Economic opportunities for on-the-farm feed processing in Montana
by Arne Degn
A thesis submitted to the Graduate Faculty in partial fulfillment of the requirements for the degree of
MASTER OF SCIENCE in Agricultural Economics
Montana State University
© Copyright by Arne Degn (1964)
Abstract:
This research study has been concerned with determining the economic feasibility of on-the-farm feed
processing.
Processing costs and other relevant data were obtained from twenty-five feeders in Montana who were
processing their own feeds in the year 1962. These costs were then compared to commercial processing
charges found to be prevalent at the time of the survey.
According to this analysis, those feeders feeding 1,000 head of cattle or more per year will nearly
always find it profitable to process their own feed. Those feeding less than 1,000 head per year must
consider factors such as, distance from feedlot to commercial processing plant, commercial processing
rates and service, management ability of farmer, capital availability, seasonality of feeding, etc., in
determining feasibility of on-the-farm feed processing for their individual farms.
This thesis should serve as an efficiency measurement for existing farm feed plants, and as a planning
guide for farmers and feeders contemplating the addition of a feed processing enterprise. ECONOMIC OPPORTUNITIES FOR ON-THE“FARM FEED
PROCESSING IN.MONTANA
Arne Degn
A thesis submitted to the. Graduate Faculty in partial
fulfillment of the requirements for the degree
-.
of
MASTER OF SCIENCE
in
Agricultural Economics-
Approved:
ifgad of yMaj
Department
Chairman, Examining ‘‘'Committee
fNeai
:an. Graduate Division
MONTANA STATE COLLEGE
Bozeman, Montana
March,
iii
ACKEOWLEDGEMENO? '
The completion of a study such as this depends upon the assistance
and cooperation of many persons.
The author wishes to thank the farmers
and feeders for their patience and consideration in answering the schedule
questions.
A debt of gratitude goes to the staff and fellow graduate
students of the Department of Agricultural Economics at Montana State
College for guidance and encouragement»
A special thanks goes to those
on my thesis'and examining committees^ Dr* Clive R e Harstonjl Mr. William
Ewasiukj, Dr. H. C, Holjejr Dr. Clarence Jensen and Mr. J. W. Van Winklejj
whose assistance and advice has been greatly appreciated.
Thanks also to
the staff secretaries and especially Mrs. Gillie for typing assistance.
The author accepts full responsibility for any omissions or errors in
this paper.
iv
TABLE OF CONTEEfTS
Page
VXTA e 0 4 e 6 <3 «
ACKNOWLEDGEMENT. ,
TABLE OF CONTENTS,
LIST OF TABLES . ,
LIST OF FIGURES. ,
ABSTRACT. . . » ,
CHAPTER 1» ■ INTRODUCTION
The Problem' Situation . . . . . . . . . . . . . . . . .
Barley Production U p . , . . . . . . . . . . . . .
Montana Feedlot Expansion. . . . . . . . . . . . .
Montana Feedlot Size Distribution® "®
.
Total Montana Cattle Marketed Ccmrpared With Number Fed
Montana Feeds Substitute For C o m
. . . . . . . .
Montana Feeds Need to Be Processed ". * , , . V » »
Alternatives Forgetting Complete Ration to Farm® .
Practical Processing Methods For Montana . . . . .
The Research Problem. ... . . . ® . . . . . . . * . . .
Objectives
. . - . . . . . . . o . . . . . . .
Bj/potheses . . . . .
. . . . . o .
Limitations « . . .
Procedure For phase I - Survey of Existing Plants » . .
Fixed Costs , *
Plant Investment Determination . . . . . . . .
.Depreciation Allowance,
. » . . . .
Plant Insurance and Property Taxes.. » , . „ »
Interest or Opportunity Cost... . . . . . . .
Tractor Fixed Costs ...........
. . . . . .
Variable Costs .
.
labor Costs
...
Power Costs . . . . . . . . . . . a . . ® . .
Repair and Upkeep
Additional Factors Related to. Cost Analysis. . . .
Annual Feed Production®
Number of Cattle Fed P e r Year
Commercial Processing Rates . . . . . . . . .
Trucking Charges . . . . . . .
Waiting Time
6 O
Data Analysis In.. Total Cost Determination® . » . »
Procedure For phase II — Theoretical Models
9
9
ii
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vi
viii
ix
I
I
I
I
3
If
5
7
10
II
12
12
12
12
13
Ik
Ik
15
15
15
16
16
l6
16
17
18
18
18
18
18
19
19
20
'
TABLE OF CONTENTS
(Continued) .
Page
21
CHAPTER II, EMPIRICAL OBSERVATIONS . . ............... .. .
.21
Description of Existing On-The-Farm Feed Processing* » © © ©
21
Trends in Processing
»
*
21
Rations * * * * * * * * * * * * * * * * * * * * *
©
»
©
!plant Type By Areas * * * * * * * * * * * * * * *
*
23
O
fJCost o f Farm Processed Feeds
«
23
»
Opportunity "Costs" For Labor * . , , . . * * . *
23
*
Utilizing Idle Capital Resources
»
25
O
Nutritional Disease * * * . » * * * * » * « * « »
*
*
25
G^pe of Plant * * * * * * * * * * * * * * * * * *
25
»
.26
O
Investment Per Head * * # * * * » * * » * * » * »
©
Total Per Ton Costs a * * * * * * * * * * * * * *
©
, 27
»
e
Total Per Ton Processing Costs By Size Groups* .
* , 9
27
»
Fixed Costs * * * * * * * * * * * * * * * * * * *
*
27
30
©
Variable Costs * «
» 0 * * » » * * * » * * * * *
32
Total Cost Per Ton * * * «
* * . , * . * * * « *
»
Total Costs For Three Size Groups Compared* » » *
39
*
Management ' * * * . * * * * * * * * * * * * * * * * *
39
e
*
Relating On-The-Farm Processing Costs to Commercial * *
Processing Costs * * * ' * * * * * * * * * * * * * * *
*
43
Effect of Varying Commercial Charges * ......... e -$ ©
45
Transportation Costs « . * * « « « • *
« * « « • © » *
45
«
©
Waiting Time * * * * * * * * * * * * * * * * * * *
47
©
Savings By On-The-Farm Processing
♦
47
Other Commercial Processing Methods Observed * * * ©
©
47
50
©
» <*
Summary * * * * * * * * * * * * * * * * * * * * *
©
CHAPTER III* HYPOTETHICAL MODELS * » *•*
. . . . . . .
53
*
Plant Cost Derivation * * * « * » # * * * * * * . * » * » e
53
Operating Cost Determination * » « « * * « 1P v i* * * * * » ©
54
Models for Size Group I - 999 Head Per. Year. * * * * * 9 * . *
55
Models for Size Group 1,000 - 1,999 Head Per Year* . *
Models for Size Group 2,000 and Over Per Year * * * *
2
Breakeven Points * * * * * * * * * * * * * * * *
* * * e «
63
CHAPTER IV, SUMMARY AND RECOMMENDATIONS . . ............... o e o
67
Summary * * * * * * * * * * , . * . * * * * * » * * * * * * © © e
67
©
Recommendations * * * * * * * * * * * * * * * * * * * *
»
•
Tl
«
To The Farmer * * * * * * * * * * * * * * * * * *
74
To Commercial Feed Processors' * * * * * * * * * *
©
For Further Research® « . * * . « ' * ' « « . . « . .
* ■ »
75
©
76
APPENDICES * * * * * * * * * * * * * * * * * * * * * * * * *
©
APPENDIX A « « e * # ® . * « ® .
77
e
78
APPENDIX B e * * * * * * * * * * * * * * * * * * * * *
80
0
APPENDIX C * .
*
9
9
86
APPENDIX D * * * * * * * * * * * * * * * * * * * * * *
89
LITERATURE CONSULTED * * * * * * * * * * * * *
9
G
Yi
LIST OF TABLES
Number
I
II
III
MONTANA. BAKLEY PRODUCTION AND U e S e FEED GRAIN PRODUCTION
2
@*9
3
CAluIiIE ON FEED JANUARY I * *
DISTRIBUTION OF CATTLE FEEDLOTS CLASSIFIED AS TO SIZE, . .
4
FED CATTIE MAEKETED **“" BY YEAR
5
COMPARISON OF FEED INGREDIENTS . . ........................
8
VI
COMPARISON OF DRY AND STEAM ROLLED BARLEY* * * * * * * * *
9
VII
COST COMPARISON OF FARM PROCESSED FEEDS FOR TWO TYPES
OF RATIONS o » e e ® e e " e # e 0 » e @ * » o e » e e e »
2^4-
PLANT INVESTMENT AND TYPE OF FARM P L A N T * .........* * * *
27
IV
V
.
Page
VIII
DC
X
XI
XII
XIII
. XIV
XV
XVI
XVII
XVIII
XDC
BREAKDOWN OF FIXED COSTS FOR SIZE CATEGORY 2,000 HEAD
AND OVER FED.PER YEAR * . * » . » » * . * » . » » » * * * „ *
»
33
BREAKDOWN OF FIXED COSTS FOR SIZE GROUP 1,000 TO 1,999
HEAD FED PEB ,YEAR * p @ $ * # * * * e * @ * - .
