for feeding while the feed mill pro- 
 grams require three for this purpose. The 
 manager-owner devotes the major portion 
 of his time to the cattle operation, par- 
 ticularly in buying and selling cattle, buy- 
 ing feeds and specifying the rations to be 
 fed. The manager, together with the men 
 doing the feeding, also watches for sick- 
 ness, for cattle off feed, and helps to sort 
 and treat animals. However, many feed- 
 lots of this size hire an additional man 
 strictly for handling cattle (exclusive of 
 feeding) ; in this case, the income figures 
 reported later would be lowered by about 
 $5,000 per year. All full-time employees 
 are salaried except the owner-manager 
 who receives his compensation from 
 profits. The remaining labor for crop and 
 
 [7] 
 
livestock production on the farm is hired 
 seasonally at prevailing rates in the area. 
 It is assumed that the operation has the 
 management and financial backing to 
 warrant obtaining ample operating 
 capital or investment capital for any of 
 the plans envisioned in this report. It is 
 further assumed that that the owner- 
 manager has 100 per cent equity in the 
 land, machinery, and feeding facilities, 
 but borrows operating capital to finance 
 the crop production and cattle inventory. 
 Of course, financial conditions vary 
 widely from situation to situation and 
 may require corresponding adjustments 
 in the costs and returns shown later. For 
 example, if investment capital for the 
 feedlot construction and silos must be 
 borrowed, the interest paid would be a 
 
 cash fixed cost rather than noncash 
 "interest on investment." (Such adjust- 
 ments could be made directly from the 
 data in appendix table A-ll.) 
 
 Cost comparisons 
 
 Table 4 itemizes the major categories 
 of fixed costs associated with the various 
 farming programs analyzed in this re- 
 port. The bottom portion of table 4 gives 
 the total fixed costs for each of the three 
 major situations studied. The fixed costs 
 for the plans including livestock are 
 obviously considerably higher than for 
 the cash crop operation. Fixed costs for 
 the silage operation are $5,734 higher 
 than those for the conventional ration 
 operation; although labor costs for the 
 silage operation are $8,000 lower than 
 
 Table 4 
 
 SUMMARY OF FIXED COSTS FOR ENTIRE FARM, OPERATED AS CASH CROP FARM, 
 
 FARM FEEDLOT WITH SILOS, AND FARM FEEDLOT WITH FEEDMILL 
 
 Item 
 
 Depreci 
 ation 
 
 Taxes 
 
 and 
 
 insurance 
 
 Interest 
 
 on 
 
 investment 
 
 Miscellane- 
 ous cash 
 fixed costs 
 
 Total 
 
 annual fixed 
 
 costs 
 
 dollars 
 
 Land (table 1) 
 
 Buildings (table 1) 
 
 Irrigation equipment (table 1) 
 
 Cash-crop machinery and facilities (table 1). . . . 
 Additional machinery and equipment for silage 
 rations (table 2) 
 
 6. Additional machinery and equipment for non- 
 
 silage rations (table 3) 
 
 7. Bookkeeping and overhead (Accountant plus 
 
 misc. off. exp.) 
 
 8. Crop foreman (Annual salary) 
 
 9. Feeding labor, silo operation (One man, annual 
 
 salary) 
 
 10. Feeding labor, feedmill operation (3 men, 
 
 annual salaries) 
 
 1,415 
 
 772 
 
 9,481 
 
 16,798 
 
 8,569 
 
 11. Total fixed costs for cash-crop farm (sum of 
 
 items 1, 2, 3, 4, 7, 8) 
 
 12. Total fixed costs for farm plus feedlot with silo 
 
 operation (sum of items 1, 2, 3, 4, 5, 7, 8, 9). . . 
 
 13. Total fixed costs for farm plus feedlot with feed- 
 
 mill operation (sum of items 1, 2, 3, 4, 6, 7, 8, 10) 
 
 11,669 
 28,466 
 20,238 
 
 3,055 
 
 283 
 
 77 
 
 1,108 
 
 2,916 
 
 1,693 
 
 4,523 
 7,439 
 6,216 
 
 18,330 
 990 
 270 
 
 3,877 
 
 10,206 
 5,924 
 
 23,468 
 33,675 
 29,392 
 
 Note: Occasional discrepancy in final digit from rounding original computations to nearest dollar 
 
 I 8] 
 
 5,200 
 5,000 
 
 5,000 
 
 13,000 
 
 10,200 
 15,200 
 23,200 
 
 21,385 
 2,688 
 1,120 
 
 14,466 
 
 29,920 
 
 16,186 
 
 5,200 
 5,000 
 
 5,000 
 
 13,000 
 
 49,860 
 84,780 
 79,046 
 
for the conventional ration operation, the 
 annual fixed costs associated with the in- 
 vestment in the silage operation are $13,- 
 692 higher ($13,734-$8,000=$5,734) . 
 Thus, the annual fixed costs of the con- 
 
 ventional and the silage programs are 
 quite comparable. The comparative ad- 
 vantage of the two systems therefore is 
 likely to hinge on factors other than 
 annual overhead costs. 
 
 CROP AND LIVESTOCK ALTERNATIVES 
 CONSIDERED 
 
 Cropping alternatives 
 
 Each of the three soil groups on the 
 study farm is physically adapted to a 
 range of crops. Table 5 summarizes 
 yields, costs and returns, by soil group, 
 for each crop alternative considered. 
 While certain high-income cash crops, 
 such as tomatoes and sugar beets, might 
 be grown on parts of the A soil on the 
 ranch, the range of crops considered is 
 limited to those more typically grown in 
 the rice area. Yields were estimated in 
 consultation with Farm Advisor person- 
 nel familiar with the area, and checked 
 against county yield records and crop his- 
 tory on the study farm. 3 Production costs 
 for each crop were estimated by updating 
 and revising past cost studies of Farm 
 Advisors, and comparing these with pro- 
 duction costs on the study ranch (appen- 
 dix tables A-l to A- 10). Since haylage 
 and silage are used directly on the farm 
 and have no established sale value, prices 
 and returns are not computed for these 
 alternatives in table 5. In the plans pre- 
 sented later, these activities contribute 
 toward total profits through the livestock 
 feeding opportunities they permit. 
 
 Livestock alternatives 
 
 To find the most profitable feeding pro- 
 gram for a number of situations, ten dif- 
 ferent rations were considered, ranging 
 from an all-concentrate ration to rations 
 high in silage and haylage. A major prob- 
 lem was encountered in establishing daily 
 
 3 F. L. Bell, and Robert Sailsbery, Glenn 
 County farm advisors, were particularly helpful 
 in suggesting appropriate crop yield levels for 
 the various soils. 
 
 gains for each of these rations. While re- 
 sults from a large number of individual 
 feeding trials were available, the experi- 
 mental conditions from trial to trial varied 
 greatly as to type and breed of animal, 
 weighing conditions, climatic conditions, 
 control rations, and other factors. There- 
 fore, to estimate gains more directly com- 
 parable among rations, the relationship in 
 equation (1), derived experimentally by 
 Garrett et al. (1959) was used: 
 (1) TDN = 0.0331 W 075 (1.48) G 
 
 where TDN = pounds of total digesti- 
 ble nutrients fed per day. (Concen- 
 trates are entered in the equation at 
 100 per cent of their TDN value; 
 good quality roughage at 75 per cent 
 of reported TDN, and poor quality 
 roughage at 50 per cent of reported 
 TDN.) 
 
 W = weight of the animal in pounds 
 G = gain in pounds per day 
 
 The daily requirements for feeder cat- 
 tle were taken from Morrison (1949). 
 Tables 6 and 7 give these requirements, 
 the composition of feeds, and the com- 
 ponents of the ten rations considered, 
 along with estimated gains per day based 
 on equation (1). The resultant gains, 
 varying from 2.37 to 2.87 pounds per day 
 probably should be considered close to 
 the maximum attainable under actual 
 feeding conditions on a year-around 
 basis. Many feeders will not be able to 
 obtain the gain levels specified in table 7 
 under normal day-to-day conditions. For 
 example, in a study based on a survey of 
 85 feedlot operators. Hopkin ( 1957. page 
 24) reports average gains in California 
 
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Table 6 
 FATTENING REQUIREMENTS AND COMPOSITION OF FEEDS 
 
 
 Dry 
 matter 
 
 Digestible 
 protein 
 
 TDN 
 
 Calcium 
 
 Phos- 
 phorus 
 
 Carotene 
 
 Estimated 
 net energy 
 
 
 pounds/day 
 
 mg/day 
 
 therms/day 
 
 Requirements for fattening 
 yearling cattle (800 pounds) 
 
 17.8- 
 20.4 
 
 1.5- 
 1.7 
 
 14.1- 
 
 15.9 
 
 .044 
 
 .042 
 
 45 
 
 13.0- 
 
 14.6 
 
 Composition of feeds 
 
 per cent 
 
 mg/pound 
 
 therms/cwt 
 
 Concentrates 
 
 Barley 
 
 89.9 
 88.0 
 85.0 
 92.2 
 79.5 
 
 90.5 
 60.0 
 60.0 
 26.3 
 
 6.9 
 8.2 
 6.6 
 5.9 
 23.4 
 
 11.2 
 7.1 
 3.4 
 1.1 
 
 78.8 
 78.5 
 80.1 
 72.4 
 58.3 
 
 51.4 
 35.7 
 35.0 
 17.2 
 
 0.06 
 0.02 
 0.02 
 0.57 
 3.20 
 
 1.47 
 0.84 
 
 0.09 
 
 0.33 
 0.32 
 0.27 
 0.07 
 0.66 
 
 0.24 
 0.17 
 
 0.06 
 
 0.2 
 
 2.2 
 0.1 
 8.7 
 
 8 2 
 18.9 
 40.2 
 
 5.8 
 
 71 4 
 
 Milo 
 
 #2 Dent corn 
 
 Beet pulp 
 
 76.4 
 80.1 
 74.3 
 
 U.C. supplement* 
 
 Roughage 
 
 Alfalfa hay . 
 
 57.2 
 41.5 
 
 Alfalfa haylage 
 
 Oat-vetch haylage 
 
 Corn silage 
 
 29.1 
 29.8 
 16.3 
 
 
 
 * U.C. supplement = 57 per cent cottonseed meal 
 20 per cent alfalfa meal 
 10 per cent molasses 
 7 per cent ground limestone 
 6 per cent trace mineralized salt 
 Source: Morrison (1949). 
 
 feedlots ranging from only 1.86 to 2.13 
 pounds per day for 600-pound steers, and 
 2.08 to 2.33 pounds per day for 900- 
 pound steers. Thus, the income figures 
 derived from cattle feeding as shown in 
 this report should be interpreted as near- 
 ing the upper limit attainable by the most 
 efficient managers. The importance of 
 gains per day on the level of income at- 
 tainable is discussed in more detail on 
 page 26. 
 
 Table 8 summarizes the gross return 
 minus purchase cost per head for cattle 
 fed on each of the ten rations. The higher 
 concentrate rations naturally show greater 
 returns when so computed because of 
 greater weight gains. However, one pur- 
 pose of this study is to find which rations 
 are more profitable when livestock feed- 
 ing is considered as one component in an 
 over-all farming program. 
 
