When it makes sense to have cattle custom fed

Freight costs, yardage, and the ‘opportunity cost’ of your labour may be the deciding factors

Custom feeding may be the wise choice this year, but you still have to calculate 
all the costs.
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Trucking in hay is very expensive this year, but you still have to run the numbers to decide if it’s better to buy feed or have cattle custom fed, says a provincial farm business management specialist.

The first step is to calculate the cost of putting feed into the feed bunk, said Dean Dyck. This is the sum of the feed cost, shipping costs, yardage charge on the farm, ‘opportunity cost’ of labour, and shrink and waste.

“For example, if each cow needs about 35 pounds of hay per day to maintain her, it will take about 7,500 pounds or approximately 3.75 tons of hay over 215 days,” said Dyck. “Feeding days are suggested to be longer this coming winter due to a lack of fall grazing opportunities and to give pastures time to recover from lack of moisture.”

At $200 per ton, the total cost of the hay will be $750 per animal. Freight charges add about $6 per loaded mile. If hay is picked up 100 miles away, that works out to $33 per ton or $123 per animal for the 215 days, said Dyck.

Yardage charges include the cost of operating equipment, corral cleaning, utilities, and wear and tear on facilities. Using approximately $0.70 per head per day for ‘at home’ yardage, the total cost of hay delivered to the farm is $1,026 per animal for 215 days.

“This example assumes that there is less than 15 to 20 per cent of wasted hay per day and that the farmer has no opportunity cost for labour,” says Dyck. “That is, if the owner can use the labour to generate alternative income, then the opportunity cost of not feeding cattle must be added to the cost of purchasing and hauling feed.”

Step two

The second step is to calculate the cost of moving animals to a custom operator and paying for the feed and care there. This is the sum of shipping the animals to and from the lot, along with the cost of feed at the facility, and the yardage charge by the feeder to care for and feed the animals.

If the price of hay is the same at the custom feeder, the cost of feed would be $750 per animal. However, the cost of freight for moving the cattle to and from the feed yard has to be factored in. The average custom rate for hauling cattle is about $5.50 per loaded mile with 50 cows per load. A 100-mile round trip cost will be $22 per head, making the total cost of hay and hauling $772 per head for 215 days. If the feeder charges $0.85 per head per day in yardage, the total cost will be $954 per head for 215 days, or $72 per head lower than the cost of buying feed.

“These are just examples and you must figure your own costs including the purchase price of feed and the cost of shipping hay and cattle,” said Dyck. “If you are considering custom feeding, both parties should agree on a body condition score going into and coming out of the feed yard as well as a fairly accurate estimate of pregnancy.”

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