3^*
BREAKDOWN "OF FIXED COSTS FOR SIZE CATEGORY I - 999 HEAD
FED PER Y E A R .» <? o p
35*
BREAKDOWN OF VARIABLE COSTS FOR S I Z E .CATEGORY 2,000
HEAD AND OVER FED _PER YEAR * * » @ @ @ * ' @ * $ 6 $ $ * *
36
BREAKDOWN OF VARIABLE COSTS FOR SIZE CATEGORY 1,000 1,999 HEAD FED PER YEAR. . , . . . . . .................
37
BREAKDOWN OF VARIABLE COSTS FOR SIZE CATEGORY 1=999
HEAD FED PER YEAR
3^
COMPARISON OF FIXED, VARIABLE, AND TOTAL COSTS WITH TONS
OF FEED PROCESSED FOR SIZE GROUP 2,000 & OVER * * * * *
40
COMPARISON OF FIXED, VARIABLE AND TOTAL COSTS, WITH TONS
. OF FEED PROCESSED FOR SIZE GROUP.1,000 - 1,999 * * * *
4l
COMPARISON OF FIXED, VARIABLE AND TOTAL COSTS, WITH
TONS OF FEED PROCESSED FOR SIZE GROUP I - 999 * « - * * *
42
COMPARING FIXED, VARIABLE AND TOTAL COST FOR PROCESSING
FEEDS ON THE FARM FOR.ALL THREE SIZE GROUPS * * * » *■ 4
43
COMPARING MILEAGE FROM COMMERCIAL FEED PLANT, TOTAL COSTS
OF PROCESSING FEEDS AT FARM PLANT AND CORRESPONDING
COMMERCIAL RATE PLUS TRANSPORTATION COSTS TO FARM FEED=
LOT AS REPORTED BY SURVEY RESPONDENTS* * * * * * * * *
51
vil
LIST OF TABLES
(Continued)
Number
XX
XXI
xxn
XXIII
XXI?
XX?
xj £v i
Page
PROCESSING COSTS FOR MODELS IN THE I - 999 HEAD CLASS, , „
56
PROCESSING COSTS FOR MODELS IN THE 1 ,0 0 0 - 1 ,9 9 9 HEAD
GLASS e e e * . o e e e e ^ e . c p e e o e o d a e e e e t i e
|pS
TOTAL PER TON COSTS FOR MODELS H THE 2,000 AND OVER
HEAL 1 CLASS c e e e ' e e » e e » e o » e e e » e o e e e 6
62
FARM TRACTOR OPERATING COSTS PER HOURe . . . . . . . . . .
tJl-
AVERAGE FIXED, VARIABLE AND TOTAL COSTS FOR MODELS H
SIZE CAl1E GOEy 1 Iea999 *
86
AVERAGE FIXED, VARIABLE AND TOTAL COSTS FOR MODELS H
SIZE CATEGORY 1,000 « 1,999 . . . . . . . . . . . . . .
Q rJ
AVERAGE FIXED, VARIABLE AND TOTAL COSTS FOR MODELS IN
SIZE CATEGORY 2,000 AND OVER . . . . . . . . . . . . . .
88
viii
LIST GF FIGURES
Figure
1
Page
Dispersion, Variance and Average of Actual Plant
Investment Per Head Fed Annually,. e
e
29
2
Costs and Annual Output of Surveyed Plants, .............
31
:3
Farm Processing Costs Per Ton of Feed by Size Groups, , .
4
Effects of Varying Commercial Processing Rates, .
44
46
5
6
Effects of Varying Distance From Commercial Processor « ,
7
8
9
. , .
Comparing Total Per Ton Processing Costs O f 1Automatic
Electric Powered Mix-Mill and Tractor Powered RollerMixer With Average For Eleven Plants In The I - 999
Sxze Group
59
Comparing Total Per Ton Processing Costs For Mix-Mill
Plus Molasses and Average of Seven Plants In 1,000 1,999 Sxze Group,
61
Comparing Total per Ton processing Costs For Hay Grinding
Plant, Grain Roller Plant and Average of Seven Plants
In 2,000 and Oyer Size Group,
64
Required Humber of Head Fed Annually to Equate Farm
Processing,Costs to Commercial .Charge, , ,
10
Model Plant' Floor Plan,
11
Material Flow Diagram For Model Plant , , , , , , , , , ,
66
83
84
Ix
ABSTRACT
This research study has been concerned "with determining the economic
feasibility of on-the-farm feed processing.
Processing costs and other relevant data were obtained from twentyfive feeders in Montana who were processing their own feeds in the year
1 9 6 2 ® These costs were then compared to commercial processing charges
found to be prevalent at the time of the survey®
According to this analysis, those feeders feeding 1,000 head of
cattle dr more per year will nearly always find it profitable to process
their own feed® Those feeding less than 1,000 head per year must con­
sider factors such as, distance from feedlpt to commercial processing
plant, commercial processing rates and service, management ability of
farmer, capital availability, seasonality of feeding, etc®, in determining
feasibility of .on-.the-farm feed processing for their individual farms 9
This thesis should serve as an efficiency measurement for existing
farm feed plants, and as a planning guide for farmers ,and feeders contem­
plating the( addition of a feed processing enterprise®
■\
CHAPTER I
INTRODUCTION
The Problem Situation
. Montana’s increased, barley production over the past decade has con­
tributed to an expansion in livestock feeding.
The purpose of this thesis
is to determine the feasibility of feed processing on the farm as a
means of' reducing feeding costs and expanding the in-state market for
Montana barley.
Barley Production.Up
With increased wheat acreage controls came an increase in barley
production in Montana,
parley production expansion has also been
influenced by varietal improvements and cultural advancements.
Montana barley production increased 109 percent from 1951 to 1961 .
There have been year t o 1year fluctuations due to climatic variations
and changing governmental policy during these years but a definite increase
in production has prevailed.
Table I reveals this past trend together
with the estimated production for 1962 and 1 9 6 3 .
Nationally, feed grain production has also increased but at a slower
rate than in Montana.
’The increased national population and the increased
per capita consumption of animal products has enabled livestock feeders
and other livestock producers throughout the nation to utilize this accel­
erated feed grain production to a great extent.
Montana Feedlot Expansion
Since barley is the principal feed ingredient in cattle feeding
operations throughout Montana, the tremendous production expansion of
barley in the state in recent years has been a determining factor in the
expansion of Montana's livestock feeding industry.
Cattle feeding in
"* 2 "=
Montana has expanded continuously during the period from 1950 to 1963 .
On January I, 1963 there'were a total of 71,000 head of cattle and calves
on feed in the state -compared with 25,000 on feed January I, 1950 . IyZ
This is an increase of 184 percent for this 14 year period.
TABLE I.
MONTANA BARLEY PRODUCTION AND U. 8. FEED GRAIN PRODUCTION
Acres Harvested a/
Date
1951
1952
1953
1954
1955'
1956
.1957
1958
1959.
i960
1961
1962 c/
1963 d/
, 46o,ooo Z
744,000
5 5 0 ,0 0 0
1 ,2 6 5 ,0 0 0
1,354/000
1,043,000
1 ,7 2 1 ,0 0 0
1 , 5 8 3 ,0 0 0
1 ,8 5 2 ,0 0 0 .
1,704,000
1,465,000
1 ,8 0 2 ,0 0 0
1 ,5 5 0 ,0 0 0
Montana Barley Production
U.S. Total
In Tons a/
Feed Grain In
Tons b/
3 0 3 ,6 0 0
324,216
356,400
759,000
975,000
713,424
1,094,000
1 ,2 9 1 ,7 2 8
1 ,2 2 2 ,3 2 0
9 6 1 ,0 5 6
6 3 2 ,8 8 0
1,319,064
1 , 1 1 6 ,0 0 0
119 ,3 0 8 ,0 0 0
132,424,000
144,121,000
149,605,000
155 ,6 1 8 ,000
140,626,000
143,093,000
a/
Statistical Reporting Service, Montana Agricultural Statistics, Vol. IX,
Montana Department of Agriculture, cooperating with United States
Department of Agriculture, Helena, Montana, December, 1962 , P. 20»
h/
Economic Research Service, 1962 Grain and Feed Statistics ~ Supplement
to Statistical Bulletin No. 159S USDA, Washington, D» Co, July, 1963 ,
Table VII, P. 5»
c/
Preliminary
d/
Estimated
l/
The number on feed on any specific date is an indicator of trend but it
does not give total annual numbers fed. See discussion on page 4 for
this estimate.
^ 3 *"
Table II shows the increase in cattle feeding in Montana and in the
nation,
‘
(
The increase for -the United States during the period 1950 to 1962 was
76 percent while Montana's increase for the same period was 176 percent,
Montana has truly increased her cattle feeding but still only feeds
approximately I percent of the nations fed cattle.