 The feeder cattle are bought as 600- 
 pound good-to-choice feeders, fed 150 
 
 days and sold at 922 to 995 pounds, de- 
 pending on the ration fed. These market- 
 ing weights represent actual weight sold 
 after deducting a 3% per cent shrink on 
 the gross weight. (Data based on Wyckoff, 
 1961.) The gains presented in table 7 are 
 gains in the lot before shrink is deducted. 
 It is also assumed that differences among 
 rations in finishing grade are negligible — 
 that 75 per cent of the cattle finish choice 
 and 25 per cent good for each ration. 
 These assumptions probably are unduly 
 favorable to the higher roughage rations 
 relative to higher concentrate rations. It 
 is likely that cattle fed on the former will 
 have a higher percentage shrink and 
 place a smaller percentage of animals in 
 the choice grade as compared with cattle 
 fed on the latter. As data were not avail- 
 able to specify with precision the differ- 
 ences among rations for these factors, the 
 same assumptions were used for all. How- 
 ever, the effects on comparative incomes 
 
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Table 8 
 
 PURCHASE COST, GROSS RETURN AND GROSS RETURN MINUS PURCHASE COST 
 
 PER HEAD FOR CATTLE FED FOR EACH OF THE TEN RATIONS 
 
 
 Purchase cost 
 
 Gross return 
 
 Gross 
 return 
 
 Ration number 
 
 Average 
 
 weight 
 
 Average price 
 per cwt* 
 
 Average 
 cost 
 
 Average 
 weightf 
 
 Average price 
 per cwtt 
 
 Average gross 
 return§ 
 
 minus 
 
 purchase 
 
 cost 
 
 
 pounds 
 
 dollars 
 
 pounds 
 
 dollars 
 
 1 
 
 600.0 
 600.0 
 600.0 
 600.0 
 600.0 
 600.0 
 600.0 
 600.0 
 600.0 
 600.0 
 
 25.00 
 25.00 
 25.00 
 25.00 
 25.00 
 25.00 
 25.00 
 25.00 
 25.00 
 25.00 
 
 150.00 
 150.00 
 150.00 
 150.00 
 150.00 
 150.00 
 150.00 
 150.00 
 150.00 
 150.00 
 
 994.4 
 994.4 
 991.5 
 956.8 
 939.4 
 936.5 
 942.3 
 925.0 
 922.0 
 927.8 
 
 25.375 
 25.375 
 25.375 
 25.375 
 25.375 
 25.375 
 25.375 
 25.375 
 25.375 
 25.375 
 
 252.33 
 252.33 
 
 251.59 
 242.79 
 238.37 
 237.64 
 239.11 
 234.72 
 233.96 
 235.43 
 
 102 33 
 
 2 
 
 102 33 
 
 3 
 
 101 59 
 
 4 
 
 92 79 
 
 5 
 
 88 37 
 
 6 
 
 87 64 
 
 7 
 
 89 11 
 
 8 
 
 84 72 
 
 9 
 
 83 96 
 
 10 
 
 85 43 
 
 * Assume purchase 50 per cent choice and 50 per cent good with choice at $25.75 cwt and good at $24.25/cwt giving an average 
 price/cwt of $25.00. 
 
 f 150-day average feeding period. Gains per day are shown in table 7. Weight shown is after a 3'/ 2 per cent shrink has been 
 deducted. 
 
 t Assume finish 75 per cent choice and 25 per cent good with choice at $25.75/cwt and good at $24.25/cwt giving an average 
 price/cwt of $25,375. 
 
 § Death loss assumed to be negligible. 
 
 of varying percentage shrinks and final 
 grades are discussed on page 31. 
 
 It also was assumed that death losses 
 for cattle on all of the rations were negli- 
 gible. However, differences in death losses 
 among rations might be a factor in choice 
 of ration. For example, with the feedlot 
 at a capacity of 3,600 head per year, a 1 
 per cent death loss would reduce gross 
 and net incomes by about $7,000 per 
 year. 
 
 For the major part of the analysis, a 
 zero price margin is assumed — good- 
 choice cattle are bought and sold at an 
 average price of 25 cents per pound. 
 (However, average sale price slightly ex- 
 ceeds purchase price because of a larger 
 percentage in the choice grade, table 8.) 
 In essence, this implies that there is no 
 within-year trend or cycle in cattle prices. 
 The effect of different sets of price rela- 
 tionships is analyzed later in more detail. 
 
 METHOD OF ANALYSIS 
 
 Given the large number of crop and 
 livestock alternatives presented, linear 
 programming (Heady and Candler, 1958) 
 is used to evaluate the profitability of the 
 large number of combinations possible. 
 Linear programming is a mathematical 
 technique which selects the most profit- 
 able combination of activities from those 
 available, consistent with resources avail- 
 able, government programs, and other re- 
 
 strictions. First, the cost and net return 
 from each of the crop and livestock alter- 
 natives is budgeted (see the text and 
 appendix tables for crop and livestock 
 budgets) . Then, the resource restrictions 
 are specified. In this study, the major re- 
 stricting resources are the acreage of total 
 farmland, acreage of land in each soil 
 class, rice allotment, maximum acreage of 
 land doublecropped (no more than 50 per 
 
 [14 
 
cent of each soil type), feedlot capacity 
 by months (1,500-head "practical" ca- 
 pacity), and silo storage space. 4 Finally, 
 given these alternatives and restrictions, 
 the linear programming procedure se- 
 
 lects the most profitable plan. (Problems 
 solved on the IBM 704 computer.) By 
 changing the alternatives, restrictions, 
 prices and other data, solutions to a range 
 of situations can be obtained. 
 
 OPTIMUM CROPPING SYSTEM AND 
 INCOME WITHOUT LIVESTOCK 
 
 Table 9 presents the most profitable 
 cropping system and the resulting level of 
 income for the study ranch when operated 
 as a cash crop farm with no livestock — 
 the typical type of operation in the rice 
 area. The results serve as a point of com- 
 parison with later analyses which convert 
 the operation to alternative types of farm- 
 feedlot programs. Rice is the most profit- 
 able cash crop on each soil group. How- 
 ever, the 309-acre rice allotment is most 
 profitably planted on the better soils; all 
 of the A soils (209 acres) and 100 acres 
 of the B soils are allocated to rice. 5 The 
 remainder of the B soil (235 acres) is 
 planted to alfalfa, the next most profitable 
 cash crop on B soils. Aside from rice, 
 barley x milo (doublecropped) is the most 
 profitable cash crop on C soils. Since 
 doublecropping is limited to 50 per cent 
 of the acreage, 215 acres of C soil are 
 planted to barley x milo (doublecropped) 
 and the remaining C acreage is planted 
 to milo, the next ranking crop in profit- 
 ability. 
 
 The bottom portion of table 9 sum- 
 
 Table 9 
 
 OPTIMUM CROPPING SYSTEM AND INCOME 
 
 LEVEL WITHOUT LIVESTOCK 
 
 Category 
 
 Crop 
 
 Acres 
 
 Crops 
 
 Soil A 
 
 Rice 
 Rice 
 
 Alfalfa hay 
 Barley x milo 
 
 (doublecropped) 
 Milo 
 
 209 
 
 Soil B 
 
 100 
 
 SoilC 
 
 235 
 
 
 215 
 215 
 
 
 dollars 
 
 Costs and returns 
 
 Gross income 
 
 Cash variable costs. . . 
 
 Cash fixed costs 
 
 Depreciation 
 
 Interest on investment 
 
 132,940 
 76,086 
 12,186 
 11,669 
 23,468 
 
 
 dollars 
 
 Net income 
 
 Net cash income* 
 
 Net farm income 
 
 Management income.. 
 
 44,668 
 
 32,999 
 
 9,531 
 
 * See definitions on page 16. 
 
 4 Silo storage space is most limiting at the end of the summer when alfalfa haylage harvest is 
 completed. Two silos are set aside for grain and the remaining eleven (total capacity = 1.870 tons 
 haylage) are available for silage. The cattle on feed during the summer eat the silage component 
 of the ration after it has been allowed to process in the tanks — a period of approximately two weeks 
 after harvest. The excess supply harvested accumulates through the summer, reaching a peak with 
 the last cutting of alfalfa. If enough silage cannot be stored to carry the 1,500 head of cattle 
 through the winter, either hay must be purchased and reconstituted, cattle numbers reduced, or a 
 different ration fed. 
 
 5 Putting all of the A soils into rice assumes that continuous rice is possible. While continuous 
 rice is not typical, some fields in the study area have maintained or increased rice yields when 
 continuously cropped with rice over a 15-year period. More typically land is planted to rice for 3-5 
 years, then fallowed or planted to a nonirrigated crop for a year, followed by safflower, milo, bean, 
 oats-vetch or some other alternative for a year, and then returned to rice. If continuous rice is not 
 considered practical, the cropping system in table 9 could be revised to combine A and B soils 
 into one rotation, with a maximum of 4 years of rice followed by 3 years in alfalfa. Such a revision 
 would reduce management income by only about $1,000 from that shown in table 9. 
 
 [15] 
 
Net cash income = gross income minus cash variable costs minus cash fixed 
 costs. This figure gives the cash remaining from the business after paying all 
 cash expenses for the year. Unless this figure is positive, the operator will be 
 forced to draw on savings or outside sources of funds to continue in operation, 
 even in the short run. 
 
 Net farm income = net cash income minus depreciation. If this figure is posi- 
 tive, the operator can stay in business indefinitely. He can replace his equipment, 
 pay all cash costs, and have cash remaining. However, this figure may be so low 
 as to provide returns to the operator's labor, management, and capital which are 
 far below market rates. Net farm income as defined here is approximately equal 
 to taxable income as defined by the Internal Revenue Service. 
 
 Management income = net farm income minus interest on investment. This 
 figure is a more accurate measure of the true "profit" of the operation. It repre- 
 sents what is left for the owner-manager's labor and management after paying 
 all other factors of production at the market rates. It is assumed that the man- 
 ager has full equity in his land and equipment. Hence, the "interest on invest- 
 ment" is not a cash cost, but represents an opportunity cost (what the capital 
 could earn if invested elsewhere at market rates). If the operator owned less 
 than 100 per cent of his business and therefore paid cash interest costs, both net 
 cash income and the net farm income would be correspondingly lowered but 
 management income would remain unchanged. 
 
 marizes the costs and returns and the net 
 income figures from this cropping system. 
 (See also appendix table A-ll.) Since 
 comparable net income figures are used 
 for other plans throughout the report, 
 they are briefly defined in the box above. 
 The results presented in table 9 show 
 that the optimum cropping system alone 
 provides sizable net cash and net farm in- 
 comes, and leaves a management income 
 roughly comparable with salaries paid to 
 
 professional farm managers on operations 
 of this size and complexity. Although rice 
 harvesting is assumed to be contracted in 
 this study, the income figures likely could 
 be raised somewhat by owning rice har- 
 vesting machinery, particularly in view 
 of timeliness of harvest. Succeeding sec- 
 tions evaluate the income possibilities of 
 reorganizing the resources of this cash 
 crop farm into various types of farm feed- 
 lot programs. 
 
 OPTIMUM PLANS AND INCOME LEVELS 
 USING SILAGE RATIONS 
 
 Table 10 summarizes the optimum 
 farm organizations and income levels pos- 
 sible when a 1,500-head capacity feedlot, 
 13 air-tight silos and associated equip- 
 ment are added to the cash crop farm. 
 The results are presented for each of the 
 six silage rations outlined earlier in table 
 
 7. Ration 5, using alfalfa haylage, oats- 
 vetch haylage and barley, provides the 
 highest income of the several plans, re- 
 gardless of the income measure employed. 
 Some milo is produced in each of the 
 plans in table 10. In practice, a feeder 
 would likely use the milo produced as 
 
 [16 
 
Table 10 
 COMPARISON OF OPTIMUM PLANS FOR THE SILAGE RATIONS* 
 
 
 Crop 
 
 feed and livestock systems, and costs and returns for alternative plans 
 
 Category 
 
 Ration 5 
 
 Ration 6 
 
 Ration 7 
 
 Ration 8 
 
 Ration 9 
 
 Ration 10 
 
 
 acres 
 
 Cropsf 
 
 Soil A (209 acres) 
 
 R-209 
 
 R-166 
 
 AH-43 
 
 R-209 
 
 R-166 
 CS-43 
 
 R-166 
 CW-43 
 
 R-166 
 CW-43 
 
 Soil B (335 acres) 
 
 AH-29 
 OVXM-44 
 
 AH-291 
 OVXM-44 
 
 AH-29 
 OVXM-44 
 
 R-26 
 AH-309 
 
 R-26 
 AH-309 
 
 R-26 
 AH-309 
 
 Soil C (430 acres) 
 
 R-100 
 AH-93 
 OVXM-214 
 M-23 
 
 R-143 
 
 OVXM-215 
 M-72 
 
 R-100 
 AH-93 
 OVXM-214 
 M-23 
 
 R-117 
 
 BXM-215 
 M-98 
 
 R-117 
 BXM-215 
 M-98 
 
 R-117 
 BXM-215 
 M-98 
 
 
 pounds per head per day 
 
 Components of ration 
 
 Alfalfa haylage 
 
 16.0 
 
 4.0 
 
 100 
 
 16.0 
 4.0 
 
 io'o 
 
 16.0 
 
 4.0 
 
 io!6 
 
 16.0 
 
 '4:0 
 10.0 
 
 16.0 
 '4.0 
 100 
 
 16.0 
 
 Oat-vetch haylage 
 
 Corn silage 
 
 4 
 
 Barley 
 
 
 Milo 
 
 
 Corn 
 
 10.0 
 
 
 
 
 cwt 
 
 Feed buying 
 
 Barley 
 
 54,000 
 
 42,'il6 
 
 54,000 
 
 50,775 
 
 43,055 
 
 
 Milo 
 
 
 Corn 
 
 54,000 
 
 
 
 
 tons, haylage basis 
 
 Alfalfa reconstituted.... 
 
 470 
 
 470 
 
 470 
 
 920 
 
 920 
 
 920 
 
 
 cwt 
 
 Feed selling 
 
 Barley 
 
 10,'i53 
 
 
 io,'i53 
 
 i6,945 
 
 3,225 
 
 3,225 
 
 Milo 
 
 10,945 
 
 
 
 
 number purchased per month 
 
 Cattle feeding 
 
 Jan. - Dec... . 
 
