Presentation by John Dhuyvetter, NDSU Extension area livestock specialist. This slideshow was part of the 2011 NDSU Feedlot School.

1. CATTLE FEEDING Do we want to feed cattle? What kind of cattle feeding ? Business Planning steps?

2. Cattle Feeding - has a positive and modest impact on the community More Feeding - because better markets for larger lots of uniform preconditioned calves Add and capture value in superior cattle utilization of damaged grains and byproduct feeds keep more people involved in agriculture Economic activity and diversification

3. Cattle Feeding - competitive potentially rewarding enterprise with associated risk Feeding - because Personal interest, knowledge and/or experience Complimentary to other agricultural enterprises Utilization of available resource Opportunity for expansion of operation to support next generation Economic profits

4. ND Adult Farm Management

5. Industry Trends High grain prices – increased byproducts Low cattle inventory- high prices Excess feeding capacity – shift north Continued concentration Product Branding Growing niche markets (natural, organic,…) Added documentation (PVP, ID, …) Alliances (supply chain integration) Greater Regulation International Competition

6. Cattle Feeding Requirements Source of cattle Competitive reliable feed Favorable climate – temps, rainfall Capitol/financing Land/facilities/equipment/infrastructure Interest and knowledge Services – vet, trucking, feed Markets Labor

7. Important Business Concepts Competitive advantage Examples Land best suited to corn and alfalfa crops best marketed through finish feedlot Feed base in range country supports custom heifer development Low cost land reclamation forage and proximity to DDGS supports custom cattle wintering Economy of scale Overhead Equipment Facilities Marketing Purchasing Examples JBS Five Rivers 960,000 feeding capacity 13 locations

8. SWOT analysis

9. Economies of ScaleCapital Cost Summary (NDSU 1997)

10. How about our Winter Weather? ND weather? Greater intake and maintenance Performance can be high Wind protection and bedding critical Snow and storm work, preparations, and cost Ideal feeding climate in much of the rest of the year

11. Local Feed Resources Large farming base Cheapest hay in country Many opportunity feeds screenings, damaged crops, feed barley Midds, DDGS, WDGS, oil seed meal, pressed pulp CRP hay, stover, aftermath

12. Site, Equipment, & Facilities

13. Cattle/Feeding Alternatives Wintering stock cows Feeding cull cows growing/developing heifers Bull test/ development Wintering calves for grazing Preconditioning /backgrounding Finishing calf feds Finishing yearlings Dry lot cow calf

14. Business planning Analyze a business/enterprise idea on paper including definition of production, financial requirements, associated risks and projected returns Informal to Document Takes time, research, and honesty Planning to evaluate alternatives Access to credit

15. NDSU Plotting the Coarse – planning prices

16. Planning prices grain/feed

17. Example: Situation Due to high grain prices feed yards are looking and offering good value for heavier cattle Medium quality hay has consistently been available and at a cost of about $50/t Current farming operation includes a shop, well, utilities, tractors, trucks and equipment available for seasonal feeding 5-6 cwt calves are available through local sale barns and direct from Oct-Jan, with considerable discounts on heifers in fall diminishing by grazing/breeding season

18. Description of Business Type of business, structure of business, size and scale, ownership of cattle, expectations of performance, days on feed, marketing endpoint and method, custom feeding arrangements

19. Example: Business Description Construct a 500 head calf feeding facility to background fall purchased heifer calves Feed hay based ration supplemented with local grain screenings, feed grains, and byproduct Market heavy feeder heifers in Jan-Feb, and light stocker heifers and replacement heifers in Mar-Apr Purchase feeding/handling equipment Employ seasonal hourly labor

20. Operational Plan Feeding program Rations and feeding protocols Feed sourcing and costs Performance targets and breakeven Health program Treatment and vaccination protocols Death loss and treatment cost Procurement-Marketing plans Target weight and date Location and method Labor Needs and costs

21. Example: Operational Plans Health Vaccination 4 way viral 7 way clostridial Bangs Treatment Treat 10% $20/HD Death loss 1% Procurement - Marketing Nov buy 500 heifers 550 lbs @ $1.20 Mar sell 250 heifers 800 lbs @ $1.05 Mar sell 240Heifers 850 lbs @ $900 Labor 150 days – 2.5hr/day

22. Example: Operational Plans Feeds Feeding Ration: Cost: Performance: 2lb/day Ration

23. financials Budget BE Capital investment/debt service Income statement Balance sheet Cash flow projection Lender assistance NDSU Extension Adult farm management

25. Capitol Investments

26. Expenses

27. Expenses

28. Income

29. Financing Issues Loan Structure Annual feeder loans (cattle and feed) 75% Term operating (equipment) 65% Long term real estate (land, facility, site) 60% Equity-collateral Co sign Equip cost share FSA guarantee / subordination Custom feed Interest Rates Beginning farmer Socially disadvantaged

30. Loan Table

31. Regulation Issues/Limitations Local zoning ND feedlot permit Nutrient management plan

32. Custom Feeding Services Feeding Processing Chute charges Marketing Promotion/ Clients Cow/calf Stocker Buyers Finish feedlot seedstock Billing Feed + yardage Cost/ lb of gain Daily cost per head Business Feeding contract Feed lien

33. Adopt a Professional Attitude You’re in the customer service business Be precise Be timely Be thorough Be knowledgeable Pay attention to details Cattle care is a responsibility

34. Yes, we can feed cattle profitably.