TABLE II.
CATTLE OW FEED JANUARY I, a/
Year
Montana
1950
1951
1952
1953
1954
1955
1956
1957..
1958
1959
I 960
2 5 ,0 0 0
2 6 ,0 0 0
3 2 ,0 0 0
4,448,000
45,000
54,000
49,000
6 8 ,0 0 0
•>
75,QQO.....
7 3 ,0 0 0
7 2 ,0 0 0
7 0 ,0 0 0
7 7 ,0 0 0
6 9 ,0 0 0
7 1 ,0 0 0
1961
1962
1963
...
a/
U® S. Total
7,833,000
-
Derived from files"of the Statistical Reporting Service, United States
Department of Agriculture, Helena, Montana, July 2 5 , 1 9 6 3 ®
Montana Feedlot Size Distribution
'f
---------------- -------- ------------ According, to an. "armchair" estimate -made in i960 by the Montana Crop
and Livestock. Reporting Service-). Montana has about 600 feedlots®
An
accurate estimate of feeders., is. difficult to obtain because of the "in-andouters" in the feeding- industry and because of the difficulty in defining
"feedlot".
This i960 estimate is shown in Table III.
«
#■
Montana now has about 600 feedlots with only 23 (or 4 percent) of
them feeding over I,OQO head per year.
This group had on feed January I,
1963 ^ 24,000 cattle or 34 percent of the total cattle on feed in the state
on that date. 2/
TABLE III.
DISTRIBUTION OF CATTLE FEEDLOTS CLASSIFIED AS TO SIZE ON
JANUARY I, i 9 6 0 , a/
Number of Cattle in Feedlot
Number of Feedlots in Size Group
I - 49 .
--y99
» 199
- 299
- 399
400 - 499
500 - 999
1 ,0 0 0 - 1 ,9 9 9
2 ,0 0 0 - 2 ,9 9 9
3 ,0 0 0 - and over
192
194
119
46
50
100
200
300
11
16
16
2
TOTAL
a/
'
5
I
603
Statistical Reporting Service, op. cit.
Total Montana Cattle Marketed Compared With Number Fed
Montana had a net marketing of 1,139,913 cattle of all classes in
i960 and 1 ,101 , 506 : in 1 9 6 1 . 3/
Fed Cattle numbers for the same two years
can be determined, from the marketings during the quarters.
(See Table IF).
Approximately 115,000 head were fed in i 960 and 1 1 3 ,0 0 0 in 1 9 6 1 .
2/
This is a revised estimate made by the Montana Crop and Livestock
Reporting Service and reported in "Cattle on Feed", USDA Statistical
Reporting Service, July, 1963 .
3/
Montana Agricultural Statistics, op. cit., pp® 84-85.•
By comparing the number of fed cattle marketed with the total number
of cattle of all classes marketed, we find '
■that Montana feeders were only
feeding about 10 percent of the cattle that are marketed each year in
^
and from the state, the remainder leave the state as stockers or feeders.
The surplus barley production, together with the- small percentage of
Montana’s, cattle fed in the state, would indicate that, future feedlot
expansion is feasible, if Montana feeds are suitable as feed ingredients.
TABLE IV.
FED CATTLE MftRKETED--BY YEAR, a/
Quarter
I960
1 st
2 nd
3 rd
34,000
34,000
35,000
3 0 ,0 0 0 .
2 8 ,0 0 0
2 3 ,0 0 0
2 9 ,0 0 0
2 8 ,0 0 0
2 2 ,0 0 0
2 7 ,0 0 0
2 3 ,0 0 0
1 5 ,0 0 0
1 1 3 ,0 0 0
1 0 0 ,0 0 0
4th
TOTAL
a/
1961
115^000
1962
Statistical Reporting Service, o p . cit.
Montana Feeds Substitute For Corn
Present,Montana feeders, meat packers and retailers feel that Montana
barley-fed beef-is entirely acceptable in the meat trade.
Barley, especially Montana’s high quality barley, is considered to be
worth at least -90 percent of an equal weight of number two c o m when fed
to beef cattle.
Dried molasses beet pulp, another feed available in large
quantities and at prices comparable to feed grains, is worth 8 8 -9 5 percent
of an equal weight of number' two corn when fed to cattle at not over
50 percent of the ration, 4/
4/
These feeds used in conjunction with roughages
S. H. Morrison, "Estimated Feed Value Table of Various Ingredients for
Fattening.Cattle.and Sheep", Feedlot (magazine) November, 1962 , pp. 21-30
- 6 make up a satisfactory ration requiring almost no protein supplementation,
Table V exhibits the exceptional complementarity between barley and beet
pulp.
The beet pulp provides the "roughage effect" in the rumen (from fiber
which' is more readily digested in the rumen than is most fibrous material)
as well as providing high TDEF,, calcium and readily available sugar for the
rumen microorganisms„
Barley provides a good source of TDN, phosphorous,
and a higher percentage of protein than is needed for an ideal fattening
ration. 5/
The ration resulting from the blending of these Montana ingred­
ients is one with a high percentage of TDN to give fast, efficient gains
as well as one which has a "roughage effect" to stimulate rumen microbial
activity.
5/
Dr. Wo H. Hale of Arizona reported in the May ll, 1963 issue of Feedlot
magazine that barley rations with 10-11 percent crude protein gave
significantly better results than those at the 13-14 percent level.
Morrison, in his Feeds and Feeding book recommends that fattening cattle
b e fed rations containing 8.1 to 8 . 7 percent digestable protein.
Montana (high quality) barley has 12-l4 percent crude protein (10-11
percent digestable protein), therefore a ration composed of barley
and about 20 percent to 2 5 .percent beet pulp should meet the protein
requirements' of fattening beef cattle.
Montana Feeds Need To Be Processed
'
Present day demands for lighter weight and more uniformly finished
carcasses of beef necessitates rapid fattening of beef animals.
High
energy rations become essential to this accomplishment.
If high energy, rations are to be built up of barley alone, without
the use of beet pulp or other roughage.or roughage-like ingredients,
it becomes necessary to retain as much of the barley fiber and in effect
make the barley itself act as a roughage upon entering the rumen.
This
can be done by flaking or steam-rolling, by dry-rolling or by coarse
grinding.
There is much dispute among nutritionists as to the relative
desirability of-these various processing methods.
Dr. A. T. Ralston of
Oregon State-University, indicates that there is no significant nutritional
difference between dry rolled and steam rolled barley for feeding to beef
cattle.
Table VI shows results of another study at the University of
Arizona on dry vs. steam-rolled barley.
It therefore seems safe to assume that there is no appreciable
difference between steam-rolled barley and dry-rolled barley especially if
some dry beet pulp or roughage is fed in conjunction with the barley.
processing other than barley grinding or rolling may be desirable.
Cattle feeding is now in a period of rapid change, with new and improved
feed additives coming onto the market almost daily.
These micro-ingredients
must be unifarmally dispersed throughout the ration by some method.
A
feed industry spokesman warns prospective farm feed processors of the /
danger of improperly mixed rations. "The mixing phase of processing becomes
especially critical with the addition of micro-ingredients such as,
vermifuge drugs, trace minerals, vitamins, hormone?, urea, etc." 6 /
6/
Oakley M. Roy, American Feed Manufacturers Association, "On-The-Farm
Milling”, paper presented at the Feed Manufacturing School, September,
TABLE V.
COMPARISON ON FEED INGREDIENTS
Feed Ingredient
Total
.Dry
Matter
Crude
Protein
Fat
Fiber
Total
Digest- Digestable
able
Protein Nutri­ Cal­
ents cium
Phos­
phorus
Barley, common feed
grade, not including
Pacific Coast States a/.
89.3%
11.8%
1.9%
6.2%
10.0%
75.6%
0.06%
0.39%
Barley, High Grade b/
90.3
13.5
3.5
8.7
10.8
73.2
0.03
0.40
Beet pulp, with
molasses, dried a/
92.2
8.9
0.5
15.2
5.9
72.4
0.57
0.07
Corn, #2 yellow a/
85.0
8.7
3.9
2.0
6.7
80.1
0.02
0.27
a/
S. H. Morrison, "Estimated Feed Value Table of Various Ingredients for Fattening
Cattle and Sheep", Feedlot (magazine), November, 1962, pp. 21-30.
b/
Frank B. Morrison, Feeds and Feeding, 22nd Edition, The Morrison Publishing Co.,
Ithaca, N. Y., 1957, pp. 1114-1115.
TABLE
VI.
COMPARISON OF DRY AfyD STEAM ROLLED BARLEY.
”
Trail Days
Percent
Grain
in
Ration
Steers
DRY ROLLED
Average Average
Daily
Daily
Feed,
Gain,
Lb.
Lb.
STEAM ROLLED
Feed/100
Average Average Feed/100
Lb.
Daily
Daily
.Lb.
Gain
Steers Feed
Gain
Gain
Lb.
Lb.
Lb.
Lb.