 300 
 
 300 
 
 300 
 
 300 
 
 300 
 
 300 
 
 
 
 
 dollars 
 
 Costs and returns 
 
 Gross returns 
 
 940,076 
 
 751,256 
 
 45,843 
 
 28,466 
 
 33,675 
 
 912,558 
 
 729,052 
 
 45,845 
 
 28,466 
 
 33,675 
 
 942,722 
 
 775,556 
 
 45,843 
 
 28,466 
 
 33,675 
 
 924,975 
 
 752,184 
 
 45,807 
 
 28,466 
 
 33,675 
 
 906,405 
 
 738,510 
 
 45,807 
 
 28,466 
 
 33,675 
 
 933.584 
 
 Cash variable costs 
 
 Cash fixed costs 
 
 Depreciation 
 
 Interest on investment. . 
 
 783.095 
 45.807 
 28,466 
 33.675 
 
 
 dollars 
 
 Net income 
 
 Net cash income 
 
 Net farm income 
 
 Management income 
 
 142,977 
 
 114,511 
 
 80,836 
 
 137,661 
 
 109,195 
 
 75,520 
 
 121,323 
 92,857 
 59,182 
 
 126,984 
 98,518 
 64,843 
 
 122,088 
 93,622 
 59,947 
 
 104,682 
 76.216 
 42.541 
 
 * Rations defined in table 7. 
 
 t R = rice, AH = alfalfa haylage, OVXM = oat-vetch, milo doublecropped, M = milo, CS = corn silage, BXM = barley, milo 
 doublecropped. 
 
 [17] 
 
part of the grain component in the ration 
 fed. However, at the prices used in this 
 study (buying and selling prices of $2.05 
 and $1.85 per cwt, respectively, for barley 
 and $2.10 and $2.00 per cwt for milo) it 
 is most profitable to use barley as the pur- 
 chased grain. Of course, a shift in the 
 milo-barley price relationship favoring 
 milo could make it profitable to purchase 
 milo rather than barley. Since compara- 
 ble gains are obtained from silage rations 
 using either barley or milo as the grain 
 component, the choice of purchased grain 
 depends on which provides the lower cost 
 per unit of TDN. 
 
 The entire allotment of rice is included 
 in each of the optimum programs in table 
 10. Rice is clearly the most profitable cash 
 crop in the area, and in every plan it pays 
 to raise rice as a cash crop and buy the 
 major portion of the feed grains, rather 
 than substituting feed grains for rice in 
 the cropping system. Aside from rice, the 
 rest of the acreage is devoted first to the 
 forages required for the rations, the re- 
 mainder to milo — the best remaining cash 
 crop on C soils. However, the capacity of 
 the 11 silos (two additional silos set aside 
 for grain) is not sufficient to store enough 
 forage at the end of the harvest seasons 
 to carry all lots of cattle through the win- 
 ter and early spring on the high forage 
 rations. Hence, under plans 5, 6, or 7, 
 470 tons of alfalfa (haylage basis — the 
 equivalent of about three silos capacity) 
 are purchased and reconstituted during 
 the winter months to carry the cattle until 
 forage harvesting begins in the spring. 
 Rations 8, 9, and 10 each require pur- 
 chase and reconstitution of 920 tons of 
 alfalfa (haylage basis — about 5% silos 
 capacity) because of the higher storage 
 requirement for the corn silage included 
 
 in these rations. Other alternatives to re- 
 constituting alfalfa hay would be building 
 additional storage capacity (the most eco- 
 nomic would be building cheaper grain 
 storage and using all 13 silos for silage), 
 reducing the number of cattle fed, or 
 switching to higher concentrate rations 
 during the winter months. The latter al- 
 ternative is evaluated on page 20. 
 
 As shown in table 10, it is most profit- 
 able to keep the feedlot filled to its prac- 
 tical capacity of 1,500 head year-around. 
 To help reduce price risk, 300 head are 
 bought and sold each month in order to 
 be in the market year-around. The feed- 
 ing period averages 150 days, with some 
 cattle sorted out and sold earlier, some 
 being held over until later in order to 
 reach the desired finish. Under this sys- 
 tem, 2.4 lots (3,600 head) are fed out 
 and sold each year. 
 
 All of the rations considered increase 
 the earning potential of the study farm 
 considerably beyond that possible for a 
 cash crop operation alone (compare tables 
 9 and 10) . Note, however, that the earn- 
 ings from the feedlot program are based 
 on superior management as reflected in 
 relatively high crop yields and livestock 
 gains. Also, the livestock feeding program 
 involves greater risk. Again, essentially a 
 zero price margin (equal buying and sell- 
 ing prices averaging 25 cents per pound 
 for 50 per cent good-50 per cent choice 
 animals) is used throughout. However, 
 since the finished animals are assumed to 
 grade 25 per cent good-75 per cent 
 choice, a slight positive margin of $0,375 
 per cwt actually exists for cattle fed on 
 each of the ten rations studied. A more 
 detailed appraisal of the critical price risk 
 element in cattle feeding is made in the 
 section starting on page 22. 
 
 OPTIMUM PLANS AND INCOME LEVELS 
 USING NON-SILAGE RATIONS 
 
 Table 11 summarizes the optimum pro- 
 grams and income levels possible when a 
 1,500-head feedlot and feed mill for con- 
 
 ventional ration feeding are superimposed 
 on the study farm. The results are pre- 
 sented for the entire farm when cattle are 
 
 [18 
 
Table 11 
 COMPARISON OF OPTIMUM PLANS FOR THE NONSILAGE RATIONS* 
 
 
 Crop, feed and livestock systems, and costs and returns for alternative plans 
 
 Category 
 
 Ration 1 
 
 Ration 2 
 
 Ration 3 
 
 Ration 4 
 
 
 acres 
 
 Cropsf 
 
 Soil A (209) 
 
 R-209 
 
 R-209 
 
 R-209 
 
 R-190 
 
 
 A-19 
 
 Soil B (335) 
 
 R-100 
 A-67 
 BXM-168 
 
 R-100 
 A-90 
 BXM-145 
 
 R-80 
 A-255 
 
 A-335 
 
 
 
 Soil C (430) 
 
 BXM-215 
 M-215 
 
 BXM-215 
 M-215 
 
 R-20 
 BXM-215 
 M-195 
 
 R-119 
 
 
 BXM-215 
 M-96 
 
 
 pounds per head per day 
 
 Components of ration 
 
 Barley 
 
 ( U.C. supplement 
 
 13.0 
 2.0 
 6.0 
 
 12.0 
 5.7 
 4.9 
 
 9.8 
 
 Alfalfa 
 
 8.0 
 
 Beet pulp 
 
 4.2 
 
 
 
 
 cwt 
 
 Feed buying 
 
 Barley 
 
 90,279 
 
 63,785 
 
 61,575 
 
 49,695 
 
 
 
 
 cwt 
 
 Feed selling 
 
 Seel milo 
 
 22,106 
 
 21,140 
 
 14,350 
 
 10,885 
 
 
 
 
 tons 
 
 Sell alfalfa hay 
 
 402 
 
 
 
 
 
 
 
 number purchased per month 
 
 Cattle feeding 
 
 Jan. -Dec 
 
 300 
 
 300 
 
 300 
 
 300 
 
 
 
 
 dollars 
 
 Costs and returns 
 
 Gross returns 
 
 1,027,317 
 
 849,196 
 
 48,491 
 
 19,040 
 
 28,553 
 
 1,016,541 
 
 844,443 
 52,735 
 20,238 
 29,392 
 
 999,471 
 
 826,520 
 
 52,783 
 
 20,238 
 
 29,392 
 
 955,387 
 
 Cash variable costs 
 
 793.591 
 
 Cash fixed costs 
 
 52.817 
 
 Depreciation 
 
 Interest on investment 
 
 20.238 
 29,392 
 
 
 dollars 
 
 Net income 
 
 Net cash income 
 
 129,631 
 
 110,591 
 
 82,038 
 
 119,363 
 99,125 
 69.733 
 
 120,168 
 99,930 
 70.538 
 
 108 980 
 
 Net farm income 
 
 88 742 
 
 Management income 
 
 59,350 
 
 
 
 * Rations defined in table 7. 
 
 t R = rice, A = alfalfa hay, BXM 
 
 barley, milo doublecropped, M = milo. 
 
 [19] 
 
fed on each of the four grain-hay rations 
 specified. The all-concentrate ration 1 is 
 the most profitable nonsilage ration under 
 the conditions specified. Rations 2 and 3, 
 containing typical grain-hay ratios, rank 
 about equal in income, but net approxi- 
 mately $12,000 less than the all-concen- 
 trate ration. Ration 4, with a high propor- 
 tion of hay relative to concentrate, ranks 
 somewhat lower in income potential — 
 about $20,000 less than all-concentrate 
 ration 1. The programming results also 
 indicate that the all-concentrate ration 
 alone produces greater income than any 
 combination of the four rations shown in 
 table 11. Despite the results presented 
 here, some feeders still might prefer ra- 
 tions 2 or 3 over 1 because of the rela- 
 tively short experience with all-concen- 
 trate rations, the possibility of cattle going 
 off-feed, higher death losses and other 
 factors. Considering these factors, the 
 $12,000 separating these three rations 
 may not solely determine a feeder's 
 choice. Again, each of the cattle feeding 
 plans (table 11) permit higher attainable 
 incomes than a cash crop operation. 
 
 All of the plans in table 11 show milo 
 sold and barley purchased. With the ex- 
 ception of ration 1, where barley is 
 needed to provide enough fiber in the 
 ration, the milo produced could be sub- 
 stituted for barley in the rations with neg- 
 ligible changes in income. However, after 
 the home-produced supply of milo is fed, 
 any additional grain purchased would be 
 barley. 
 
 Table 11 shows that the optimum crop- 
 ping system changes to include more 
 alfalfa hay and less barley and milo as 
 the type of ration shifts to a higher per- 
 centage of roughage. However, for none 
 of the plans does it pay to attempt to pro- 
 duce all of the feed for the cattle finishing 
 program. In every case it is more profit- 
 able to plant the entire rice allotment and 
 purchase barley. Except for the plan using 
 ration 1, where 67 acres of alfalfa hay are 
 raised as a cash crop, the remaining plans 
 produce just the alfalfa needed to supply 
 the cattle feeding operation. In these 
 cases, raising the alfalfa is a more profit- 
 able alternative than producing another 
 cash crop and buying alfalfa. 
 
 OPTIMUM PLAN AND INCOME LEVEL 
 USING A COMBINATION OF RATIONS 
 
 Tables 10 and 11 above indicate that 
 rations 1 (all-concentrate) and 5 (alfalfa 
 haylage, oats- vetch haylage and barley) 
 are almost identical in earning power 
 under the assumptions used. The effect of 
 other shrink and grade assumptions are 
 discussed later. The question arises as to 
 whether some combination of forage and 
 concentrate rations might provide higher 
 income than either alone. Table 12, there- 
 fore, presents the plan representing the 
 optimum choice from among all of the 
 rations. The optimum plan uses a com- 
 bination of the silage rations 5 and 6 
 (using both barley and milo) during the 
 major portion of the year, with the all- 
 concentrate ration being used for about 
 one lot of cattle fed during the winter 
 months October-February. The all-con- 
 
 centrate ration essentially replaces the 
 reconstituted hay activity required to per- 
 mit year-around feeding of the silage 
 rations presented in table 10. The com- 
 bination of rations in table 12 would be 
 feasible in that the barley could be pur- 
 chased as needed during the fall and win- 
 ter, put in one of the silos, then crimped 
 and fed as an all-concentrate ration, using 
 the regular feeding setup available for the 
 silage rations. However, the income in- 
 centive for introducing this new ration is 
 slight, netting only about $2,000 more 
 than ration 5 alone and only about $500 
 more than ration 1 alone. It is doubtful if 
 feeders would be interested in introduc- 
 ing the complexity of feeding two com- 
 pletely different rations for these small 
 bonuses. 
 
 20 
 
Table 12 
 OPTIMUM PROGRAM AND INCOME LEVEL WITH 
 COMBINATION OF HIGH FORAGE AND 
 CONVENTIONAL RATIONS 
 
 Category 
 
 Crop 
 
 Acres 
 
 Crops 
 
 Soil A 
 
 SoilB 
 
 Rice 
 
 Alfalfa haylage 
 
 Oats-vetch x milo 
 
 (doublecropped) 
 Rice 
 
 Alfalfa haylage 
 Oats-vetch x milo 
 
 (doublecropped) 
 Milo 
 
 209 
 310 
 
 SoilC 
 
 25 
 
 100 
 
 76 
 
 215 
 
 39 
 
 
 cwt 
 
 Feed buying 
 
 Barley. . 
 
