III. Economic evaluation of different
types of buildings on the outcome of
finishing beef cattle

Dan Loy
Professor of Ani...
Five Systems Analyzed
• Earthen lot with no shelter…windbreak only

• Earthen lot with a shed for shelter
• Concrete lot w...
Costs/assumptions
• 1 USD $ = 2.32 R$
• 1 R$ = $.43

• Interest rates 10%
Assumptions Common to All
• Fencing costs are the same for all. Cost = R$76/m.

• Site preparation = R$ 4.64 per head
• Co...
Assumptions Common to All
• 150 head per pen
• .3 m of bunk space per head
• 1 gate per pe
• 1 waterer per pen
• 100% of r...
Earthen Lot with Shed
Windbreak fence
Open lot (150) head
Fenceline bunk
Drive alley
Open lot (150) head
Settling basin

W...
Earthen Lot Assumptions
• 3.66 m concrete apron along length of bunk

• 13.9 sq m concrete pad around waterer
• 2.72 MT/yr...
Earthen Lot Assumptions
• Lot with shed
– 20.9 sq m/head outside, 2.3 inside
– No concrete inside building
– Building cost...
Concrete Lot with Shed

S ettlin g a p ro n

Pa ve d lo t
Deten tio n b a s in

9
Concrete Lot Assumptions
• 1.85 sq m/head inside, 2.79 outside
• No feed alley
• No roof water gets on lot

• 4.1 MT/yr/hd...
Complete Confinement Building
with Solid Floor

11
Complete Confinement Building
• Total roof means no liquid manure to haul

• Total solid concrete floor
• 5.5 MT/yr/hd sol...
Complete Confinement Building
with Slatted Floor

13
Complete Confinement Building
with Slatted Floor
• No solid manure to haul
• Liquid manure = 24.6 l/day/hd
• Hauling cost ...
Change In Feed Intake
Open Lot vs. Confinement
14
12
10
8
6
4
2
0
ISU 70-75 ISU 78-83 MN 70-76 MN 77-78 NB 74-75 MO 74-82 ...
Change In Feed/Gain
Confinement vs. Open Lot
8
7
6
5
4
3
2
1
0
-1
-2
-3
ISU 70-75 ISU 78-83 MN 70-76 MN 77-78 NB 74-75 MO ...
Change In Feed/Gain
No Shelter vs Shelter
10
9
8
7
6
5
4
3
2
1
0
ISU 70-75

ISU 78-83

MN 70-76

MN 77-78

H&G

SOI 88-97
ADG Assumptions
1.50

1.00

0.50

0.00

Yearlings
Calves

Open
1.41
1.27

OL/S, PC
1.49
1.34

Conf
1.37
1.24
F/G Assumptions
7.4
7.2
7
6.8
6.6
6.4
6.2
Yearlings
Calves

Open
7.4
7

OL/S, PC
7
6.7

Conf
7.2
6.85
Rations
• Flexible feed storage
– Modified distillers grains
– Ground hay
– Dry corn
– Supplement
Economic Analysis
• Initial investment
• Annualized costs
• Cost per head
• Yardage
• Environmental structures costs
Other costs
• Feed costs ($R per MT)
• Bedding cost
• Labor, land, etc.
Other non-feed costs
• Bedding-- $R 127/MT
• Land Rent-- $R 1030/hectare
• Wage rate $R32/hr
Other Non-feed Costs, per Hea...
Feed Costs
• Corn--$R 387/MT
• Hay--$R 199/MT

• Modified Distillers Grains (50% DM)-- $R 217/MT
• Supplement-- $R 1020/MT
Initial Investment Per Head by System and Size R$
$2,000
$1,800
$1,600

750 head
1,500 head
5,000 head

$1,400
$1,200
$1,0...
Ownership and Operating Costs (nonfeed) per Head
(Two Turns of Yearling Steers), R$
$350
$300

750 head
1,500 head
5,000 h...
Cost of gain with 2 turns of yearlings
(days on feed = 152 to 164) R$
$2.04
750 head

$2.02

1,500 head

$2.00

5,000 head...
Cost of gain with one turn of calves
(days on feed = 194 to 207), R$
$1.92
750 head
$1.90
1,500 head
$1.88
5,000 head
$1.8...
Breakeven Yardage Charge at 85% Capacity, R$
$2.50
750 head
$2.00

1,500 head
5,000 head

$1.50

$1.00

$0.50

$Earthen Lo...
Breakeven Yardage Charge minus
Manure Value (85% Capacity), R$
$1.40
750 head
$1.20
1,500 head
5,000 head

$1.00

$0.80

$...
Initial Investment
• Earthen lot with windbreak has lowest initial investment

• Adding a shed doubles the costs
• Concret...
Overhead and Operation
• Earthen lot advantage for small lot