126
53
14
22.7
2.91
780
14
23.0
3.10
742
2
97
56
16
21.6
2.60
833
16
21.8
2.34
934
3
97
46
16
21.4
2.26
946
-16
21.2
2.40
884
4
112
56
16
23.8
3.19
741
16
23.2
3.15
728
I a/
■'
VO
AVERAGE
2.74
22.4
•
a/
.9:.
825
22.3
;■ •
2.75
822
Results of Experimental worlp done at the University of Arizona reported by Dr. W.
H. Hale in the May 11, .1963 issue of Feedstiiffs, p. 84.
I-
- 10 The need for careful mixing lies.in the fact that even a small overdose
of any of these additives might prove harmful or even fatal to the live­
stock.
Mixing or "blending is therefore an exacting and critical stage of feed
processing.
Other feed processing stages that should be considered are grinding
or chopping hay to facilitate feed handling and increase feed efficiency,
and molasses blending which is quite commonly used to increase feed
palatibility.
Pelleting, though economically feasible for feeding other classes of
livestock, does not prove to be so for cattle fattening.■ Therefore, it
will be omitted from the study.
Alternatives For Getting Complete Ration To Farm
When livestock feeding developed in an area, expansion of feed manu­
facturing inevitably follows.
Proper feed processing is becoming more
important as the individuals in the feeding industry become acquainted
with new feeding technology and strive to put these advances to practice.
Montana now has about $0 commercial feed plants. 7 /
There are also an
increasing number of farm feed processing plants that are capable of
grinding or rolling and mixing or blending.
Many other feeders have plants
that will do a partial job of processing, often leaving but the increasingly
important mixing step.
7/
Kenneth Eubanks, "The Feed Manufacturing Industry in Montana", unpub­
lished thesis, Montana State College; Bozeman, Montana, p. 1 5 .
11 The alternative methods whereby a farmer or feeder might acquire a
complete ration are;
I.
Buy a complete mixed feed from a feed manufacturer or dealer,
2.. Buy only a supplement or premix and have his own grain commercially
ground and mixed together with this supplement,
3.
Hire a portable custom mill to come to his farm and process his
feed,
4,
Buy a premix and add it to his own on-the - fa m processed grain,
5»
Purchase a "small power-take-off feed mill and process his own feed.
6 , Build a complete on-the-farm plant consisting of a roller or grind­
ing mill, mixer or metering system, a molasses blender, and
possibly a pellet mill.
The last three methods are considered to be on-the-farm processing.
practical Processing Methods For Montana
All of the foregoing methods of obtaining complete rations are not
practical for every farm because of special problems.
Conditions in
Montana that affect these alternatives include the following;
1.
The distance from the commercial feed processing plants to the
farm feedlots is greater in Montana than for most areas in the
nation. Additional transportation charges therefore must be
considered.
2.
Montana feeders .or potential feeders often have their own feed
grain supply on the farm.
3.
The existing Montana commercial feed plants have efficiency
problems related to seasonal demand, low volume, variable demand
from year to year and a variety of competitive situations,
4.
The cost of transportation is usually too great to transport
commercial feeds economically from those out-of-state areas with
large, efficient, feed processing plaits.
5.
The commercially prepared feeds from these efficient but distant
plants would likely not be suitable for Montana feeders, though
proper for the area where produced.
-
22
The Research Problem
The specific research problem is to determine the economic feasibility
of on-the-farm feed processing for different types and scales of feeding
operations.
Distance from commercial feed plants to feedlots will be given
consideration.
Objectives
The objectives of the study are;
1.
To study the type of existing on-the-fa m feed processing equipment in
relation to area and type of feeding being done.
2.
To determine the operating, costs of farm feed plants, including costs
of depreciation, interest and all other fixed and variable costs, so
that cost of on-the-fam feed processing can be determined,
3.
To compare the cost of feed processing on the farm with the costs of
commercially processed feeds.
4.
To determine the economic position of feed processing on the farm with
the following variables;
(a)
(b)
(c)
Size of feedlot.
Type of plant. ■
Distance from commercial processing plant.
Hypotheses
I
To guide the study, the following hypotheses are projected:
I
:.
1.
On-the-farm feed processing is economically feasible on some Montana
farms.
2.
The size of the feedlot is positively related to the economic feasi­
bility of on farm feed'processing.
Limitations
Because of limited research resources and the necessity to keep the
” 13 study from becoming too cumbersome, it becomes necessary to establish cer­
tain limitations and assumptionsi
I.
The study.will be directed toward on-the-faim feed processors
rather than all feeders in the state„
2„
The study will be limited primarily to cattle feeders since
the expansion has been in this type of feeding.
3«
The assumption will be made that rations prepared by the
on-the-farm plants are nutritionally sound and comparable
to a commercially prepared ration
4.
The relatively small population makes random sampling impractical,
5«
Incomplete farm records make cost allocation to a particular
enterprise on farms extremely difficult.
Procedure For Phase !-Survey
of Existing Plants
I
Virtually all of the complete on-the-farm feed processors in Montana
were interviewed. 8 /
A n initial list of feeders falling into this category
was obtained from a state-wide feed ingredient supplier.
This list was
then verified and expanded upon by contacts with county agents and inter­
viewed feeders,
''
Personal interviews were made of on-the-farm processors in an effort
to arrive a t both fixed and variable operating costs.
Total investment,
number of head of livestock fed per year, number of tons of feed processed
per year and mileage to the nearest or most desirable commercial feed
processor were also obtained, -.Questions relative to why the feeders in­
stalled their own processing equipment were asked to gain knowledge of the
motivating variables.
8/
'
In this study a complete feed processing plant will be considered to
be one that mixes or blends the-' ration as well as grinds or rolls,
-14Commercial processors supplied information on commercial processing
services available and on the processing charges.
In an effort to isolate the trends of on-the-farm feed processing,
visits were made to the. three: counties having the largest concentration
of feeding in the state.
Richland.
These counties are Cascade, Yellowstone, and
Since a complete population of all feeders is difficult to
obtain, a visit wijbh the county agent and selected feeders provided a list
of a few key operators in each county.
Included in this list were unusual
or new operations that might give some clue to trends in feed processing.
Visits with equipment dealers gave added information for this phase as
well as the following Phase II.
Relatively large feeders who were
successfully using the services of the commercial processors were inter­
viewed.
Also included in this phase were visits with feeders who were
partially processing their own feeds.
Trends recognized in these three counties are presented as representative of the trends throughout the state.
Fixed Costs
Plant Investment Determination.— Total investment for each plant was _
determined by taking the reported actual investment as stated by the
respondent.
The questions were asked in such a way as to include purchase
price of all equipment, value" of any old' buildings or equipment that were
included in the complete plant, and all installation and construction
expenses including the value of -farm' labor in construction.
In the two
cases of small partial plants that were already fully depreciated, an
estimate was made of the present market value and this value was used in
determining depreciation and interest (or opportunity cost).
ETo land value
was assigned to the "plant evaluation since in most cases plant site values
were negligible.
I
Depreciation Allowance ,0— Each interviewee was asked to express his
opinion as to the expected life of his plant»
These life expectancies
were then used in the determination of the annual depreciation.
The plant
life estimates varied, hut the quality of the plants varied as well.
Expected life ranged from five years for the reappraised, fully depreciated
plants to 25 years for one plant of exceptional quality.
Ten, fifteen
and twenty years were more frequent estimates of mill life with the shorter
life being assigned to plants with lighter quality equipment.
The depreciation was calculated by the straight-line method.
No
salvage value was deductedi
Plant Insurance and Property Taxes.— Difficulty was encountered in
getting reliable costs for taxes and insurance.
The county tax statements'
do not include a separate evaluation or tax statement for the feed plants
and the operators usually had not made an estimate of tax on the plant
prior to this interview.
A percentage of the total tax bill was used by
the feedlot operators,in -determining a share to apply to the plant.
Insurance on the plants varied a-great deal because of different cov­
erages and different company policy and rates.
In many cases the whole
farmstead was covered by one -policy and the total insurance cost had to
be multiplied by the percentage of farmstead value assigned to- the feed
plant.
-
Interest or Opportunity■Cost.— To make interest costs more comparable,
a uniform procedure was used in determining the interest cost for all plants.
A n interest rate of
rJ
percent was selected as a compromise between a
long term loan rate of 6 percent, short term rates of between T percent
and 8 percent and equipment contract rates which often exceed 12 percent
actual interest rate.
«- i6 —
An average interest was used because annual depreciation allowance
lowers the remaining plant investment e
QJhe average annual interest cost
was determined "by multiplying the initial investment b y 7 percent and
dividing the product by two*
In applying this method of deriving an interest charge, a $40,000,00
investment results in an average annual interest cost of $1,400*00
($40,000.00 x 3&#).
■ Tractor Fixed Gostse--When a tractor was used as power for processing
feed at the farm plant the tractor fixed costs were separated from the
total costs, so that a better comparison of variable power costs could be
obtained for data analysis.