 47,846 
 
 
 
 
 Number purchased 
 per month 
 
 Ration 
 fed 
 
 Cattle feeding 
 
 January 
 
 February 
 
 March-June 
 
 300 
 300 
 300 
 
 |237 
 
 \ 63 
 
 300 
 
 300 
 
 300 
 
 (16 
 
 300 
 
 5 
 6 
 5 
 
 July 
 
 August 
 
 September 
 
 October 
 
 5 
 6 
 6 
 5 
 1 
 
 November 
 
 December 
 
 1 
 5 
 5 
 
 
 dollars 
 
 Costs and returns 
 
 Gross return 
 
 Cash variable costs. .. 
 
 Cash fixed costs 
 
 Depreciation 
 
 Interest on investment 
 
 923,694 
 
 733,103 
 
 45,866 
 
 28,466 
 
 33,675 
 
 
 dollars 
 
 Net income 
 
 Net cash income 
 
 Net farm income 
 
 Management income. . 
 
 144,725 
 
 116,258 
 
 82,583 
 
 The main body of this report has con- 
 centrated on the question of optimum 
 cattle finishing programs in farm feedlots. 
 
 starting with feeder cattle in the 600- 
 pound range. However, some operators, 
 particularly those equipped to feed silage 
 rations, may be interested in the possibili- 
 ties of buying lighter animals and carry- 
 ing them through to finished weights. 
 Appendix B summarizes the results of 
 such a program. 
 
 SENSITIVITY OF 
 CATTLE FEEDING 
 INCOME TO PRICE AND 
 GAIN VARIABILITY 
 
 Assuming average price conditions, 
 each of the farm plans that included cat- 
 tle feeding increased income substantially 
 over the cash crop operation. However, 
 cattle feeding generally is considered 
 quite risky. The following analysis indi- 
 cates the variability in income from the 
 cattle feeding operations resulting from 
 variations in probably the two most criti- 
 cal factors influencing feeding profits — 
 cattle prices and gains per day. 
 
 Profits from cattle feeding can be sum- 
 marized as in equation (2) where: 
 
 (2) tt^PsWs-PbWb-F-K 
 
 tt = profit ; P B = buying price ; P s = selling 
 price; W B = initial weight; W s = final 
 weight after shrink; F = variable costs as- 
 sociated with feeding (feed, labor, etc.) ; 
 and K = fixed or overhead costs (depre- 
 ciation, taxes, etc.). Final weight after 
 shrink equals initial weight plus total 
 shrunk gain (G) in the feed lot (W s = 
 W B + G) . Substituting this expression in 
 equation (2) and simplifying gives equa- 
 tion (3). 
 
 (3) 7t = W b (Ps-Pb) + (P s G-F) -K 
 
 In the short run, fixed costs (K) can 
 be ignored since they will remain con- 
 stant whether cattle are fed or not; of 
 course, in the long run they must be cov- 
 ered if the feeder is to remain in business. 
 Hence, in the short run, cattle profits de- 
 
 [21] 
 
pend on two factors: the increase (or 
 decrease) in the value of the initial 
 weight, W B (P s -Pb) ; and the value of 
 the gain (loss) over (under) feeding 
 costs, P S G - F. For any given lot of cattle 
 on a specified ration, W B , G and F can 
 be assumed constant and the effect on 
 profits of variation in the remaining price 
 variables P B and P s assessed. Both the 
 price margin (P s -Pb) and the level of 
 prices (P s ) exert a strong impact on 
 profits. Also, at given prices, variation in 
 gains (G) sharply change the profit level. 
 
 Income variability resulting from 
 fluctuations in cattle prices 
 
 Table 13 illustrates several aspects of 
 the influence of cattle prices on the level 
 and stability of income from the two most 
 profitable farm plans derived earlier — 
 those with cattle fed on rations 1 and 5, 
 respectively. Variation in cattle prices 
 would affect variability in income from 
 the other livestock plans similarly. 
 
 The top portion of table 13 illustrates 
 the effect of price margin (P s — P B ) on 
 management income for rations 1 and 5, 
 
 Table 13 
 
 INFLUENCE OF PRICE MARGIN AND PRICE LEVEL ON FARM PROFITS 
 
 FOR OPTIMUM FARM PLANS USING RATIONS 1 AND 5 
 
 Price relationships* 
 
 Optimum plan 
 
 jsing ration 1 
 
 Optimum plan using ration 5 
 
 Feeder cattle 
 
 Slaughter cattle 
 
 Price margin 
 
 Management 
 
 Deviation from 
 
 Management 
 
 Deviation from 
 
 prices (Pb) 
 
 prices (Ps) 
 
 (Ps - Pb) 
 
 income 
 
 averagef 
 
 income 
 
 averagef 
 
 
 dollars per cwt 
 
 
 dollars 
 
 per cent 
 
 dollars 
 
 per cent 
 
 25.00 
 
 20.00 
 
 -5.00 
 
 -110,457 
 
 -235 
 
 -110,976 
 
 -237 
 
 25.00 
 
 22.00 
 
 -3.00 
 
 - 38,853 
 
 -147 
 
 - 33,332 
 
 -141 
 
 25.00 
 
 24.00 
 
 -1.00 
 
 32,751 
 
 - 60 
 
 34,312 
 
 - 58 
 
 25.00 
 
 26.00 
 
 1.00 
 
 104,319 
 
 27 
 
 101,920 
 
 26 
 
 25.00 
 
 28.00 
 
 3.00 
 
 175,923 
 
 115 
 
 169,564 
 
 110 
 
 25.00 
 
 30.00 
 
 5.00 
 
 247,527 
 
 202 
 
 237,208 
 
 193 
 
 20.00 
 
 20.00 
 
 
 
 10,971 
 
 - 87 
 
 20,193 
 
 - 75 
 
 22.50 
 
 22.50 
 
 
 
 46,467 
 
 - 43 
 
 50,260 
 
 - 38 
 
 25.00 
 
 25.00 
 
 
 
 82,038 
 
 
 
 80,836 
 
 
 
 27.50 
 
 27.50 
 
 
 
 117,459 
 
 43 
 
 111,362 
 
 38 
 
 30.00 
 
 30.00 
 
 
 
 152,955 
 
 87 
 
 141,890 
 
 75 
 
 20.00 
 
 20.33 
 
 0.33 
 
 9,531$ 
 
 
 
 
 22.50 
 
 21.84 
 
 -0.66 
 
 9,531 
 
 
 
 
 25.00 
 
 23.32 
 
 -1.65 
 
 9,531 
 
 
 
 
 27.50 
 
 24.86 
 
 -2.64 
 
 9,531 
 
 
 
 
 30.00 
 
 26.37 
 
 -3.63 
 
 9,531 
 
 
 
 
 20.00 
 
 20.07 
 
 0.07 
 
 
 
 9, 531 J 
 
 
 22.50 
 
 21.67 
 
 —0 83 
 
 
 
 9,531 
 
 
 25.00 
 
 23.27 
 
 -1.73 
 
 
 
 9,531 
 
 
 27.50 
 
 24.86 
 
 -2.64 
 
 
 
 9,531 
 
 
 30.00 
 
 26.46 
 
 —3.54 
 
 
 
 9,531 
 
 
 < • u !l ee( lf, r and slau i h 4 ter Prices based on 50-50 good-choice grade. Actual selling prices are $0,375 higher in each case because 
 finished cattle assumed to grade 25-75 good-choice. 
 
 eA A Per J*"* dev '2l' 0l L f ™ m i^rage management income resulting from feeder and slaughter cattle prices of $25.00 per cwt for 
 50-50 good-choice ($81,982 and $80,833 for rations 1 and 5, respectively). ^ 
 
 t Management income level possible from cash-crop operation of ranch. 
 
 [22] 
 
at feeder cattle prices of $25.00 per cwt. 
 A negative price margin of only $1.00 per 
 cwt reduces management income for ra- 
 tion 1 from $82,038 (with $25.00 buying 
 and selling prices) to $32,751 — a drop of 
 60 per cent. A negative price margin of 
 $3.00 per cwt results in a negative man- 
 agement income of $38,853 — a drop of 
 147 per cent. The level of management 
 income is equally sensitive to positive 
 price margins. The variation in income 
 from different cattle price margins is 
 about the same for rations 1 and 5. While 
 the percentage variation in income might 
 be overemphasized by using management 
 income as the standard for comparison, 
 the absolute variation would be the same 
 regardless of whether net cash or net 
 farm income were used. 
 
 The second section of table 13 shows 
 the effect on income of the level of cattle 
 prices with a constant zero price margin. 
 For example, ration 1 varies ± 87 per 
 cent in management income as the level 
 of buying and selling prices are varied 
 simultaneously from $20.00-$30.00 per 
 cwt. In all of these cases, the entire cattle 
 feeding profit comes from the value of the 
 gain over feed costs — the second source 
 of profit in equation (3) ; the higher the 
 price level, the higher the value of the 
 gain. Since the price margin equals zero, 
 the first source of profit contributes noth- 
 ing to cattle feeding returns; i.e., W B 
 (P s -Pb) =0. Results for ration 5 are 
 similar. 
 
 Hence, cattle feeding profits are highly 
 sensitive to both price margin and the 
 level of beef prices. The analysis provides 
 evidence for the widely held conviction 
 that cattle feeding is a high-risk business. 
 Time devoted by a cattle feeder to study- 
 ing market conditions and price trends 
 
 usually is well spent; buying and selling 
 cattle at the most favorable possible prices 
 is probably the most important single 
 aspect of his business. 8 
 
 The last portion of table 13 answers 
 this question: At various feeder cattle 
 prices, what price margin is needed to 
 "break even"? By break even is meant to 
 provide a short-run management income 
 as high as is possible by shutting down 
 the feedlot and producing cash crops. 7 
 Table 13 shows that, at feeder cattle 
 prices of $20.00, a slightly positive price 
 margin is needed to break even. However, 
 as feeder cattle prices rise, successively 
 larger negative price margins can be sus- 
 tained and still provide break-even 
 profits. Referring again to equation (3), 
 the higher level of prices permits the 
 value of gain over feed costs (second 
 source) to outweigh the negative price 
 margin (first source) . 
 
 The proceeding analysis shows that 
 income associated with cattle feeding can 
 be extremely variable depending on cattle 
 price relationships. But do actual prices 
 and profits show this degree of variability 
 from year to year? Tables 14 and 15 
 show the management income which 
 would have been derived annually from 
 1951-61 if the optimum plans with live- 
 stock using rations 1 and 5, respectively, 
 had been employed in these years. Actual 
 variations in both crop and livestock 
 prices are reflected in the income figures 
 shown. However, crop yields, production 
 costs, and other variables are held 
 constant at the levels assumed in the rest 
 of the study. The top portion of each 
 table shows the level and variability of 
 management income if the cattle were 
 purchased and sold on a monthly basis 
 throughout the year. The lower portion of 
 
 6 This analysis assumes that the feeder buys and sells his own cattle. A common alternative is 
 custom feeding all or a part of the cattle for someone else who owns the cattle and takes the price 
 risk. In this case, the returns to the feedlot operator will be related to the second source of profits — 
 value of gain in relation to feed costs. For further information on custom feeding see King (1962) 
 andHopkin (1957). 
 
 7 The fixed or overhead costs associated with cattle feeding still remain even if the lot is tem- 
 porarily closed. The break-even margins of table 13 therefore reflect continuation of these costs. 
 