• Earthen lots without shed or concrete lot were lowest cost...
Cost of Gain
• Incorporates animal performance
• Yearlings and calves similar
• Confinement has higher cost of gain
Environmental Structures
• Not needed on confinement

• Lowest for concrete lot with shed

– 1/5 to 1/10 the cost of earth...
Size of Feedlot
• Subject to assumptions
– Many costs were linear
• 750 head lot
– Already capturing most economies of sca...
ISU Beef Feedlot
Systems Manual
(PM-1867)
Summary
Construction and Operational Factors
• Confinement systems have the highest initial investment
• Economies of size...
Key to Competitiveness
with Confinement
Questions?
Dan Loy
Extension Beef Specialist
Director, Iowa Beef Center
515-294-BEEF
dloy@iastate.edu
 Workshop Internacional – Como Confinar o ano todo  Palestra com Dr. Dan Loy:  Avaliação econômica dos diferentes tipos de...
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Workshop Internacional – Como Confinar o ano todo Palestra com Dr. Dan Loy: Avaliação econômica dos diferentes tipos de construções sobre o resultado de confinamentos de bovinos de corte

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Workshop Internacional – Como Confinar o ano todo Palestra com Dr. Dan Loy: Avaliação econômica dos diferentes tipos de construções sobre o resultado de confinamentos de bovinos de corte