QJhe tractor fixed cost was calculated by using rates set up in a
California bulletin entitled, "Machinery Costs arid Related Data", and
recorded in Appendix A of this ■thesis,
QJhe costs were based on a total
of 800 hours per year tractor use on the farm and in the feed plant„
Variable Costs
Labor Costs.— QJhe labor cost for feed processing is a major portion
of the total cost.
The questionnaire was designed to determine the actual
amount of labor required to operate and maintain the feed processing plant.
QJhe amount of hired labor was. differentiated from the owner's labor and an
attempt was made to have respondents evaluate their time by setting a wage
ratea. Respondent, reply consistency for owners' salary was hard to maintain.
In an attempt to set a somewhat uniform wage rate it was assumed that
a plant operator must be above average in skill and reliability with some
knowledge of animal nutrition as well.
It was therefore decided that the
relatively high farm wage rates of $ 3 0 0 .per month, including house and
other 1'fringe" benefits, for hired help and $400 per month for owners'
labor should be used in determining hourly wage rates.
It was further
- 17 assumed that a 48-hour work week and a 50 -week work year prevailed.
,This results in a $ 1 .5 0 per hour wage rate for hired labor and $2 .0 0 per
hour for owner salary.
These wage rates corresponded with those of the
larger operators who had calculated labor costs for their plants.
In the
few cases requiring assistants for such jobs as hay grinding, a lower
wage rate was used for the helper.
There was difficulty in distinguishing processing time from feeding
time since in almost all instances the same worker accomplished both tasks.
Upon asking the feedlot operator to estimate the actual labor required to
operate the plant, the first reply was often, "the plant is automatic and
requires almost no labor".
This seemed to be true' in many cases.
Power Costs.— On-the-farm processing power requirements were deter­
mined from the interviews.
The only adjustment needed in the power cost
estimates was to apply a standard per hour variable tractor cost to the
hours of tractor use reported by.the respondents who used tractor power
for part of their processing.
These costs were taken from the same
California bulletin from which the fixed tractor costs were obtained and
appear in Appendix A.
Electric power costs were estimated without a great deal of variation
by the respondents. ■The reported electric costs were compared with a
theoretical power requirement for grain processing and were found to be
within reason.
f
Repair and Upkeep.— These costs were based entirely upon the operators
■records or his estimated annual cost of repair and maintenance.
A small
amount of upkeep might be required to maintain an idle plant but these
costs would certainly be negligible.
Therefore all repair and maintenance
costs were considered as variable costs in the analysis.
- 18 -
Additional Factors Eelated to Cost Analysis
Annual Feed Production,— The tons of feed processed per year were
reported with apparent knowledge by the respondents „
Reported output was
compared with tonnage computed by multiplying Morrison's feeding standards
times the number of cattle fed per year, times the average number of days
the cattle were on feed.
This latter method was used as data in a few
cases where the feeder had little idea of the annual feed tonnage processed.
There appears to be some discrepancy in the data reported but it must
be borne in mind that varying amounts of silage and unprocessed hay were
fed in conjunction with the processed feeds.
Mumber of Cattle F e d 1Per Year.— Numbers of different species and
classes of livestock were reduced to a common unit to facilitate stratifi­
cation of the observations into size groups.
The unit can be defined as
equal to the following:
I' yearling steer or heifer carried to choice grade, or
li calves wintered, or
3/4 calf carried to choice grade, or
5 ewes wintered, or
6 lambs fattened, or
I cow wintered (provided she was fed processed feed throughout
the winter).
Commercial Processing Rates.--Custom charges were obtained by asking
feedlot operators what they would be required to pay at the commercial
processing plant of their choice for a similarly processed feed.
These
data were then verified b y .interviews with elevator operators in the area.
Trucking Charges.— The cost of hauling home grown feed ingredients to
and from the commercial processing plant w a s .determined by multiplying the
reported mileage to the plant, times the rate per mil 6 as shown in Appendix
B.
Mileage on paved roads was calculated at 21 cents per mile total oper­
ating costs and the. per mile rate for gravelled roads was estimated at
- 19 29 cents per mile.
Trucks were considered loaded both ways since the
assumption was made that feed ingredients were on the farm.
Five ton
loads were assumed in arriving at per ton cost.
Waiting Time.— Farmers cannot afford to spend long periods of time
waiting for grain to be processed and mixed.
As farm labor becomes more
productive and expensive, and volume of processing per farm increases,
the waiting time becomes more of a consideration.
The waiting and hauling time reported by respondents was multiplied
by $2 .50 , of which $1.75
^or average hourly wage rate and $.75 is for
truck fixed costs which was split off from the per mile derivation to make
a more realistic comparison between those feeders hauling short and long
distances.
The total cost of delivering the commercially processed feed to the
feedlot was determined by mileage, times rate per mile; plus waiting
and hauling hours,times $2 .5 0 per hour.
Four of the respondents who had taken the pains to calculate a
hauling and waiting cost for ,their own operations gave credence to the
procedure and rates used in this-phase of the study. ■
Data Analysis in Total Cost. Determination
'To facilitate analysis of' data, the observations were broken down
into three size groups.
Stratification was made according to number of
head fed per year rather, than lot capacity or mill capacity.
Nine feedlots fall into the size category of 2,000 head and over
fed per year.
Seven of these-nine feedlots had cost data that- were
usable in the cost per t o n analysis, while the remaining two were included
in the plant type comparison in Table VIII®
The reported number of head
fed per year was well-dispersed from 2 ,0 0 0 to 8 ,0 0 0 in this size group.
c
“
20
—
The category 1,000 to 1,999 head fed per year also comprised nine
feedlots.
This group had. four lots reporting 1,000 head fed per year, two
reporting 1,200 and three with I,500 per year.
Two lots that used
commercially processed feed were eliminated from on-the-farm processing
cost analysis.
They had only sufficient equipment to handle the
commercially processed feed after it was delivered to the feedlot.
Eleven lots in the size category of I to 999 were used in the cost
analysis ^ , Four lots that made use of commercial processing were .omitted
from the cost analysis, hut two of these will he discussed in a later
section.
The number of head fed per year ranged from 200 to 830 in this
group.
Procedure for. phase II— Theoretical Models
Theoretical models and budgets were set up for the following;
1.
Processing equipment for feedlots under 1,000 head fed per year.
a.
b.
2.
Plants for feedlots feeding 1,000 to 1,999 head per year.
a.
h.
3«
Electric powered.:mill .and percentage mixer.
Tractor power-take-off mill-and mixer.
Electric powered mill and percentage mixer.
Plant similar to 2. (a) with addition of molasses equipment.
Plants for feedlots feeding 2,000 and over head per year.
a. - Plant suited to feedlots in valley areas of eastern Montana.
b. Plant suited to dryland barley producing areas.
The costs for these models were derived from feeders and equipment
dealers as well as correspondence with equipment manufacturers and
agricultural engineers at several Universities throughout the nation.
The purpose of these models is twofold. ' First, they will show
realistic costs based on interviews and brought up-to-date by present day
costs of building. ■ Second, the models will incorporate all of the ideas
in plant design that can be obtained from the above-mentioned sources.
3
CHAPTER II
- EMPIRICAL OBSERVATIONS
A total of 38 Montana farm feedlots were visited during the first
seven months of 1963 in an effort to determine the actual per ton costs
of on-the-farm feed processing.
Twenty-five of these interviews resulted
in complete, reliable information; 'The remainder were using a combination
of commercial and on-the-farm processing or gave such incomplete results
that the questionnaires were rendered useless for cost analysis.
Data
from all 38 interviews were, used in determination of existing plant type
and trends in feed processing.
This chapter is devoted to the reporting
and evaluation of data from this survey.
Description of Existing Gn-the-Fann
Feed Processing
-
Trends in Processing
The feeders who were contacted indicated a strong interest In live­
stock feeding in Montana.
They recognized the technological advancements '
that are taking place in the feeding industry and realized the need for
the adoption of these changes." Many felt the keen competition from other
areas and realized the need for maximum efficiency and economy in their
own feedlots.
A desire to keep up with their neighbors seemed to be a
contributing factor in some feeder's decision to process their own feed.
These three factors seemed to account for the trend toward feed pro­
cessing on the farm in Montana,
Rations
The observations made during this survey indicate certain feeding
areas in Montana that were characterized by different types of feed plants
and feed rations.
W
'f.
"
22
—
The interviewed Yellowstone Valley feeders usually fed a relatively
high proportion of alfalfa hay and c o m silage.
Very few of these feeders
fed molasses but virtually dll fed dried molasses beet pulp,'
Typical rations from this area can be summarized as follows;
Growing ration:
5 pounds
15 pounds
23 pounds
Chopped alfalfa hay
C o m silage
Dried beet pulp
■Supplement
Ground or rolled barley
Fattening ration:
I pound
3- 4 pounds
. ■
Chopped alfalfa
Corn silage
Dried beet pulp
Supplement
Ground or rolled barley
2 pounds
4 pounds
5 pounds
■ I pound
10-12 pounds
These rations by no means contain a complete listing of all feeds
used nor do they typify each and every feedlot operation.