 [23] 
 
Table 
 
 VARIATION IN COSTS, REVENUES AND MANAGEMENT 
 OVER PERIOD 1951-61, WITH MONTHLY 
 
 Costs and returns 
 
 1951 
 
 1952 
 
 1953 
 
 1954 
 
 1955 
 
 1956 
 
 
 Monthly buying- , 
 
 
 dollars 
 
 Revenue 
 
 Rice 15 495 cwt 
 
 63,530 
 
 66,318 
 
 11,418 
 
 1,181,347 
 
 1,322,613 
 
 718,794 
 
 267,386 
 
 35,396 
 
 188,690 
 
 1,210,266 
 
 -15,540 
 
 96,807 
 (110) 
 
 112,347 
 (112) 
 
 79,024 
 
 80,687 
 
 12,881 
 
 1,131,025 
 
 1,303,617 
 
 604,098 
 
 286,116 
 
 38,299 
 
 188,690 
 
 1,117,203 
 
 -93,330 
 
 93,084 
 (106) 
 
 186,414 
 (185) 
 
 85,222 
 
 67,423 
 
 9,058 
 
 807,970 
 
 969,673 
 
 383,670 
 
 247,963 
 
 33,876 
 
 188,690 
 
 854,199 
 
 -55,560 
 
 59,914 
 (68) 
 
 115,474 
 (115) 
 
 72,826 
 
 57,476 
 
 7,920 
 
 800,900 
 
 939,122 
 
 395,442 
 
 208,862 
 
 33,925 
 
 188,690 
 
 826,919 
 
 2,340 
 
 114,543 
 (130) 
 
 112,203 
 (HI) 
 
 71,277 
 
 50,844 
 
 10,658 
 
 765,638 
 
 898,417 
 
 385,344 
 
 198,519 
 
 33,922 
 
 188,690 
 
 806,475 
 
 -44,070 
 
 47,872 
 (54) 
 
 91,942 
 (91) 
 
 61,980 
 
 Milo 22 106 cwt 
 
 56,370 
 
 Alfalfa 402 ton 
 
 9,422 
 
 Livestock 
 
 704,602 
 
 Total revenue 
 
 832,374 i 
 
 Cost 
 
 Feeder cattle 
 
 358,884 
 
 Buy barley 90,279 cwt 
 
 198,920 
 
 Buy supplement, 540 ton 
 
 32,619 
 
 Other costs 
 
 188,690 
 
 Total costs 
 
 779,113 
 
 Closing-opening inventory 
 
 8,430 
 
 Management income (accrual basis), 
 (per cent of average) 
 
 61,691 
 (70) 
 
 Management income (cash basis) 
 
 (per cent of average) 
 
 53,261 
 (53) 
 
 
 
 
 Seasonal buying- 
 
 
 dollars 
 
 Milo rice and alfalfaj 
 
 141,266 
 1,235,045 
 
 1,376,311 
 
 730,647 
 302,782 
 188,690 
 
 172,592 
 1,178,260 
 
 1,350,852 
 
 626,940 
 324,415 
 188,690 
 
 161,703 
 872,676 
 
 1,034,379 
 
 366,444 
 281,839 
 188,690 
 
 836,973 
 
 -55,560 
 
 141,846 
 (143) 
 
 197,406 
 (177) 
 
 138,222 
 802,555 
 
 940,777 
 
 399,060 
 242,787 
 188,690 
 
 830,537 
 
 2,340 
 
 112,580 
 (114) 
 
 110,240 
 (99) 
 
 132,779 
 787,788 
 
 920,567 
 
 343,197 
 232,441 
 188,690 
 
 764,328 
 
 -44,070 
 
 112,169 
 (113) 
 
 156,239 
 (140) 
 
 127,772 
 
 Livestock 
 
 711,494 
 
 Total revenue 
 
 839,266 
 
 364,068 
 231,539 
 188,690 
 
 Cost 
 
 Feeder cattle 
 
 Barley and supplement! 
 
 Other costs 
 
 
 Total cost 
 
 1,222,119 
 
 -15,540 
 
 138,652 
 (140) 
 
 154,192 
 (138) 
 
 1,140,045 
 
 -93,330 
 
 117,477 
 (118) 
 
 210,807 
 (189) 
 
 784 297 
 
 Closing-opening inventory 
 
 8,430 
 
 63,399 
 (64) 
 
 54,969 
 (49) 
 
 Management income (accrual basis). . . . 
 
 Management income (cash basis) 
 
 (per cent of average) 
 
 
 * Buy and sell 300 head monthly at actual prices. 
 
 t Fill lot twice a year; once in April, once in September; sell in January and August at actual prices. 
 
 t Not itemized since same as in upper section of table. 
 
14 
 
 INCOME FROM OPTIMUM PLAN USING RATION 1 
 
 VERSUS SEASONAL BUYING AND SELLING 
 
 1957 
 
 1958 
 
 1959 
 
 1960 
 
 1961 
 
 1951-61 
 average 
 
 Optimum 
 program 
 
 Coeff. of 
 
 variation 
 
 s 
 
 C = -(100) 
 
 filing program* 
 
 selling program! 
 
 65,079 
 
 45,980 
 
 9,105 
 
 776,378 
 
 67,403 
 
 46,423 
 
 9,591 
 
 926,910 
 
 1,050,327 
 
 57,332 
 
 45,096 
 
 10,176 
 
 963,245 
 
 1,075,849 
 
 63,530 
 
 42,664 
 
 10,120 
 
 885,742 
 
 64,304 
 
 46,202 
 
 8,410 
 
 839,114 
 
 68,319 
 
 55,044 
 
 9,887 
 
 889,352 
 
 1,022,602 
 
 65,854 
 
 44,212 
 
 8,844 
 
 908,407 
 
 1,027,317 
 
 
 t 896,542 
 
 1,002,056 
 
 958,030 
 
 
 409,968 
 
 190,508 
 
 31,311 
 
 188,690 
 
 533,412 
 
 191,822 
 
 29,249 
 
 188,690 
 
 943,173 
 
 562,140 
 
 196,269 
 
 34,579 
 
 188,690 
 
 501,660 
 
 185,057 
 
 32,559 
 
 188,690 
 
 479,736 
 
 193,958 
 
 31,208 
 
 188,690 
 
 484,832 
 
 215,035 
 
 33,358 
 
 188,690 
 
 540,000 
 
 185,072 
 
 31,573 
 
 188,690 
 
 945,335 
 
 
 820,477 
 
 981,678 
 
 907,966 
 
 893,592 
 
 921,915 
 
 
 58,530 
 
 29,280 
 
 -18,240 
 
 -12,630 
 
 -2,070 
 
 -12,610 
 
 
 
 
 134,595 
 (153) 
 
 136,434 
 (155) 
 
 75,931 
 (86) 
 
 81,460 
 (92) 
 
 62,368 
 (71) 
 
 88,077 
 (100) 
 
 81,982 
 (93) 
 
 34 7 
 
 76,065 
 (76) 
 
 107,154 
 (106) 
 
 94,171 
 (94) 
 
 94,090 
 (93) 
 
 64,438 
 (64) 
 
 100,687 
 (100) 
 
 81,982 
 (81) 
 
 34 6 
 
 T 120,164 
 754,585 
 
 123,417 
 886,502 
 
 112,604 
 953,088 
 
 1,065,692 
 
 116,314 
 886,771 
 
 1,003,085 
 
 118,916 
 851,197 
 
 133,250 
 901,815 
 
 
 
 
 874,749 
 
 1,009,919 
 
 970,113 
 
 1,035,065 
 
 
 , 410,940 
 221,819 
 188,690 
 
 539,514 
 221,070 
 188,690 
 
 949,274 
 
 577,368 
 230,848 
 188,690 
 
 502,524 
 217,616 
 188,690 
 
 908,830 
 
 487,404 
 225,166 
 188,690 
 
 486,191 
 248,394 
 188,690 
 
 n 
 
 cable 
 
 
 821,449 
 
 996,906 
 
 901,260 
 
 923,275 
 
 
 58,530 
 
 29,280 
 
 -18,240 
 
 -12,630 
 
 -2,070 
 
 -12,610 
 
 appli 
 
 
 111,830 
 . (H3) 
 
 89,925 
 (91) 
 
 50,546 
 (51) 
 
 81,625 
 (82) 
 
 66,783 
 (67) 
 
 99,180 
 (100) 
 
 
 
 30.8 
 
 53,300 
 (48) 
 
 60,645 
 (54) 
 
 68,786 
 (62) 
 
 94,255 
 (84) 
 
 68,853 
 (62) 
 
 111,790 
 (100) 
 
 
 
 52 4 
 
the table shows the same data assuming 
 that the cattle were purchased seasonally, 
 one lot in the spring, another in the fall — 
 probably a more usual practice for farm 
 feedlots. 
 
 The data in tables 14 and 15 provide 
 some interesting insights into price risks 
 associated with cattle feeding. First, per- 
 haps the most obvious observation is that 
 cattle feeding may not be as risky due to 
 price variation as the preceding analyses 
 might indicate. In no year from 1951-61 
 would management income have been as 
 low from cattle feedings as from cash crop 
 farming alone (approximately $10,000). 
 Second, there would have been little dif- 
 ference in either level or variability of 
 management income between feeding 
 ration 1 or ration 5. In part, this results 
 from the fact that prices of purchased 
 feeds did not fluctuate greatly from year 
 to year (although there was a decline in 
 the feed price level from 1951-61). 
 Third, price variations from the cash 
 crops were less important than cattle 
 prices in influencing year-to-year income 
 variability although again there was a 
 general decline in cash crop prices over 
 the 11-year period. Fourth, management 
 income would have averaged roughly 
 $10,000 per year higher from 1951-61 if 
 cattle were bought and sold seasonally 
 (spring and fall) rather than monthly. 
 Fifth, variability in income would have 
 been no higher from seasonal versus 
 monthly buying and selling, providing 
 income was reported on an accrual basis 
 (i.e., taking into account changes in in- 
 ventory values because of changes in the 
 price level) . For example, the coefficients 
 of variation in annual management 
 income from the monthly versus the sea- 
 sonal programs were 34.7 versus 30.8, 
 respectively, for ration 1 (table 14), and 
 30.8 versus 30.6, respectively, for ration 
 5 (table 15). 8 Sixth, if income were re- 
 ported on a cash basis, the variability in 
 
 income would have been appreciably 
 higher from the seasonal program. The 
 coefficients of variability in management 
 income for monthly versus seasonal buy- 
 ing on a cash basis were 34.6 versus 52.4, 
 respectively, for ration 1 (table 14), and 
 34.0 versus 51.3, respectively, for ration 5 
 (table 15) . Thus, at least if income is to 
 be reported on a cash basis, the argument 
 for buying and selling cattle monthly to 
 reduce income variability would appear 
 sound. Seventh, because of changes in the 
 level of farm prices, the income from the 
 optimum programs derived in this report 
 are slightly lower than the average in- 
 come which could have been obtained 
 from these same programs if employed 
 over the past 11-year period. However, 
 the levels of income from the optimum 
 programs are somewhat higher than 
 those possible in the past three years 
 shown (1958-61). 
 
 Effect of gains per day on income 
 and relative advantage of 
 various rations 
 
 One of the most difficult variables to 
 estimate in cattle feeding is the gain per 
 day from a particular ration. The method 
 used for estimating gains in this report 
 was explained earlier; the same method 
 was used for all rations in an attempt to 
 maintain reasonable relationships among 
 the gains from different rations. Despite 
 this attempt, many feeders will not be 
 able to achieve the feeding efficiencies 
 and gains used in this report. Con- 
 sequently, this section shows how the 
 comparative advantage and the income 
 levels associated with different rations 
 change as gains per day vary. 
 
 As indicated earlier, rations 1 (all- 
 concentrate) and 5 (alfalfa haylage, 
 oats-vetch haylage, and barley) provide 
 approximately equal management in- 
 comes at the assumed gain-per-day 
 figures of 2.87 and 2.49, respectively. 
 
 8 Coefficient of variation = (standard deviation -5- mean) 100. The coefficient of variation is thus a 
 comparative measure of the year-to-year variability in income from the various programs; it is 
 computed from the indexes of management income from 1951-61 in tables 14 and 15. 
 
 [26] 
 
Figure 1. Combinations of Gains from Rations 1 and 5 which 
 Yield Equivalent Management Incomes. 
 
 3.00^ 
 
 2.00 
 
 2. 50 
 
 3.00 
 
 3. 50 
 
 Pounds, Gain Per Day, Ration 1 
 
 Figure 1 shows all combinations of the 
 gains per day from rations 1 and 5 which 
 provide the same management income. 
 All-concentrate ration 1 has a profit ad- 
 vantage only if gains per day from it 
 exceed by at least 0.37 pounds the daily 
 gains from high-forage ration 5. For 
 example, a 2.50-pound gain per day from 
 ration 1 provides the same management 
 income from the entire farm plan as a 
 2.13-pound gain per day from ration 5 
 (point B, figure 1.) Point A, figure 1, 
 shows the gains per day required to pro- 
 vide a management income of zero from 
 each of the two rations (at $25.00 per cwt 
 buying and selling prices for cattle) . In 
 summary, for any combination of gains 
 from rations 1 and 5 lying to the left of 
 
 the dividing line in figure 1, it will be 
 advantageous to feed ration 5; combina- 
 tions of gains to the right of the dividing 
 line favor ration 1. 
 
