The object of this report is to try and determine what it will cost to produce beef in the Kenai Peninsula and other parts of the Railbelt. Because little beef is being produced in this area, it has been necessary to project beef enterprises, rather than to cite actual case studies

Saudners, Dale A.

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a summary of expected costs and possible returnsA. DALE SAUKDEHiUniversity of AlaskaALASKA AGRICULTURAL EXPERIMENT STATIONMarch 1962 Palmer, Alaskaproducing Beeffor Alaska'sra ilb elthe Railbelt area of Alaska consumes 25 to 30,000 beef carcasses a year. Within this area there are vast areas of prime grazing land but less than 500 head of beef cattle of all ages. Why? The reason for this apparent paradox hingfes upon two factors, feed costs and marketing.At the present there are no developed marketing channels for livestock. The; small amount oi locally produced beef is butchered under primitive conditions and peddled by the producer directly to the purchaser. Because of generally low quality, lack of handling facilities, and sporadic supply, normal retail outlets are not inter­ested in handling locally produced beef. Ranchers on Kodiak and other islands'to the Southwest where the major cattle herds are, have the additional problems of small local markets and lack of econ­omical transportation to other areas. Before beef production in any quantity can become feasible an adequate marketing system will have to be developed. This system must.provide modern slaughtering facil­ities with adequate storage and means to provide a dependable, even flow of beef to the retailer. The quality of the beef will also have to be raised to-the level of imported beef.Before marketing facilities are developed, a determination should first be made as to whether or not beef can be produced at a price the market will pay and in what -quantity.The object of this rejjort is to try and determine what it will cost to produce beef in the Kenai Peninsula and other parts of the Railbelt. Because little beef is being produced in this ar^a, it has been necessary to project beef enterprises, rather than to cite actual case studies. The basis used for the individual illustrations a r e ;  _ _ o r . . . .  ■■ ; ./K-■oration - These illustrations apply only to the Kenai Peninsula and -■ i ai.ib^lt areas. Ranches on Kodiak and other islands of southwestern Alaska are able to run cattle on range for most of the year with a winter feeding period of comparative1y short duration^Length of feeding period - The winter feeding.period has been figured at seven months. In some years it may be possible to get by with a shorter period but in other years a longer period will be needed.Summer range - Summer range must be utilized as long as possible be­cause it provides fast gains at low cost. In these illustrations the grazing period has been set at five months. Range costs have been figured at the rate of five cents per animal-unit-month which is the charge by the Bureau of Land Management on government r-owned land. An animal unit is the equivalent of one cow with or without calf up to tlie age of six months. In the future a large percentage of the range will be under the jurisdiction of the state but to date the state has not set up a grazing fee schedule.2Feed production costs - Feed prices used in these illustrations are the cost of production. These prices are considerably lower than what feed costs on the local market. They are also below what many farmers are presently producing feed for, but are in line with what the most efficient farmers are able to do. In order to produce feed at these prices a farmer must have good land and large fields, and he must be a good manager. Yields and cost of production are:Yield Production Normalper acre cost sellingper ton priceBarley grain . 1 ton $60.00 $85.00Bromegrass hay . 2 1/2 tons 42.50 60.00Silage , . . . 6 tons 15.00 20.00Cattle prices - Prices for cattle represent a reasonable long-time price for the various types and classes involved:Breeding cow . . . .  $300 per head Breeding bull . . . $500 per headFeeder cattle laid down at Kenai or Railbelt points per cwt liveweight- Heifers . . . .  400 pounds ...........  $22.00Steers . . . .  400 pounds ...........  $25.00Grass fat cattle, grading common to low good per cwt liveweightHeifers . . . .  400 to 800 pounds . . $22.00Steers . . . .  