They are used
to indicate, the type of feed used in the area.
Great Falls area feeders fed similar rations with the following
exceptions;
(l)
Very little dried beet pulp was used in the plants that
were visited. ~ (2) Molasses was used at the rate of about five to seven
percent of the ration in over half of the cases.
(3 ) Corn silage was used
quite extensively but usually at a lower-daily rate.
(4) The rajbions
therefore were usually made up of a higher percentage of barley than were
the Yellowstone area rations.
The intermountain ranching area plants that were visited were designed
to winter calves, cows and ewes.
The ration therefore consisted primarily
of molassified hay with supplementation.
- 23 -
Plant Type ~by Area
It can be readily seen that plant type requirements must differ to
some extent for processing these different rations.
The Yellowstone Valley area did have a larger percentage of hay
processing equipment (often a tractor powered field chopper), more hammermills and a lower percentage of roller mills than the Great Falls area.
It logically follows that the Great Falls area had more roller mills
and a larger percentage of plants with molasses equipment.
The ranching area had plants that were well adapted to hay processing,
but lacked facilities for processing rations with a large percentage of
grains.
Cost of Farm Processed Feeds
Complete ingredient weights and costs for a year were obtained from
eight of the respondents.
Table VII shows tlese data together with a cost
comparison of rations containing plant processed hay with rations based
on rolled barley.
The costs of the hay rations were lower per ton but validity of any
conclusions made .must be weighed with care because of small sample numbers
and lack of comparative nutritive values for the two rations.
Opportunity "Costs" for Labor
A question was asked of the interviewees pertinent to the use of
otherwise nonutilized labor on the farm.
Most respondents who answered
felt that there wasn't much off-season or slack time that could be
put to use in feed processing.
Most farms, large enough to consider on-
the-farm feed processing, do not have year-around surplus labor.
Since
year-around feeding is desirable to get ample feedlot volume to pay fixed
costs, it seems illogical to assume that off season work can apply to feed
processing.
Possible exceptions might be found in wintering operations
TABLE VII.
GOST COMPARISON OF FARM PROCESSED FEEDS FOR TWO TYPES OF RATIONS.
Hay, Coneen,£ratg & Premix a/
Concentrate & PremiK a/
Ingredient
Processing
Total
Ingredient Processing
Total
Cost
Cost
Ration
Cost
Cost
Ration
Cost
____ _____________ Cost
Per Ton
Per Ton
Per Ton
Per Ton
Per Ton
Per Ton
Observation
$33.81
$0.94
$34.75
$37.77
$1.44
$39.21
Observation
$31.34
$4.60
$35.94
$37.31
$1.58
$38.89
Observation
$36.12
$3.77
$39.89
Observation
$37.78
$3.67
$41.45
Observation
$39.77
$2.46
$42,23
Observation
$39.24
$3.19
$42.43
$38.00
$ 2.68
$40.68
AVERAGES
a/
$32,58
$2.77
$35.35
Rations similar to those discussed on page 2 1 .
j
.
'
- 25 using tractor powered processing equipment.
Utilizing. Idle Capital Resources
Previously acquired building and equipment were utilized to a limited
extent in new plants visited.
Storage facilities and tractor powered hay
choppers were the most frequent items of existing capital investment that
were incorporated into the new feed processing systems.
Nutritional Disease
In replying to a question on prevalance of nutritional disease and
ration deficiencies relative to home processed feeds, the feeders indicated
a need for careful processing of the barley to prevent bloat and "goingoff -feed".
This was felt to be especially important when low roughage
levels were fed.
One case of calcium shortage did occur on a high barley
ration; this was corrected by the addition of a calcium supplement.
In general, there seemed to be no great problem with nutritional
diseases in the Montana feedlots visited.
Nutritional quality of the
farm processed rations therefore does not appear to be a limiting factor
in the economic feasibility of farm processing.
Type of Plant
Plant equipment frequencies by size category are exhibited in
Table VIII.
The plants in the larger size group had a larger percentage
of mixers and were more likely to have a roller mill than a hammefmill.
There seemed to be no relationship of molasses blending to plant size.
The use of molasses was found to follow area lines rather than be '
influenced by plant size.
A much smaller incidence of molasses use occurred
in areas where the ration, was built around rolled barley than in areas
where corn silage and dried beet pulp were utilized as feed ingredients.
Thirty-two of the 38 visited plants did their own processing (the
sample was taken to include predominately on-the-farm processors).
Only
— 26 —
three of the 38 mixed their own premix or supplement.
Three of the
visited plants made use of water tempering prior to barley rolling and
one had steam-roller facilities.
Mixers of various types were common among the visited plants.
Twelve
plants had batch mixers, ten had percentage type continuous mixers and all
but five of the remaining 16 used a feeder box or feed wagon that did a
degree of mixing.
Investment Per-Head
Actual plant investment per head is exhibited in Figure I.
The average
for the size groups was used to determine the curve.
Variation in.investment per head fed annually was found to be extreme
at the small lot size level; it ranged from $ 6 .2 5 for an older, tractor
powered mill and auger setup to $100 for a modern, complete, electrically
powered plant.
The extremes in this size group point out the necessity
for planning the proper size and type of plant for the anticipated feedlot
capacity,
The medium and larger size plants had less variation in plant invest­
ment per head.
Extremely high per head investments did not occur because
of better plant design and nearer to optimum plant utilization.
Extremely
low per head investments were also unlikely to occur because the plants in
these size groups were relatively new and, were as a rule, designed to
accommodate new labor saving techniques.
Mean plant investment per head for the three size'groups was checked
for statistical,significance by the "Analysis of Variance" and the "F" test
and was found significant at the 10 percent level.
If variance had been
less in the small lot category the means would have demonstrated higher
significance. 9/
9/
Robert G. S. Steel and James H. Torrie, Principles and Procedures of
Statistics, (New York; McGraw-Hill Book Company, Inc., I960), pp. 112113 and 438..
v
;■
TABLE VIII.
PLANT INVESTMENT AND TYPE OF FABM PLANT
Investment
Per
Head Fed
Annually__
Type of.Mill
Number of Visited Lots Having
!
The Following~~
Roller Hammer Molasses
Mixer . Mill
Mill
Blender
No.
of
Lots
Plant
Investment
Average
2,000 & over
9
$34,*77.00
$8.77
6
7
I
4
1,000 to. 1,999
9
17,811.00
14.88
5
4
3
I
11
14,500.00
25.70
8
4
7
4
Size
Group
I to 999
Group With
Incomplete
Cost Data
5
3
2
3
3
Group With
No Equipment
4
-
-
-
-
TOTALS
38
22
17
14
12
- 28 -
Total Per Ton Costs
■ ■
Processing costs for the 25 feed plants whose operators gave complete
cost data are shown in the scatter diagram of Figure 2,
Further cost
analysis and size stratification are exhibited in Tables IX through XVII.
By observing Figure
2. -}
extreme cost variation •can be noted among the
farm processors in the smaller size group with less variation in the
medium size group and almost none in the larger category.
The free hand
graph connecting the group averages indicates that economics of size do
exist in farm feed processing.
However by referring again to the small
size group it can be noted that many of these small operators are pro­
cessing at a cost that is comparable to the larger operators.
Operational
inefficiencies and poor plant design can be held responsible for many of
the more costly operations in this category.
The lowest cost operation that was observed occurred in the smaller
end of the 1,000 to 1,999 size group.
This feeder was using an almost
automatic mill of relatively low initial cost and low capacity.
■
This system
was designed so that the equipment was being fully utilized without the
use of excessive labor.
More will be said about this plant in Chapter III.
The higher cost operations were the result of over designed, too
costly plants that were not being fully utilized.
These plants were not
designed to give maximum labor efficiency nor were other variable operating
costs lower than average.
These are good examples of imbalance of resources
with over-building resulting in much higher than average fixed costs.
Total Per Ton Processing Costs By Size Groups
Individual observations were broken down to show the reported fixed
and variable operating costs.
Averages for each size group were determined
for use in comparison with commercial rates in a later section.
Actual Observations
Average Investment Per
Head Fed Per Year for
Size Groups.
t)
60
Investment Per Head
5000
6000
Head Fed Per Year
Figure I. Dispersion, variance and average of actual plant investment per head fed
annually.
- 30 —
• The feedlots are listed in Tables IX through XVII according to number
of head fed per year.
Starting with the largest as number one on Table IX
and becoming smaller through Table X and Table XI.
The same numbering order
is used for the variable cost tables and the total cost, tables that follow.
Fixed Costs
■ Costs of processing feeds that continue regardless of plant use were
separated from other costs that are in direct proportion to the plant out­
put,
The per ton fixed costs were derived by dividing the reported annual
fixed cost by the reported annual feed output.