 Feeders equipped to feed only conven- 
 tional hay-grain rations may be interested 
 in a similar gain comparison with all- 
 concentrate ration 1. Figure 2 provides 
 the relevant "break-even" gains. Rations 
 2 and 3 would need to produce gains per 
 day of nearly 0.1 pounds higher than 
 ration 1 in order to provide comparable 
 management incomes. For example, when 
 ration 1 is assumed to give gains of 2.50 
 pounds per day, rations 2 and 3 must 
 provide gains of 2.59 and 2.57, respec- 
 tively, to produce the same profit. Gains 
 from ration 4 can be about 0.1 pound 
 
 [27] 
 
Table 
 
 VARIATION IN COSTS, REVENUES AND MANAGEMENT INCOME 
 
 1951-61, WITH MONTHLY VERSOS 
 
 Costs and returns 
 
 1951 
 
 1952 
 
 1953 
 
 1954 
 
 1955 
 
 1956 
 
 Monthly buying- 
 jl 
 
 Revenue 
 
 Rice, 14,495 cwt. 
 Milo, 10,153 cwt. 
 Livestock 
 
 dollars 
 l 
 
 Total revenue 
 
 Cost 
 
 Feeder cattle 
 
 Buy barley, 54,000 cwt.. 
 Buy alfalfa hay, 320 ton^ 
 Other costs 
 
 Total cost 
 
 Closing-opening inventory 
 
 Management income (accrual basis) 
 (per cent of average) 
 
 Management income (cash basis) 
 (percent of average) 
 
 59,430 
 
 30,459 
 
 1,116,007 
 
 1,205,896 
 
 718,794 
 
 160,510 
 
 9,991 
 
 199,601 
 
 1,088,896 
 
 -15,540 
 
 101,460 
 (110) 
 
 117,000 
 (112) 
 
 73,924 
 
 37,058 
 
 1,068,746 
 
 1,179,728 
 
 604,098 
 
 170,940 
 
 15,863 
 
 199,601 
 
 990,502 
 
 -93,330 
 
 95,896 
 (104) 
 
 189,226 
 (181) 
 
 79,722 
 
 30,967 
 
 763,281 
 
 873,970 
 
 383,670 
 
 148,181 
 
 12,529 
 
 199,601 
 
 743,981 
 
 -55,560 
 
 74,429 
 (81) 
 
 129,989 
 (124) 
 
 68,126 
 
 26,398 
 
 756,602 
 
 851,126 
 
 395,442 
 
 124,852 
 
 9,774 
 
 199,601 
 
 729,669 
 
 2,340 
 
 123,797 
 (134) 
 
 121,457 
 (116) 
 
 66,677 
 
 23,352 
 
 723,291 
 
 813,320 
 
 385,344 
 
 118,731 
 
 13,425 
 
 199,601 
 
 717,101 
 
 -44,070 
 
 52,149 
 (57) 
 
 96,219 
 (92) 
 
 57,980 
 
 25,8S0 
 
 665,631 
 
 749,501 
 
 358,884 
 119,661 * 
 12,365 
 199,601 
 
 690,511 i 
 
 8,430 
 
 67,420 
 (73) 
 
 58,990 
 (56) 
 
 Seasonal buying- 
 
 dollars 
 
 Revenue 
 
 Rice and milo|. 
 Livestock 
 
 89,889 
 1,166,735 
 
 Total revenue 
 
 Cost 
 
 Feeder cattle 
 
 Buy barley and alfalfa! 
 Other costs 
 
 1,256,624 
 
 730,647 
 170,501 
 199,601 
 
 Total cost 
 
 Closing-opening inventory 
 
 Management income (accrual basis) 
 (per cent of average) 
 
 Management income (cash basis) 
 (per cent of average) 
 
 1,100,749 
 
 -15,540 
 
 140,335 
 (137) 
 
 155,875 
 (136) 
 
 110,982 
 1,111,695 
 
 1,222,677 
 
 626,940 
 186,803 
 199,601 
 
 1,013,344 
 
 -93,330 
 
 116,003 
 (113) 
 
 209,333 
 (182) 
 
 110,689 
 824,408 
 
 935,097 
 
 366,444 
 160,710 
 199,601 
 
 726,755 
 
 -55,560 
 
 152,782 
 (149) 
 
 208,342 
 (181) 
 
 94,524 
 758,166 
 
 852,690 
 
 399,060 
 134,626 
 199,601 
 
 733,287 
 
 2,340 
 
 121,743 
 (119) 
 
 119,403 
 (104) 
 
 90,029 
 744,216 
 
 834,245 
 
 343,197 
 132,156 
 199,601 
 
 674,954 
 
 -44,070 
 
 115,221 
 (113) 
 
 159,291 
 (138) 
 
 83,870 
 672,140 
 
 756,010 
 
 364,068 i 
 
 132,026 
 
 199,601'' 
 
 695,695 
 
 8,430 
 
 68,745 
 (67) 
 
 60,315 
 (52) 
 
 
 * Buy and sell 300 head monthly at actual prices. 
 
 t Fill lot twice a year; once in April, once in September, sell in January and August at actual prices 
 
 t Not itemized since same as in upper section of table. 
 
 § Includes a cost of $2.00 per ton to unbale, chop, add water, and put in silo. 
 
;0M OPTIMUM PLAN USING RATION 5 OVER PERIOD 
 .ASONAL BUYING AND SELLING 
 
 1958 
 
 1959 
 
 1960 
 
 1961 
 
 1951-61 
 average 
 
 Optimum 
 program 
 
 Coeff. of 
 
 variation 
 
 s 
 
 C = -(100) 
 
 60,879 
 
 21,118 
 
 733,436 
 
 63,053 
 
 21,321 
 
 875,643 
 
 960,017 
 
 53,632 
 
 20,712 
 
 909,969 
 
 984,313 
 
 59,430 
 
 19,595 
 
 836,752 
 
 915,777 
 
 60,154 
 
 21,220 
 
 792,703 
 
 63,910 
 
 25,281 
 
 840,187 
 
 61,604 
 
 20,306 
 
 858,166 
 
 940,076 
 
 
 815,433 
 
 874,077 
 
 929,378 
 
 
 409,968 
 
 113,936 
 
 11,696 
 
 199,601 
 
 533,412 
 
 115,206 
 
 10,880 
 
 199,601 
 
 859,099 
 
 562,140 
 
 109,379 
 
 12,587 
 
 199,601 
 
 501,660 
 
 110,691 
 
 14,711 
 
 199,601 
 
 826,663 
 
 479,736 
 
 116,282 
 
 10,104 
 
 199,601 
 
 805,723 
 
 484,832 
 
 128,034 
 
 12,175 
 
 199,601 
 
 824,642 
 
 540,000 
 
 110,700 
 
 8,953 
 
 199,601 
 
 
 735,201 
 
 883,707 
 
 859,254 
 
 
 * 58,530 
 
 29,280 
 
 -18,240 
 
 -12,630 
 
 2,070 
 
 -12,610 
 
 
 
 
 138,762 
 (151) 
 
 130,198 
 (141) 
 
 82,365 
 (89) 
 
 76,484 
 (83) 
 
 70,424 
 (76) 
 
 92,126 
 (100) 
 
 80,822 
 (88) 
 
 30 8 
 
 80,232 
 (77) 
 
 100,918 
 (96) 
 
 100,606 
 (96) 
 
 89,114 
 (85) 
 
 68,354 
 (65) 
 
 104,736 
 (100) 
 
 80,822 
 (77) 
 
 34"0 
 
 81,997 
 712,850 
 
 84,374 
 837,470 
 
 921,844 
 
 74,344 
 900,373 
 
 974,717 
 
 79,025 
 837,724 
 
 81,374 
 804,117 
 
 885,491 
 
 89,191 
 851,808 
 
 940,999 
 
 
 
 
 794,847 
 
 916,749 
 
 
 410,940 
 
 , 125,632 
 
 199,601 
 
 539,514 
 126,086 
 199,601 
 
 577,368 
 121,966 
 199,601 
 
 502,524 
 125,402 
 199,601 
 
 827,527 
 
 487,404 
 126,386 
 199,601 
 
 813,391 
 
 486,191 
 140,209 
 199,601 
 
 826,001 
 
 n 
 appli 
 
 ot 
 cable 
 
 
 736,173 
 
 865,201 
 
 898,935 
 
 
 58,530 
 
 29,280 
 
 -18,240 
 
 -12,630 
 
 2,070 
 
 -12,610 
 
 
 
 
 117,204 
 (114) 
 
 85,923 
 (84) 
 
 57,542 
 (56) 
 
 76,592 
 (75) 
 
 74,170 
 (72) 
 
 102,388 
 (100) 
 
 
 
 306 
 
 58,674 
 (51) 
 
 56,643 
 (49) 
 
 75,782 
 (66) 
 
 89,222 
 (78) 
 
 72,100 
 (63) 
 
 114,998 
 (100) 
 
 
 
 5L3 
 
Figure 2. Comparison Gains from Rations 2, 3, and 4 which 
 Yield the Same Management Income as Ration 1. 
 
 3. 50 
 
 3.00 
 
 2. 50 
 
 2. 00 
 
 2. 00 
 
 Ration 2 
 
 J 
 
 2.50 3.00 
 
 Pounds, Gain Per Day, Ration 1 
 
 3. 50 
 
 lower than from ration 1 and still provide 
 comparable profits. Again, the relative 
 advantage of the different rations will 
 depend directly on the gains an individual 
 feeder can actually obtain. For example, 
 if a particular feeder has difficulty keep- 
 ing cattle on feed using the all-concentrate 
 ration, gains may drop to the point where 
 he might more profitably feed ration 2 
 or 3. 
 
 Feeders organized to feed high silage 
 rations would be interested in how in- 
 di\ idual silage rations 6-10 compare with 
 the most profitable silage ration 5 under 
 varying gain conditions. Figure 3 shows 
 that each of the 5 rations 6-10 would have 
 
 to provide greater gains per day than 
 ration 5 in order to give comparable 
 management income; the gain increases 
 required vary from only 0.02 pounds per 
 day for rations 6 and 8 to 0.21 pounds 
 per day for ration 10. 
 
 Figure 4 shows more clearly the direct 
 dependence of income level on gains per 
 day from the ten rations studied. For ex- 
 ample, if cattle on ration 3 gain 2.85 
 pounds per day, as assumed in this report, 
 management income is approximately 
 $70,000. However, if the feeder can 
 obtain only a 2.5-pound average daily 
 gain, management income drops to $25,- 
 000. If gains should fall to 2.0 pounds per 
 
 [30] 
 
Figure 3, Comparison Gains from Rations 6 to 10 which Yield 
 the Same Management Income as Ration 5. 
 
 rV 
 
 3.00 
 
 2.50 
 
 2.00 - 
 
 1.70 
 
 day, a loss in management income of 
 $40,000 would result. Similar compari- 
 sons can be made for the other rations 
 shown in figure 4. It should be clear that 
 only those individuals with the man- 
 agerial capacity to maintain cattle on feed 
 and gaining at better-than-average rates 
 throughout the feeding period are apt to 
 profit from cattle feeding. 
 
 In summary, level of income and 
 choice of optimum ration both are quite 
 sensitive to gains per day from the 
 various rations. Gains even from a single 
 ration can vary widely, as is evident from 
 a comparison of feeding trials under dif- 
 ferent conditions of weight, quality, 
 length of feeding period, feed additives, 
 climate, and other factors. Based on his 
 own evaluation of the gains obtainable 
 from the various rations, a feeder can use 
 
 figures 1, 2, 3, and 4 as aids in selecting 
 the most profitable ration and likely level 
 of income. 
 
 Effect of percentage shrink and 
 final grade on income from 
 various rations 
 
 It was stated earlier that this report 
 may tend to overevaluate the high rough- 
 age rations because of the assumption of 
 equal percentage shrink (3% per cent) 
 and final grade (75 per cent choice : 25 
 per cent good) for all rations considered. 
 The effects of alternative assumptions are 
 now considered. 
 
 The effect of added shrink is easily 
 computed : for each additional 1 per cent 
 shrink beyond the 3Vo per cent assump- 
 tion, management income drops by 
 $8,000-$9,000. Hence, significant dif- 
 
 [31 
 
Figure 4. Levels of Management Income Corresponding to Rates 
 of Daily Gain for Each of Ten Rations. 
 
 2.0 2.5 
 
 Gain Per Day, Pounds 
 
 3. 5 
 
 Figure 5. Effect of Selling Grade on Management Income from 
 
 Rations 1 to 10. 
 
 Percent choice 
 Percent good 100 
 
 30 
 
 40 
 
 50 
 
 60 
 
 70 
 
 80 
 
 90 
 
 100 
 
 70 
 
 60 
 
 50 
 Final Grade 
 
 40 
 
 30 
 
 20 
 
 JO 
 
 
 
 [32 
 
ferences in shrink could substantially 
 change comparative profits. 
 