  1. 1. III. Economic evaluation of different types of buildings on the outcome of finishing beef cattle Dan Loy Professor of Animal Science Director, Iowa Beef Center Iowa State University
  2. 2. Five Systems Analyzed • Earthen lot with no shelter…windbreak only • Earthen lot with a shed for shelter • Concrete lot with a shed • Total confinement with solid concrete floor • Total confinement with slatted floor
  3. 3. Costs/assumptions • 1 USD $ = 2.32 R$ • 1 R$ = $.43 • Interest rates 10%
  4. 4. Assumptions Common to All • Fencing costs are the same for all. Cost = R$76/m. • Site preparation = R$ 4.64 per head • Concrete cost costs = R$ 606/m3 • Concrete depth = 10.2 cm • Earth volumes for settling basin and detention basin construction = volume of liquid to handle
  5. 5. Assumptions Common to All • 150 head per pen • .3 m of bunk space per head • 1 gate per pe • 1 waterer per pen • 100% of rainfall runs off • Environmental control facilities designed per DNR regs (for once a year pumping)
  6. 6. Earthen Lot with Shed Windbreak fence Open lot (150) head Fenceline bunk Drive alley Open lot (150) head Settling basin Windbreak fence Detention basin 6
  7. 7. Earthen Lot Assumptions • 3.66 m concrete apron along length of bunk • 13.9 sq m concrete pad around waterer • 2.72 MT/yr-hd solid manure each year • Lot with windbreak – 23.2 sq m per head lot space – 2.79 sq m per head mound space – Windbreak = R$ 34.80/ head
  8. 8. Earthen Lot Assumptions • Lot with shed – 20.9 sq m/head outside, 2.3 inside – No concrete inside building – Building cost = R$388/sq m
  9. 9. Concrete Lot with Shed S ettlin g a p ro n Pa ve d lo t Deten tio n b a s in 9
  10. 10. Concrete Lot Assumptions • 1.85 sq m/head inside, 2.79 outside • No feed alley • No roof water gets on lot • 4.1 MT/yr/hd solid manure • Weekly scraping or oftener
  11. 11. Complete Confinement Building with Solid Floor 11
  12. 12. Complete Confinement Building • Total roof means no liquid manure to haul • Total solid concrete floor • 5.5 MT/yr/hd solid manure • Solid hauling cost = R$8.88/MT
  13. 13. Complete Confinement Building with Slatted Floor 13
  14. 14. Complete Confinement Building with Slatted Floor • No solid manure to haul • Liquid manure = 24.6 l/day/hd • Hauling cost = R$0.06/l
  15. 15. Change In Feed Intake Open Lot vs. Confinement 14 12 10 8 6 4 2 0 ISU 70-75 ISU 78-83 MN 70-76 MN 77-78 NB 74-75 MO 74-82 SOI 88-97
  16. 16. Change In Feed/Gain Confinement vs. Open Lot 8 7 6 5 4 3 2 1 0 -1 -2 -3 ISU 70-75 ISU 78-83 MN 70-76 MN 77-78 NB 74-75 MO 74-82 SOI 88-97
  17. 17. Change In Feed/Gain No Shelter vs Shelter 10 9 8 7 6 5 4 3 2 1 0 ISU 70-75 ISU 78-83 MN 70-76 MN 77-78 H&G SOI 88-97
  18. 18. ADG Assumptions 1.50 1.00 0.50 0.00 Yearlings Calves Open 1.41 1.27 OL/S, PC 1.49 1.34 Conf 1.37 1.24
  19. 19. F/G Assumptions 7.4 7.2 7 6.8 6.6 6.4 6.2 Yearlings Calves Open 7.4 7 OL/S, PC 7 6.7 Conf 7.2 6.85
  20. 20. Rations • Flexible feed storage – Modified distillers grains – Ground hay – Dry corn – Supplement
  21. 21. Economic Analysis • Initial investment • Annualized costs • Cost per head • Yardage • Environmental structures costs
  22. 22. Other costs • Feed costs ($R per MT) • Bedding cost • Labor, land, etc.
  23. 23. Other non-feed costs • Bedding-- $R 127/MT • Land Rent-- $R 1030/hectare • Wage rate $R32/hr Other Non-feed Costs, per Head ($R/head) YEARLINGS Veterinary and health Machinery and equipment 16.25 CALVES 22.30 25.50 Marketing and miscellaneous Total 37.10 71.85 32.50 80.30 18.50
  24. 24. Feed Costs • Corn--$R 387/MT • Hay--$R 199/MT • Modified Distillers Grains (50% DM)-- $R 217/MT • Supplement-- $R 1020/MT
  25. 25. Initial Investment Per Head by System and Size R$ $2,000 $1,800 $1,600 750 head 1,500 head 5,000 head $1,400 $1,200 $1,000 $800 $600 $400 $200 $Earthen Lot w/Windbreak Earthen Lot w/ Shed Concrete Lot w/ Shed Confinement Solid Floor Confinement Slatted Floor
  26. 26. Ownership and Operating Costs (nonfeed) per Head (Two Turns of Yearling Steers), R$ $350 $300 750 head 1,500 head 5,000 head $250 $200 $150 $100 $50 $Earthen Lot w/Windbreak Earthen Lot w/ Shed Concrete Lot w/ Shed Confinement Solid Floor Confinement Slatted Floor
  27. 27. Cost of gain with 2 turns of yearlings (days on feed = 152 to 164) R$ $2.04 750 head $2.02 1,500 head $2.00 5,000 head $1.98 $1.96 $1.94 $1.92 $1.90 $1.88 $1.86 $1.84 Earthen Lot w/Windbreak Earthen Lot w/ Shed Concrete Lot w/ Shed Confinement Solid Floor Confinement Slatted Floor
  28. 28. Cost of gain with one turn of calves (days on feed = 194 to 207), R$ $1.92 750 head $1.90 1,500 head $1.88 5,000 head $1.86 $1.84 $1.82 $1.80 $1.78 $1.76 $1.74 $1.72 Earthen Lot w/Windbreak Earthen Lot w/ Shed Concrete Lot w/ Shed Confinement Solid Floor Confinement Slatted Floor
  29. 29. Breakeven Yardage Charge at 85% Capacity, R$ $2.50 750 head $2.00 1,500 head 5,000 head $1.50 $1.00 $0.50 $Earthen Lot w/Windbreak Earthen Lot w/ Shed Concrete Lot w/ Shed Confinement Solid Floor Confinement Slatted Floor
  30. 30. Breakeven Yardage Charge minus Manure Value (85% Capacity), R$ $1.40 750 head $1.20 1,500 head 5,000 head $1.00 $0.80 $0.60 $0.40 $0.20 $Earthen Lot w/Windbreak Earthen Lot w/ Shed Concrete Lot w/ Shed Confinement Solid Floor Confinement Slatted Floor
  31. 31. Initial Investment • Earthen lot with windbreak has lowest initial investment • Adding a shed doubles the costs • Concrete with shed comparable to earthen lot with shed when environmental structures included • Confinement highest investment
  32. 32. Overhead and Operation • Earthen lot advantage for small lot • Earthen lots without shed or concrete lot were lowest cost for large lot • Confinement had higher costs • Yardage ranges from R$1.23-2.06 /head/day
  33. 33. Cost of Gain • Incorporates animal performance • Yearlings and calves similar • Confinement has higher cost of gain
  34. 34. Environmental Structures • Not needed on confinement • Lowest for concrete lot with shed – 1/5 to 1/10 the cost of earthen lot structures • Relative cost of structures – $50 was largest initial investment – 15% of pens lose more than $50/head – Maximum annual cost less than $5/head
  35. 35. Size of Feedlot • Subject to assumptions – Many costs were linear • 750 head lot – Already capturing most economies of scale – Environmental savings may be short lived • 5000 head lot – Economies of scale – Environmental and overhead
  36. 36. ISU Beef Feedlot Systems Manual (PM-1867)
  37. 37. Summary Construction and Operational Factors • Confinement systems have the highest initial investment • Economies of size exist for runoff containment • Operational costs are highest with the deep bedded housing mostly due to bedding costs • The cost of shelter is justified in all systems • To capture the value of initial investments in confinement producers must also capture and utilize increased manure nutrient values.
  38. 38. Key to Competitiveness with Confinement
  39. 39. Questions? Dan Loy Extension Beef Specialist Director, Iowa Beef Center 515-294-BEEF dloy@iastate.edu
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