The average fixed cost per ton is inversely related to the number of
cattle fed annually.
ranged from
The per ton fixed costs for the large size group
to $ .9 1 with an average of
the medium size group
ranged from $.4? to $ 1 .8 7 with an average of $1.17; and for the small
size group,, the per ton fixed ,costs ranged from $.84 to $4.23 with a
group average of $1.84,
A complete breakdown of fixed costs for all
respondents is shown in Tables IX to XI.
Variation increased with the smaller size groups.
This variation
is due in part to plants that were too costly in relation to annual feed
output.
The effect of these fixed costs on the total costs will be
readily seen in a later subsection on total per ton costs.
Variable Costs
-The average variable cost per ton of feed also has an inverse
relationship to feedlot size.
The group averages were $.82; $1.40 and
$2 .0 5 for the large, medium and small size groups respectively.
See Tables X I I ..to XIV.
'The electric and other power per ton of feed shows considerable
consistency in the larger plants with more variation in the small and
medium size groups in which part of the processing power source was from
farm tractors.
Further variation in power requirements can be explained
X = Mean Tonnage and Costs for
Size Groups
. = Individual Observations
Farm Processing Costs
10
12
14
Feed Output Per Year (1000 tons)
Figure 2.
Costs and annual output of surveyed plants.
- 32 •*
by the varying electrical rates and the different types of service charges
and minimums that the power companies require to pay for the installation
of heavy duty three-phase lines.
One operator reported having paid a flat
hook-up fee rather than an" increased monthly rate.
Considerable variation is noted in.comparing the repair and maintenance
costs per ton in these tables.
of adequate farm records.
This wide variation is due in part to lack
Also, the different types of processing mills
require different annual repairs.
One operator reported regrooving his
roller mill rolls twice a, year which increased his repair and maintenance
cost by $600 annually for this item alone.
Labor costs per ton also revealed considerable variance with the
inverse relationship to lot size holding true for this cost item also.
Many of the larger lots had processing equipment that required little
supervision while some smaller plants required almost constant, watching.
Hay processing plants were among the least efficient in labor utilization.
The small and medium size groups showed greater variation in variable
costs than did the larger size group,
This indicates that there were some
operators in these groups that had plants relatively efficient in labor
and power use.
(Refer again to Table XIV.)
Total Cost Per Ton .
The summation of fixed costs and variable costs for each respondent
comprises his total processing cost per ton of feed.
Total cost per ton for the large size group ranged from
to $1.82 and averaged $ 1 .3 6 .
per ton
The range of the medium size group was $ .7 8
to $ 3 .9 0 with $2.57 being the group average.
Small size plants, varied from "
$2.46 to $6.26 for total per ton costs and had an average of $ 3 .8 9 .
See
Table X V to XVII.
Variation within the small size group is extreme in comparison to the
other size groups.
This is due primarily to the extreme variations in
/
.
S
TABLE IX.
BREAKDOWN OF FIXED COSTS FOR SIZE CATEGORY 2,000 HEAD AHD OVER FED PER YEAR.
Tractor
Fixed
Costs
Per Y r .
Interest or
Opportunity
Cost Per
Yr.
-CO-
Feed- Plant
lot InvestN o . ■ment
Plant
Depreci­
ation
Per Y r .
$2,275.00
2 ,1 0 0 .0 0
11,225.00
185.00
1,604.00
26.00
3
4
5
6
7
8
9
7
I
230,000.00
Mean
of 7 32,857.00
2
I
$2,600.00
3,000.00
I
$65,000.00
60,000.00
a/40,000.00
25,^00.00
32.500.00
8,500.00
b /43,000.00
25,000.00
14,000.00
I
Tax
Per
Yr.
Total Fixed
Costs
Per Year
:
$1 ,0 0 0 .0 0
480.00
$170.00
50.00
50.00
50.00
$6,045.00
5,780.00
~
2,845.00
3,083.00
963.00
5,055.00
2,275.00
1,708.00
8,049.00
2,550.00
690.00
22,699.00
1,150.00
364.00
99.00
" ”
— — «
— —
-
1,250.00
1,625.00
567.00
2,650.00
1,250.00
933.00
Insur­
ance
Per Y r .
- — ■*
M
875.00
1,138.00
296.00
— — “
-lj-855.00
875.00
185.00
490.00 .
•****"
620.00
250.00
5.0.00
350.00
10 0 .0 0
aj
Plant too new to have operating costs available.
bj
Combination farm.processing and commercial rolling.
J
2 0 0 .0 0
100 .00
70.00
50.00
2 0 0 .00
Per Ton
$0.40
0.64
3.80
0.44
0.46
0.31
1.53 ..
0.91
0.64
3,243.00 . 0.54
Not included in averages.
TABLE X e
BREAKDOWN OF FIXED COSTS FOR SIZE GROUP 1,000 to 1,999 HEAD FED PER YEAR
Plant
Feed- Plant
Beprecilot
Invest- afcion
No.
ment
Per Y r .
Tractor
Fixed
Cost
Per Yr..
Interest
or Opportunity
Cost
Per Y r .
Total Fixed
Costs
Insuran ce
Per yr.
10a/$ 1,500.00 $ 100.00 $- * -$
52.00 $ - - 40,000.00 2,000.00 — — - 1,400.00 100.00
11
12
900.00 - - 18,000.00
630.00 100.00
7,000.00
700.00 - - 13
245.00
50.00
14a/ 1,600.00
56,00
107.00 - - -,
15
5,000.00
333.00 - - 175.00
40.00
16
9,177.00
918.00 284.00 321.00
10.00
17
36,000.00 1,800.00
81.001,260.00
38.00
18
9,500.00
633.00 - - 3 3 2 . 0 0
60.00
Tax
Per
Yr.
Per Y r .
Per Ton
$ 10.00
300.00
100.00
100.00
10.00
50.00
50.00
90.00
50.00
$ 162.00
3,800.00
1,730.00
1,095.00
173.00
598.00
1,583.00
3,269.00
1,075.00
$0.06
1.85
0.9$
1.10
0.48
0.47
1.34
1.87
0.61
398.00
740.00
13,150.00
8.20
57.00
106.00
1,879.00
1,17
mT
i L 124,677.00
Mean
of 7 17,811.00
a/
7,284.00
1,041.00
365.004,363.00
52.00
623.00
These feedlofcs had no grain processing equipment; only bins and augers to load
out commercially processed feeds. The data from these lots were not used in
cost averages.
TABLE XI.
BREAKDOWN OF FIXED COSTS FOR SIZE CATEGORY I -- 999 HEAD FED PER YEAR.
Plant
Depreci­
Feed-- Plant
Invest­ ation
lot
ment
Per Yr.
No.
Tractor
Fixed
Cost
Per Yr.
$20,000.00 $1,000.00 $ ---19
— — —
20
25,000.OO 1,250.00
— — —
620.00
4,300.00
21
500.00 241.00
4,900.00
22
467.00 28Ii00
7,000.00
23
24a/ 40,000.00 2,000.00 337.00
— — —
25a/ 50,000.00 2,500.00
245.00 147.00
2,450.00
26
3,052.00
305.00 147.00
27
50.00 133.00
1,250.00
28
50.00
98.00
1,550.00
29
Interest or
Opportunity
Insur­ Tax
Cost
ance . Per
Per Year
Per Yr. Yr.
$
700.00
875.00
310.00
168,00
245.00
1,400.00
1,750.00
86.00
107.00
50.00
55.00
Total Fixed
Costs ■
Per -Yr. Per Ton
$200.00 $ 40.00
100.00
50.00
50.00
70.00
•
60.00
20.00
20; 00
100.00
250.00
100.00
300.00
- - 20.00
- — “
20.00
- - 50.00
- - 20.00
$1,940.00
2,275.00
1,050.00
969.00
1,033.00
4,087.00
4,650.00
498.00
579.00
' 283.00
223.00
$1.96
2.25
1.01
1.34
1.33
3.21
4.23
1.19
1.38
0.84
1.42
11
J2L
159,502.00
Mean
of 11 14,500.00
a/
8,987.00 1,384.00
817.00
126.00
5,746.00
720.00
750.00
17,587.00
20.16
522.00
65.00
68.00
1,599.00
1.84
Feed plants that included storage for "haylage".
TABLE XII.
BREAKDOWN OF VARIABLE COSTS FOR SIZE CATEGORY 2,000 HEAD AND OVER FED PER YEAR
Electric and
Other Power
Feed
Lot
No.
Per Y r .
I
2
3a/
4
5 ■
6
7b/
8
9
7
S
Mean
of 7
Per Ton
Repair, Upkeep
and Misc.
Per Y r .
'
Per Ton
Labor
Total.Variable
Cost
Per Y r .
Costs
Pet Ton
Per,Yr.
Per Ton
$4,800.00
2,000.00
$0.31
0.22
$500.00
700.00
$0.03
0.07
$3,000.00
2,250.00
$0.20
0.25
$8,300.00
4,950.00
$0.54
. 0.54
2,281.00
2,800.00
600.00
1,200.00
700.00
956.00
0.35
0.42
0.19
0.36
0.28
0.36
638.00
650.00
100.00
300.00
100.00
70.00
0.10
0.10
0.-03
d.ib
0 ;03
0.02
3,285.00
3,600.00
1,800.00
1,600.00
1,500.00
1,500.00
0.50
0.54
0.58
0.48
0.60
0.56
6,204.00
7,050.00
2,500.00
3,100.00
2,300.00
2,526.00
0.95
1.06
0.80
0.94
0.91
0.94
0.38
» w e„
3.23
-.