 The effect of final grade on relative 
 income from the various rations is more 
 complex and is shown in figure 5. For 
 example, suppose ration 1 (high concen- 
 trate) produces 80 per cent choice and 
 20 per cent good (point A, figure 5) 
 while ration 5 (high forage ration) pro- 
 duces only 60 per cent choice and 40 
 per cent good (point B, figure 5) . Using 
 the assumed price differential of $1.50 
 per hundred between good and choice 
 grade, ration 1 would then be about 
 $10,000 more profitable than ration 5, 
 rather than being equivalent. Under 
 these same assumptions, if conventional 
 
 ration 3 produced an 80:20 ratio of 
 choice :good cattle (point C, figure 5) it 
 would be as profitable as ration 5. Greater 
 differences in grade would have more 
 drastic consequences on relative net in- 
 come. For example, if cattle on ration 1 
 grade 80:20 per cent choice :good and 
 on ration 5 grade 20:80 per cent choice: 
 good, the difference in management in- 
 come increases to about $30,000. These 
 are only illustrative examples. As more 
 information becomes available the cattle 
 feeder can formulate his own judgments 
 of relative grades. Of course, this com- 
 parison will depend on grading standards 
 used in the future and price differentials 
 associated with grade. 
 
 | 33 
 
APPENDIX A: BASIC DATA 
 
 Table A-l 
 ALFALFA HAY: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS* 
 
 Operation 
 
 Hours 
 per acre 
 
 Laborf 
 
 Fuel and 
 repairs 
 
 Materials 
 
 Total 
 
 dollars 
 
 Stand establishment 
 
 Plow 
 
 Disc2x 
 
 Disc and harrow 2 x 
 
 Landplane 
 
 Ridge and shape 
 
 Harrow 
 
 Pre-irrigateJ 
 
 Harrow 
 
 Plant 
 
 Total stand establishment. 
 
 Annual costs 
 
 Irrigate 8 xf. 
 Weed control. 
 Fertilize 
 
 Insect control 2x 
 
 Mow6x 
 
 Rake 6x 
 
 Bale 6x 
 
 Roadside 6 x (3 men). 
 
 .67 
 .60 
 .67 
 .25 
 .67 
 .20 
 1.00 
 .20 
 .40 
 
 5.00 
 .10 
 .20 
 
 .20 
 1.80 
 2.40 
 1.14 
 1.50 
 
 1.00 
 .90 
 
 1.00 
 .38 
 
 1.00 
 .30 
 
 2.20 
 .30 
 .60 
 
 11.00 
 .15 
 .30 
 
 .30 
 2.70 
 3.60 
 1.71 
 6.75 
 
 Total annual costs 
 
 Stand establishment prorated over 3-year life 
 
 Total variable costs 
 
 3.32 
 1.38 
 1.57 
 1.10 
 1.47 
 .40 
 
 .40 
 .96 
 
 .11 
 .23 
 
 .22 
 2.43 
 3.34 
 2.58 
 2.51 
 
 water, 4 acre-inches = $.50 
 seed, 20 lbs = $7.00 
 
 water, 4 acre-ft = $6.00 
 weed control spray = $9.00 
 nitrogen, 10 lbs; phosphorus, 80 lbs 
 
 = $10.00 
 Systox, 2 oz = $2.00 
 
 wire @ $.75/ton = $6.00 
 
 dollars 
 
 4.32 
 2.28 
 2.57 
 
 1 48 
 2.47 
 
 .70 
 
 2 70 
 .70 
 
 8.56 
 
 25.78 
 
 17.00 
 9.26 
 
 10.53 
 2.52 
 5.13 
 6.94 
 
 10.29 
 9.26 
 
 70.93 
 8.59 
 
 79.52 
 
 * Six cuttings, 8 ton per acre yield. Annual fixed costs not allocated to individual crops, but charged against entire farming 
 operation. & 
 
 t Labor @ $1.50 per hour. Irrigators @ $1.10 per hour. 
 X Two irrigators. 
 Source: Synthesized by authors from Farm Advisor cost studies and from costs on the study ranch. 
 
 [34 
 
Table A-2 
 ALFALFA HAYLAGE: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS* 
 
 Operation 
 
 Stand establishment 
 
 Plow 
 
 Disc2x 
 
 Disc and harrow 2 x 
 
 Landplane 
 
 Ridge and shape 
 
 Harrow 
 
 Pre-irrigateJ 
 
 Harrow 
 
 Plant 
 
 Total stand establishment. 
 
 Annual cost 
 
 Irrigate 8xJ. 
 Weed control. 
 Fertilize 
 
 Insect control 2x 
 
 Swath 7x 
 
 Chop 7x 
 
 Haul to silo and blow into silo 
 
 Hours 
 per acre 
 
 .67 
 .60 
 .67 
 .25 
 .67 
 .20 
 1.00 
 .20 
 .40 
 
 5.00 
 
 .10 
 .20 
 
 .20 
 2.03 
 1.00 
 1.00 
 
 Laborf 
 
 Fuel and 
 repairs 
 
 dollars 
 
 1.00 
 .90 
 
 1.00 
 .38 
 
 1.00 
 .30 
 
 2.20 
 .30 
 .60 
 
 11.00 
 .15 
 .30 
 
 .30 
 3.05 
 1.50 
 4.50 
 
 Total annual costs 
 
 Stand establishment prorated over 3-year life 
 
 Total variable costs. 
 
 3 32 
 1.38 
 1.57 
 1.10 
 1.47 
 .40 
 
 .40 
 .96 
 
 .11 
 .23 
 
 .22 
 2.75 
 6.35 
 2.35 
 
 Materials 
 
 water, 4 acre-inches = $.50 
 seed, 20 lbs = $7.00 
 
 water, 4 acre-ft = $6.00 
 weed control spray = $9.00 
 nitrogen, 10 lbs; phosphorus, 80 lbs 
 
 $10.00 
 Systox, 2 oz = $2.00 
 
 Total 
 
 dollars 
 
 4.32 
 2.28 
 2.57 
 1.48 
 2.47 
 
 .70 
 2.70 
 
 .70 
 8.56 
 
 25.78 
 
 17.00 
 9 26 
 
 10.53 
 2.52 
 5.80 
 7.85 
 6.85 
 
 59.81 
 8.59 
 
 68.40 
 
 * 7 cuttings, 15 ton per acre yield. Annual fixed costs not allocated to individual crops, but charged against entire farming 
 operation. 
 
 t Labor @ $1.50 per hour. Irrigators @ $1.10 per hour. 
 
 t 2 irrigators. 
 
 Source: Same as table A-l. 
 
 [35 
 
Table A-3 
 BARLEY: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS* 
 
 Operation 
 
 Hours 
 per acre 
 
 Laborf 
 
 Fuel and 
 repairs 
 
 Materials 
 
 Total 
 
 
 .67 
 
 .9 
 
 .2 
 
 .4 
 
 .2 
 
 .1 
 
 .2 
 
 dollars 
 
 100 lbs seed @ $3.00/cwt = $3.00 
 
 weed control spray = $0.55 
 contract @ $5.00/acre plus $.25/cwt = 
 $12.50 
 
 dollars 
 
 Plow 
 
 1.00 
 1.35 
 .30 
 .60 
 .30 
 .15 
 
 .30 
 
 3.32 
 2.07 
 .40 
 .96 
 .40 
 .11 
 
 .29 
 
 4.32 
 
 Disc 3x 
 
 3.42 
 
 Harrow 
 
 .70 
 
 Plant 
 
 4.56 
 
 Harrow 
 
 .70 
 
 Weed spray 
 
 .81 
 
 Combine 
 
 Haul \ 
 
 12.50 
 
 .59 
 
 Blow into silo/ 
 
 
 
 27.60 
 
 * 30 cwt per acre yield. Annual fixed costs not allocated to individual crops, but charged against entire farming operation, 
 t Labor @ $1.50 per hour. Irrigators @ $1.10 per hour. 
 Source: Same as table A-l. 
 
 Table A-4 
 PINK BEANS: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS* 
 
 Operation 
 
 Hours 
 per acre 
 
 Laborf 
 
 Fuel and 
 repairs 
 
 Materials 
 
 Total 
 
 dollars 
 
 dollars 
 
 Plow 
 
 Disc2x 
 
 Harrow 
 
 List 
 
 Pre-irrigate 
 
 Disc W/harrow 2x 
 
 Plant 
 
 Cultivate 3x 
 
 Irrigate 6x 
 
 Hoe 
 
 Pest control 
 
 Cut 
 
 Rake 
 
 Thresh 
 
 Haul 
 
 Clean-store-sack 
 
 Total variable costs 
 
 .67 
 .6 
 .2 
 .3 
 1.0 
 
 1.33 
 
 .3 
 
 .9 
 
 3.0 
 
 1.00 
 .90 
 .30 
 .45 
 
 2.20 
 
 2.00 
 
 .45 
 
 1.35 
 
 6.60 
 
 
 4.32 
 
 
 2.28 
 
 
 .70 
 
 
 .81 
 
 water, 4 acre-inches @ $1.50/acre ft 
 
 
 = $.50 
 
 2.70 
 
 
 5.14 
 
 seed, 50 lbs @ 100/lb = $5.00 
 
 5.80 
 
 
 2.65 
 
 water, 2 acre-ft = $3.00 
 
 9.60 
 
 contract @ $7.50/acre 
 
 7.50 
 
 
 5.00 
 
 contract @ $2.00/acre 
 
 2.00 
 
 contract @ $2.00/acre 
 
 2 00 
 
 contract @ $1.00/cwt = $20.00/acre 
 
 20.00 
 
 
 2.00 
 
 $.65/cwt 
 
 13.50 
 
 86.00 
 
 * 20 cwt per acre yield. Annual fixed costs not allocated to individual crops, but charged against entire farming operation 
 t Labor @ $1.50 per hour. Irrigators @ $1.10 per hour. 
 Source: Same as table A-l. 
 
 [36] 
 
Table A-5 
 CORN FOR GRAIN: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS" 
 
 Operation 
 
 Hours 
 per acre 
 
 Laborf 
 
 Fuel and 
 repairs 
 
 Materials 
 
 Total 
 
 
 .67 
 2.00 
 
 .25 
 
 .20 
 
 .30 
 
 4.00 
 
 .90 
 
 .30 
 
 dollars 
 
 nitrogen, 150 lbs plus application 
 $15.00 plus $1.25 
 
 seed, 14 lbs = $3.50 
 water, 3 acre-ft = $4.50 
 
 contract = $15.00 
 
 dollars 
 
 Plow 
 
 1.00 
 
 3.00 
 
 .38 
 
 .30 
 
 .45 
 
 8.80 
 
 1.35 
 
 .45 
 
 3.32 
 4.71 
 1.10 
 
 .40 
 .38 
 
 1.30 
 
 .36 
 
 4 32 
 
 Disc with harrow 3 x 
 
 Landplane 
 
 7 71 
 1 48 
 
 Fertilize 
 
 
 Harrow 
 
 16.25 
 
 70 
 
 Plant 
 
 Irrigate 8x 
 
 4.33 
 13.30 
 
 Cultivate 3x 
 
 Combine 
 
 Haul and blow into silo 
 
 2.65 
 15.00 
 
 .81 
 
 Total variable costs 
 
 66.55 
 
 * 55 cwt per acre yield. Annual fixed costs not allocated to individual crops, but charged against entire farming operation, 
 t Labor @ $1.50 per hour. Irrigators at $1.10 per hour. 
 Source: Same as table A-l. 
 
 Table A-6 
 CORN FOR SILAGE: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS* 
 
 Operation 
 
 Hours 
 
 per acre 
 
 .67 
 
 2.00 
 
 .25 
 
 .20 
 
 .30 
 
 4.00 
 
 .90 
 
 1.65 
 
 1.65 
 
 Laborf 
 
 Fuel and 
 repairs 
 
 Materials 
 
 Total 
 
 dollars 
 
 Plow 
 
 Disc with harrow 3 x . . 
 
 Landplane 
 
 Fertilize 
 
 Harrow 
 
 Plant 
 
 Irrigate 8x 
 
 Cultivate 3x 
 
 Chop 
 
 Haul and blow into silo. 
 
 Total variable costs 
 
 1.00 
 
 3.00 
 
 .38 
 
 .30 
 .45 
 8.80 
 1.35 
 2.48 
 7.44 
 
 3.32 
 4.71 
 1.10 
 
 .40 
 .38 
 
 1.30 
 
 10.40 
 
 4.19 
 
 nitrogen, 150 lbs plus application 
 $15.00 plus $1.25 
 
 seed, 14 lbs = $3.50 
 water, 3 acre-ft = $4.50 
 
 dollars 
 
 4 32 
 7.71 
 1.48 
 
 16.25 
 .70 
 
 4.33 
 13.30 
 
 2.65 
 12.88 
 11.63 
 
 75 25 
 
 * 25 tons per acre yield. Annual fixed costs not allocated to individual crops, but charged against entire farming opreation. 
 t Labor @ $1.50 per hour. Irrigators Qi, $1.10 per hour. 
 Source: Same as table A-l. 
 
