Calculating Cost of Production . . . . . . . . . . . . . . . . . . . - - PowerPoint PPT Presentation

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Calculating Cost of Production . . . . . . . . . . . . . . . . . . . - - PowerPoint PPT Presentation

Apr 08, 2023 131 likes •657 views

Calculating Cost of Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ben Hamm , P.Ag. Farm Management Specialist What we already know Doing your cost of production for your own farm is the starting point for

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Calculating Cost of Production

Ben Hamm, P.Ag. Farm Management Specialist

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What we already know…

  • Doing your cost of production for

your own farm is the starting point for profitability.

  • Determining your cost per lb DM

will allow you to build an effective marketing plan.

  • Each year is different! Profitability

and risk is dependent on the relationship between yield/price/costs with your financial situation. (Plan for Prosperity)

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Advantages of Corn Silage

  • Tonnes!!! Excellent energy source
  • Less land needed
  • Silage can be harvested in almost any weather conditions
  • Higher output of nutrients per acre than grain
  • Can salvage crops damaged by hail, frost and high weed

competition

  • Large quantities of uniform quality feed can be stored
  • Handling is mechanized from the field to feed
  • Control of intake and ability to get mineral into the cows
  • Free summer
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Disadvantages of Corn Silage

  • Requires more labour and equipment
  • Has an odour that may be offensive if stored

near populated areas

  • Capital investment required for storage

facilities, forage harvester

  • Has limited market potential. Long distance

transportation is inefficient because silage is heavy and deteriorates with exposure to air.

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Advantages of Baled Silage

  • Use the same equipment as dry hay
  • Requires less labour and energy for harvesting compared to

chopped silage system

  • Requires 1/2 to 1/3 the drying time compared to dry hay

– Only 13 to 20 hours vs 40 or more for dry hay

  • Permits harvest at optimum stage despite weather
  • Opportunity to utilize crops that are hard to dry down –

high yielding alfalfa

  • Less leaf loss – 5% compared to 20 to 30%

– Increased feed value

  • Less feed loss at feeding due to increase in palatability
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Disadvantages

  • Increased cost due to plastic and wrapper cost
  • Harder on baler – heavier bales
  • Hard on loaders and front axels of loader tractors – increased repair

bills??

  • Bales can spoil if plastic punctured by rodents, wildlife, birds, wind,

and hail

  • Low moisture forage will not ferment- less than 40% increase risk
  • f mold
  • High moisture forage will producer sour silage- greater than 70%
  • Freezing problems
  • Have to be used up within 3 days if taken out of plastic
  • Harder to sell- heavy bales, have to be used up immediately
  • Shorter storage life compared to chopped silage
  • Used plastic to deal with
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Fertilizer Cost

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Protein Cost Comparison

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TDN Cost Comparison

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Dry Matter Cost Comparison

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Risk Analysis

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Cost of Protein

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Cost of TDN

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Most importantly balance the ration!

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Cash Rent Based on Gross Revenue

  • Average range of cash rent across

western Canada is 18 to 22%

  • f gross revenue.
  • But how much is too much???
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Breakeven Land Rent Calculation

Gross Revenue

  • Operating Cost
  • Equipment Cost
  • Labour Cost / Owner withdrawal
  • Storage Cost

= Cash for Land Rental

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Land Rent Based on Investment Return on Land Value

(Landowner check & balance)

Land market value $1925 per acre x Long Term Investment Rate (5yr) 2.75 % + Property taxes $10.00 per acre Total Cash Land Rental $58.00 per acre

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Farm Software & Worksheets (Forage)

  • http://www.gov.mb.ca/

agriculture/business- and- economics/financial- management/farm- software-and- worksheets.html

  • Farm Machinery Custom & Rental

Rate Guide Calculator - 2018/19

  • Standing Hay Cost Calculator
  • Feedplan
  • Hay storage cost planner
  • Hay Production Cost 2018
  • Silage Production Cost 2018
  • Pasture Production Cost
  • Cropland Rental Rate Planner
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Conclusion

  • The more accurate your own numbers, the greater your

chances are for profitability.

  • It’s vital to know the risks and rewards of your forage crop.
  • Before seeding, compare forage mixtures for profit

probability.

  • After seeding, update your actual costs to keep on top of

profitability

  • Business Risk Management Programs

– Excellent value in forage insurance programs

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Questions ?

For more information

Visit our website: www.manitoba.ca/agriculture Follow us on Twitter: @MBGovAg View our videos on YouTube: www.youtube.com/ManitobaAgriculture

Contact us: Ben Hamm, P.Ag. Roy Arnott, P.Ag. benjamin.hamm@gov.mb.ca roy.Arnott@gov.mb.ca Vita Ag Office Killarney Ag Office 204.392.9350 204.523.6424