400 to 1000 pounds . . $25.00Fattened cattle 90 days or more on grain grading high good to choice per cwt liveweight, Heifers . . . .  800 to 1000 pounds . . $25.00Steers . . . . 800 to 1000 pounds . . $28.003COW-CALF OPERATIONThis operation is based on a brood herd of 100 cows and 4 bulls. In the average year it would be expected that the herd would gain the equivalent of five months of their feed primarily on leased graz­ing land. During the remaining seven months of the year the herd would be fed primarily an silage, with a small amount of good quality hay going to the replacement heifers. Calves would be dropped at the start of the pasture season and sold in the fall when the stock was brought in off pasture. Brood cows would be replaced after the sixth calf. Bulls would be used for a maximum of four years. The older stock that was being replaced would also be sold in the fall.PRODUCTION ... . f tCalf crop @ 8 5 % ........................ ................... 85 headAllowance for death losses —  3 cows and 2 calves . . . .  5 headReplacement h e i f e r s ............................... . . . . 18 headAVERAGE YEARLY SALES . f;1 bull 1100 pounds @ $15 . . . . . . . . .  . . . . . .  $ 16515 cows 1000 pounds @ $ 1 8 ...............................  2,70023 heifer calves . 400 pounds @ $22 . ... .. .. 2,02442 steer calves 400 pounds @ $25 .  ...................  4,200TOTAL ANNUAL S A L E S ......................................   . $9,089COST OF FEEDSummer pasture, 610 AUM @ 5£ . . . . . . . . * $ 30.50Winter feed k - '.J.\ .7'. Lj • •100 cows, 50 pounds silagc/day* 210 days, 525 ton @ $15 7,875.004 bulls, 50 pounds silage/day, 210 days, 21 ton @ $15 . 315.0018 heifers, 20 pounds silage/day, 210 days, 37.8 T @ $15 567.008 pounds hay/day,. 2.10 days, 15.1 .ton @ $42.50 . . . .  642.60. i ■ ■ ■  • I’/ ' • .* »TOTAL ANNUAL FEED COST.....................................$9,419.10Cost of producing feed above sales receipts . . . . .  330.10Inasmuch as the annual sales will not cover the annual feed production cost, no consideration was given to other expenses, to investment return and to labor costs.100 COW HERD, SELLING LONG YEARLINGSThis operation is basically the same as the cow-calf operation,except that the calves are roughed through the winter and sold at theend of the second pasture season as long yearlings. These cattle might move directly to slaughter but would be best suited for putting into a feedlot for future gain and a higher quality finish.PRODUCTIONCalf crop @ 8 5 % ............. ...................................85 headAllowance for death losses -- 3 cows, 2 calves, 1 yearling. . 6 headReplacements.......................................................  headAVERAGE YEARLY SALES1 bull 1100 pduridS @ $15  ............................. $ 16515 cows 1000 pounds @ $18    2,70023 heifers 750 pounds @ $22   3,79541 steers 800 pounds @ $25 ...................................  8,200TOTAL ANNUAL SALES.................   $14,860COST OF FEEDSummer pasture 935 AUM @ 5$ . . . . . .  . ................... $ 47Winter feed100 cows 50 pounds silage/day, 210 days, 525 tons @ $15 . . $ 7,8754 bulls 50 pounds silage/day, 210 days, 21 tons @ $15 . . . 31583 calves 20 pounds silage/day, 210 days, 174.3 T @ $15 . . 2,6148 pounds hay/day, 210 days, 69.72 tons @ $42.50 ............  2,963TOTAL ANNUAL COST OF FEED  ............................ $13,814Return of sales above cost of producing f e e d ................. $ 1,046While this operation shows some return over the cost of feed, there are other expenses incurred in running a beef herd.OTHER EXPENSESHousing @ $ 3 / h e a d..........    . $ 561Veterinary @ $5 head of breeding stock  .................  520Depreciation on breeding h e r d ................................  2,385Allowance for other miscellaneous costs @ $5/head ............  935TOTAL OTHER E X P E N S E S ............................................$ 4,40151 ' Fo* the operation to be profitable to the producer it would alsoneed to yield a return on the capital invested and a return to the ' operator for his labor and management.MINIMUM INVESTMENT IN BUILDINGS AND CATTLE EQUIPMENT$10,000 @ 6% interest • • • • • • • • •. • • • • v • • • • • • ^Average investment in battle $35,000 @ 6% . . . . . . . . . 2,160Labor @ 10 hours/head of breeding stock @ $2/hour . . . . . 2,080’SUMMARY ........................Expenses Return’ Annual cattle sales . . . . * $14,860Annual feed production costs .........  $13,814'• Other non-'feed expenses . . . . . . . . . • 4,401 ■ ~ 1 ■Return on capital investment @ 6% . . . . 2,760Charges for operators’ labor . . . , . 2,080:> • t  • »:> I -- : ; c '-vl ' 1 ;;i- •’ y~j*. " ' 'xr:,, '■ u  i.TOTAL ....................  . . . . . . . .  $23j055 $14,860FEED LOT OPERATIONIn this example, it is assumed that 300 head of calves (heifers and steers in about equal number) would be purchased in the fall at 400 pounds weight and be placed in the feedlot for 200 daysoperator fc ’ hjLs*'ia or'and.' nagemenV. ^  . t--r..Initial weight . . . pounds , . . . . . . . . . . .. • • 400Final weight . . . . . . pounds . . . . . . . . . . . .  . . 800-:}\srJI$tal' gain . 'V • • • .,*' V 400Feeding p e r i o d .......... days . .     . 200•|lt Rate of gain per day . , pounds . . . ., ., . ... • • 60#• Total, feed per head ,'000;( ~ .... >^'ibabb . • J >f . pounds . hour*. •. ••Barley ; . . . pounds , . . v v  .• *° V . . . . • .1360EXPENSES Expenses ReturnHay 318 tojis @ $42.50 (cost of p r o d u c t i o n ) ................. $13,51,5Barley 204 tfins <& $60 (cost of production)] 3 .,<>i..............12,240Other expenses* ,300 head @ $9.55. .. . . .   2,865Feeder calves, 300 calves <& 400;pounds @ $23.50 ,5...........  28,200Charges for operators' labor . . . . . .  2,080TOTAL E X P E N S E S ........... $56,820TOTAL ......................................  $23,055 $14,860* Includes interest at 6%, depreciation and upkeep of facilities, veterinary supplies, 1% death loss and labor @ $2 per hour.FEED LOT OPERATION 6In this example, if is assumed that 300 head of calves (heifers and ..-in : ,e^ ua,l c&unb&r*) wouiLd be , 'ift ^ y.s-ro4:x©il) to b&eifLi $}$&. b$twM&< '% ftl’>'</©$% $df kJjSS^ baB. insme-gEntim bite iocIeI aid r o i  ioj£i©qo° ° ® ......................................................  t abn troq  . . . . . .  i i i g i s w  X s l J l n l008 Pattle.spl<J ,3Q0.head <a $00 pounds <® $26.50 3A-gis,* Inail . $63,60000|s ; ......... i m m m m r n aipiAsNpMP?b • - aue «j. T«a»tsarvfe*©f&K! « mO0S Income m  excess of expenses. a^cb......  betvoq gniboaS . 6,780:-: > * • . ' ,♦• .** .♦ .** .• .? •* .* >* .♦ :.* .abxtuoq . , ysb i ■;: i.f.;,; i - ,.()£$. . . . . .  . '.>* -99 §> OOOte£§ '$$$£« . .wbiie„ tbis riSI$K^ W ° t S S WODbexpenses, the operation shQUld be further analysed as to where the profit was derived. In the past few years barley has sold in the Palmer area at $85 per ton and hay at a minimum of $60 pery,*-©*^-. Atfm?*&ese prices: soa*©qx3 3&3X&IXS•Selling -price *of ^f6rfdt0dfl&6J8cJ.\9 .9®; %£t^J^§j|uj$tife,320QfcS,SI . Product ion •lobfef: jtff j583gd I? 9Q& $ * # % & &  W&fMjjfo ,755888,8  - •.*,*,•, • §5 >ef ® m00S, 8£ -Difference b&tweeft %&&&§&, 565Income realMerf: from cattle feeding i .’ s.’io^sjajjo. ipl. aps^riffC6(780 0S8,d5$ . . . . .  .............................    aaawaqxa jatot.0&#,££$ Difference t$0.,££$. .. ., .. .. ,. ,. ,, ,. ,. .. „ .. <# ,t #> J//i$.>'J3,785feefft^ ^oijn^^miirM^iffrtaes d§^f4S~‘i£±tleproviding a dairy market lYfflft'.available ij&tfgIn another way of looking at this example, the operator realized the following return on his feed by selling it in the form of fattened cattle.«ay • • • • • ........... « . . .  . . ,f . .; . . . j, $53.58 per tonBarley . . . . , . ># . . . , . . . . . .  .. . . 7,5.79 per ton°P1 t L-* JA ...............Feeding cattle has always beep considered one of the more riskyfarm enterprises. Because profit margins are usually very close, asmall change in price during the period when the cattle are on feedcan make a large difference in profits or loss. An illustration ofi,.: risk in this example shows —Effect of a $1 change in purchase price of feeder stock . $1,200Effect of a $1 change in selling price of feed stock . . 2,400Buying and selling at the same price of $25 in this casewould yield- a return of .    1,3808t8£. * ! • » » . <  W8* *<I • - :v.: . r .. ■e88t? • » « * * .  XOK^t . .t00S,8§ ■. . . . . .  lode! * aio^Bisqo tol aegiexiO058,85^ ..................eaawaqxa jatot0&8,frl$ eS0,£S$   JATOTbnc HoJJala^xqob ',^ 8 je ie a 'io jo i aobti .* ; ft :: i - lod^J ■ : a ; , ; - "in^. '.-i ,• ;• j’jwoiTAHaqo toj aas1?:7

Producing Beef for Alaska's Railbelt

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Producing Beef for Alaska's Railbelt

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