 [37 
 
Table A-7 
 MILO: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS' 
 
 Operation 
 
 Hours 
 per acre 
 
 Labort 
 
 Fuel and 
 repairs 
 
 Materials 
 
 Total 
 
 
 .67 
 .90 
 .25 
 .20 
 .20 
 .30 
 .90 
 2.50 
 
 .20 
 
 dollars 
 
 100 lbs of nitrogen at $.10 = $10.00 
 12 lbs of seed at $.20 = $2.40 
 water, 2 acre-ft = $3.00 
 
 dollars 
 
 Plow 
 
 1.00 
 
 1.35 
 
 .38 
 
 .30 
 
 .30 
 
 .45 
 
 1.35 
 
 5.50 
 
 .30 
 
 3 32 
 
 2 07 
 
 1 10 
 
 .23 
 
 .40 
 
 .38 
 
 1 30 
 
 .29 
 
 4.32 
 
 Disc 3 X 
 
 3.42 
 
 Landplane 
 
 1.48 
 
 Fertilize 
 
 10.53 
 
 Harrow 
 
 .70 
 
 Plant 
 
 3.23 
 
 Cultivate 3 x 
 
 2.65 
 
 Irrigate 5x 
 
 8.50 
 
 Combine 
 
 10.00 
 
 Haul and blow into silo 
 
 .59 
 
 Total variable costs 
 
 45.42 
 
 * 55 cwt per acre yield. Annual fixed costs not allocated to individual crops, but charged against entire farming operation, 
 t Labor @ $1.50 per hour. Irrigators ® $1.10 per hour. 
 Source: Same as table A-l 
 
 Table A-8 
 OATS-VETCH HAYLAGE: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS* 
 
 Operation 
 
 Plow 
 
 Disc2x 
 
 Disc with harrow. 
 
 Plant 
 
 Fertilize 
 
 Swath 
 
 Chop 
 
 Haul and blow into silo. 
 
 Total variable costs. 
 
 Hours 
 per acre 
 
 67 
 60 
 33 
 40 
 20 
 
 66 
 40 
 .25 
 
 Laborf 
 
 Fuel and 
 repairs 
 
 dollars 
 
 1.00 
 .90 
 
 .50 
 
 .60 
 .30 
 
 1.00 
 
 .60 
 
 1.12 
 
 3.32 
 
 1.38 
 
 .79 
 
 .96 
 
 .23 
 
 1.10 
 
 2.52 
 
 .60 
 
 Materials 
 
 seed, 80 lbs = $4.00 
 nitrogen, 50 lbs; phosphorus at $.10 
 $8.00 
 
 Total 
 
 dollars 
 
 4.32 
 2.28 
 1.29 
 5.56 
 
 8.53 
 2.10 
 3.12 
 1.72 
 
 28.92 
 
 ! iSHSSMmSSt Ann . Ua -' fi ? ed ^ s l s i 1# all0 E ated t0 indiv 'dual crops, but charged against entire farming operation, 
 t Labor @ $1.50 per hour. Irrigators @ $1.10 per hour. 
 Source: Same as table A-l. 
 
 [38] 
 
Table A-9 
 RICE: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS* 
 
 Operation 
 
 Hours 
 per acre 
 
 Laborf 
 
 Fuel and 
 repairs 
 
 Materials 
 
 Tota 
 
 dollars 
 
 dollars 
 
 Plow 
 
 Disc2x 
 
 Landplane2x 
 
 Survey 
 
 Check 
 
 Plow 
 
 Disc 
 
 Fertilize 
 
 Flood 
 
 Plant 
 
 Spray 2x 
 
 Irrigate 
 
 Drain and open checks. 
 
 Combine 
 
 Bankout 
 
 Haul 
 
 Dry 
 
 Total variable costs 
 
 50 
 
 10 
 
 $.60 
 
 90 lbs of nitrogen = $9.00, 
 application = $3.00 
 
 150 lbs of seed = $12.00, 
 
 application = $1.50 
 spray = $3.50, application 
 water at $11.00 
 
 $15.00 
 
 $2.00 per ton 
 $2.00 per ton 
 $.35 per cwt 
 
 $2.50 
 
 4.32 
 
 2.28 
 
 2.96 
 
 .60 
 
 1 46 
 
 4 32 
 
 1 14 
 
 12.00 
 
 1.10 
 
 13.50 
 
 6 00 
 
 15.40 
 
 .22 
 
 15.00 
 
 5.50 
 
 5.50 
 
 19.25 
 
 110.55 
 
 * 55 cwt per acre yield. Annual fixed costs not allocated to individual crops, but charged against entire farming operation 
 t Labor @ $1.50 per hour. Irrigators % $1.10 per hour. 
 Source: Same as table A-i. 
 
 Table A-10 
 SAFFLOWER: ESTIMATED ANNUAL VARIABLE PRODUCTION COSTS* 
 
 Operation 
 
 Hours | 
 per acre 
 
 bort 
 
 Fuel and 
 repairs 
 
 Materials 
 
 Total 
 
 
 
 
 dollars 
 
 50 lbs of nitrogen = $5.00 
 45 lbs of seed at $.10 = $4.50 
 
 $4.00 per ton 
 
 dollars 
 
 Plow 
 
 67 1 
 
 00 
 90 
 50 
 30 
 60 
 
 3.32 
 
 1 38 
 
 .79 
 
 .29 
 
 .96 
 
 4.32 
 
 Disc 2 X 
 
 
 60 
 33 
 20 
 40 
 
 2 28 
 
 Disc and harrow 
 
 1 29 
 
 Fertilize 
 
 5 59 
 
 Plant 
 
 6 06 
 
 Combine 
 
 15 00 
 
 Haul to mill 
 
 4.40 
 
 Total variable costs 
 
 
 
 38 94 
 
 * 22 cwt per acre yield. Annual fixed costs not allocated to individual crops, but charged against entire farming operation, 
 t Labor @ $1.50 per hour. Irrigators @ $1.10 per hour. 
 Source: Same as table A-l. 
 
 [39 
 
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APPENDIX B: OPTIMUM PLAN USING SILAGE RATIONS 
 TO CARRY CALVES TO FINISH WEIGHT 
 
 In this program, summarized in table 
 B-l, calves are purchased at 350 pounds 
 and fed for six months (176 days) on a 
 daily ration consisting of 16.0 pounds of 
 alfalfa haylage, 4.0 pounds of oats-vetch 
 haylage, and 1.0 pounds of barley. Using 
 equation (1) in the text, gains during 
 this period are estimated at 1.42 pounds 
 per day. At the end of this six-month 
 period the cattle, averaging 600 pounds, 
 are placed on finishing ration 5 (see text) 
 for the regular finishing program of five 
 months. Over the total 11-month feeding 
 period, the cattle gain an average of 1.91 
 pounds per day and are sold (after 
 shrink) at 940 pounds per head. The 
 calves are purchased at four-month inter- 
 vals, with the lot being filled immediately 
 with calves as each lot of finished cattle 
 is sold. Under this program an average 
 of 1,636 head are bought and sold each 
 year. 
 
 The optimum cropping system for this 
 program is the same as for the plan in 
 which cattle are finished year-around on 
 ration 5 (compare tables 10 and B-l). 
 However, less grain is purchased in the 
 calf finishing program because of the 
 lower grain requirement for the lighter 
 cattle. Management income for this plan 
 is only about $4,000 less than for ration 
 5. Furthermore, because of the lower pur- 
 chase weight and efficient gain on light 
 cattle, calf feeding is usually considered 
 less risky than feeding somewhat heavier 
 cattle. For example, cash variable costs 
 (including cost of feeder cattle) are only 
 $293,340 in table B-l, compared with 
 $751,256 for ration 5, table 10; of course, 
 
 gross income also is much lower in the 
 calf feeding program. Although risk on 
 calves is generally considered lower than 
 on heavier cattle, it should be recognized 
 that the calves are carried for 11 months 
 rather than 5 months, and that price risk 
 increases with the length of feeding 
 period. Yet, with cattle purchased three 
 times during the year, this added price 
 risk element may not be serious. 
 
 An important qualification of this plan 
 (table B-l) is the assumption that 350- 
 pound good-choice feeder calves can be 
 purchased for the same price ($25.00 per 
 cwt) as 600-pound good-choice feeders. 
 A comparison of annual average prices 
 over a ten-year period at Stockton for 
 good-choice steers indicates that 350- 
 pound calves are usually priced higher 
 than 600-pound feeders. At feeder prices 
 of $25.00 per cwt, calf prices would 
 appear to average about $27.00 per cwt. 
 If so, management income on the calf 
 feeding plan would be reduced by $11,- 
 452 to $65,684. Still, this program would 
 be more profitable than finishing pro- 
 grams for silage rations 7 to 10 (table 
 10). 
 
 In summary, feeders interested in a 
 somewhat lower risk, less capital intensive 
 silage operation may find a calf feeding 
 program attractive. Once again, gains 
 per day actually obtained, particularly 
 during the growing period from 350-600 
 pounds, would have an important in- 
 fluence on the optimum choice of feeding 
 system. With the data presented in tables 
 B-l and A- 11, the interested reader can 
 budget out costs and returns based on 
 different gain assumptions. 
 
 [42 
 
Table B-l 
 OPTIMUM PLAN USING SILAGE RATIONS TO CARRY CALVES TO FINISH WEIGHT 
 
 Category 
 
 Crop 
 
 Acres 
 
 Crop 
 
 Soil A 
 
 Rice 
 
 209 
 
 Soil B 
 
 Alfalfa haylage 
 Oats-vetch x milo 
 (doublecropped) 
 
 
 291 
 
 44 
 
 SoilC 
 
 Rice 
 
 Alfalfa haylage 
 Oats-vetch x milo 
 (doublecropped) 
 Milo 
 
 100 
 93 
 
 214 
 23 
 
 Feed buying 
 
 Barley 
 
 cwt 
 
 
 27,000 
 
 
 
 
 
 tons, haylage basis 
 
 Alfalfa reconstituted .... 
 
 470 
 
 Feed selling 
 
 Milo 
 
 cwt 
 
 
 10,153 
 
 
 
 
 Cattle feeding 
 
 Purchase 500 350-lb calves at four-month intervals. 
 Feed calves for 6 months on daily ration of 16.0 lbs alfalfa 
 
 haylage, 4.0 lbs oats-vetch haylage and 1.0 lbs barley. 
 Switch to ration 5 for 5 months finishing period. Total 
 
 feeding period = 11 months. 
 Fill lot immediately as finished cattle sold. Average of 
 
 1,636 head bought and sold each year. 
 
 Costs and returns 
 
 Gross returns 
 
 dollars 
 
 
 471,883 
 
 293,340 
 
 39,252 
 
 28,466 
 
 33,675 
 
 
 Cash variable costs 
 
 Cash fixed costs 
 
 
 Depreciation 
 
 
 Interest on investment 
 
 
 Net income 
 
 Net cash income 
 
 Net farm income 
 
 Management income. . . . 
 
 dollars 
 
 139,291 
 
 110,824 
 
 77.149 
 
 [43 
 
ACKNOWLEDGMENTS 
 
 The authors express their appreciation to several persons associated with the Uni- 
 versity of California who gave generously of their time when consulted on various 
 phases of this study. Among these were Eugene Begg, Monte Bell, Gordon King, 
 Trimble Hedges, Glen Lofgreen, James Meyer, Milton Miller, and Robert 
 Sailsbery. 
 
 LITERATURE CITED 
 
 Garrett, W. H., J. H. Meyer and G. P. Lofgreen 
 
 1959. The comparative energy requirements of sheep and cattle for maintenance 
 and gain. J. Animal Sci. 18(2). 
 
 Heady, E. 0. and W. E. Candler 
 
 1958. Linear programming methods. Iowa State Coll. Press. 
 
 Hopkins, John A. 
 
 1957. Cattle feeding in California — a study of feedlot finishing. Bank of America, 
 Econ. Dept., San Francisco. 
 
 King, Gordon A. 
 
 1962. Economics of scale in large commercial feedlots. U.C. Giannini Fdn. Res. 
 Rept. 251. 
 
 Morrison, Frank B. 
 
 1949. Feeds and feeding. The Morrison Publ. Co., Ithaca, N.Y. 
 
 Sitton, Gordon R. 
 
 1958. Sacramento Valley rice farms, 1. Organization, costs, and returns. U.C. Gian- 
 nini Fdn. Mimeo Rept. 207. 
 
 Wyckoff, J. B. 
 
 1961. Marketing beef cattle and calves in Washington. Wash. Agr. Exp. Sta. Cir. 
 384. 
 
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