0.46 .
...
,
i
C
2.13
** “ -
0.30
•*.— ”
0.06
5/
Plant too new to have operating costs available.
W
.Combination farm processing and commercial rolling.
5.74
0.82
Not included in averages.
1
TABLE XIII.
Feedlot
No.
BREAKDOWN OF VARIABLE COSTS FOR SIZE CATEGORY 1,000 - 1,999 HEAD
FED PER YEAR,
Electric and
Other Power
Per Yr.
Per Ton
$0.01
IC a/ $ 30.00
0.46
936.00
11 '
0.40
12
. 720.00
700.00
0.70
13
20.00
14 a/
0.06
0.20
15
240.00
16
847.00
0.72
17
535.00 , 0.31
18
240.00
0.14
7
5L
Mean
of 7
- - -
Repair, Upkeep
and Misc.
Per Yr;
2,000.00
200.00
100.00
— •» —
100.00
100.00
600.00
100.00
Per Ton
^ ™ ■ ■
0.98
0.11
0.10
- - 0.07
0.08
0.34
0.05
Labor
Cost
Per Yr.
$ - - Ii000.00
1,000.00
2,000.00
— — —
50.00
1,800.00
300.00
576.00
%
Total Variable
Costs
Per Ton
$
0.49
0.56
2.00
*■ — *
0.04
1.53
0.17
0.33
2.93
1.73
5.12 .
0.42
0.25
0.73 ,
Per Yr.
Per Ton
$ -30.00
3,936.00
1,920.00
2,800.00
20.00
390.00
2,747.00
-1,435.00
916.00
$0.01
1.92
1.07
2.80
0.06
0.31
2.33
0.82 ■_
0.53
- -
—
9.78
1.40
a/ These feedlots had no grain processing equipment, only bins and augers to load
out commercially processed feeds. The data from these lots were omitted from the
averages.'
TABLE XIV.
BREAKDOWN OF VARIABLE COSTS FOR SIZE CATEGORY I - 999 HEAD FED BER YEAR
Electric and
Other Power
Feedlot
Per Yr.
No.
19
20
21
22
23
24 a/
25 a/
26
27
28
*29
$480.00
750.00
600.00
425.00
600.00
681.00
330.00
240.00
240.00
271.00
182.00
Per Ton
$0.49
0.74
0.58
0.59
0.77
0.53
0.30
0.57
0.57
0.80
1.15
Repair, Upkeep
and Misc.
Per Y r.
$500:00
100.00
300.00
80.00
30.00
150.00
100.00
120.00
120.00
25.00
100.00
Per Ton
$0.51
0.10
0.28
0.10
0.05
0.12
0.09
0.29
0i29
. 0.07
0.63
Labor
Cost
Per Yr.
$1,620.00
600.00
840.00
960.00
240.00
3,000.00
1,800.00
400.00
400.00
300.00
240.00
Total Variable
Cost
Per Ton
$1.64
0.59
0.81
1.33
0.31
2.35
1.64
0.95
0.95
0.88
1.52
Per Yr. Per Ton
$2,600.00
1,450.00
1,740.00
1,465.00
870.00
3,831.00
2,230.00
760.00
760.00
596.00
522.00
$2.64
1.43
1.67
2.02
1.13
3.00
2.03
1.81
1.81
1.75 .
3.30
CO
»
11
Mean
of 11
a/
.
w
° ~ ”
7.09
■ = *»
0.64
- - ”
2.53
" • -
12.97
0.23
-
1.18
Feed plants that included storage for "Haylage".
- - -
22.59
- - _-
2.05
39 fixed and variable costs for this category, resulting from extremes in
plant investment and plant type.
Total Costs For Three Size Groups Compared
A comparison of the fixed, variable and total costs for the three
size groups together with overall average costs from the complete survey
are shown in Table XVIII.
These tabular results are shown in a more con­
cise manner in Figure 3®
.'
The averages were checked for statistical significance by using the
"Analysis of Variance" and the "F" test. 10/
They were found to be signi­
ficant at the I percent level despite the great variance in data.
Management
An attempt has been made.to include all fixed and variable costs and
to analyze them in the best way possible.
factor,that remains to be discussed.
factor on many modern day farms.
There is however, one production
Management becomes the limiting
.
This study has included the manager's
wage allowance while -working at the feed mill but there still remains an
intangible management factor that defies pricing by anyone other than the
feedlot operator himself.
Statements by two medium sized feeders who were
using commercially rolled feeds, emphasize this hidden factor.
They said
that they were certain that they could reduce costs by processing their
own feeds but they didn't want the added responsibility of managing another
business.
They felt that their managing ability was put to better use in
buying feed and marketing cattle.
10/
Steele and Torrie, Ioc. cit.
I
TABLE XV.
Feedlot
No.
I
2
3 a/
4
5
6
7 b/
8
9
7
z.
Mean
of 7
COMPARISON OF FIXED, VARIABLE, AND TOTAL COSTS WITH TONS OF FEED
PROCESSED FOR SIZE GROUP 2,000 AND OVER.
Total Fixed
Costs
Per Ton
Total Costs
Per Ton
$ 0.54
0.54
$ 0.40
0.64
$ 0.94
1.18
15,300
9,100
0.95
1.06
0.80
0.94
0.91
0.94
0.44
0.46
0.31
1.53
0.91
0.64
1.39
1.52
1.11
6.49
1.82
1.58
6,565
6,650
3,126
3,304
2,520
2,680
5.74
3.80
9.59
- “ -
. 0.82
0.54
1.36
6,563
Total Variable
.Costs
Per Ton
Tons Processed
Per Year
a/
Plant too new to have operating costs available.
b/
Combination farm processing and commercial rolling, not included in
averages.
TABLE XVI 0
Feedlot
No. .
10 a/
11
12
13
14 a/
15
16
17
18
COMPARISON OF FIXED, VARIABLE AND TOTAL COSTS, WITH.TONS OF FEED
PROCESSED FOR SIZE GROUP 1,000 - 1,999.
Total Variable
Costs
Per Ton .
Total Fixed
Costs
Per Ton
$0 .0 1
1.92
1.07
2.80
0.06
0,31
2.33
0.82
0.53
$0.06
1.85
.0.96
Total Costs
Per Ton
Tons Processed
Per Year
0.48
0.47
' 1.34
1.87
0.61
$0.07
3.77
2.03
3.90
0.54
0.78
3.67
2.69
1.14
360
1,260
1,180
1,750
. 1,750
9.78
8 .2 0
17.98
" - -
1.40 . .
1.17
2.57
1,541
1 .1 0
2,600
2,050
1,800
1,000
7
Mean
of 7
a/
These feedlbts had no grain processing equipment, only bins and augers to
load out commercially processed feeds. The data from these lots were not
included in calculations.
TABLE XVII.
COMPARISON OF FIXED, VARIABLE AMD TOTAL COSTS, WITH TONS OF FEED
PROCESSED,FOR SIZE GROUP I - 999.
Feedlot
No.
Total Variable
•Costs
Per Ton
19
20
21
22
23
24 a/
25 a/
26
27
28
29
Total Fixed
Costs
Per Ton
Total Costs
Per- Ton
Tons Processed
Per Year
$4.60
3.68
1,012
$2.64
1.43
1.67
$1.96
2.25
1 .0 1
2 .6 8
2 .0 2
1.34
1.33
3.21
4.23
1.19
1.36
0.84
1.42
3.36
2.46
22.59
20.16
42.75
2.05
1.84
3.89
1.13
3.00
2.03
1.81
1.81
1.75
3.30
.
6 .2 1
6.26
3.00
3.19
2.59
4.72
988
- 1,040
724
775
1,275
1,100
420
420
- 340
158
11
X
Mean .
of 11
a/
Feed plants that included storage for "Haylage".
- — —
752
= 43 "
TABLE XVIII.
COMPARING FIXED, VARIABLE AND TOTAL COST FOR PROCESSING
FEEDS ON THE FARM FOR ALL THREE SIZE GROUPS.
'
Variable Costs
Fixed Costs
Total Costs
2 ,0 0 0 and over
$ 0 .8 2
$0.54
$1.36
1 ,0 0 0 - 1,999
'1.40
1.17
2.57
2.05
1.84
3.89
TOTAL
4.27.
3.55
7 .8 2
Average for A U Size Groups
1.42
1.19
. 2 .6 1
I - 999
Each operator should add such value, to the top of the "bars on Figure
I to the extent that he 'will he compensated for his mental strain and
anxiety from managing another enterprise.
For some people the feeling of
accomplishment and the pride of ownership may be ample compensation for
this management factor.
Relating On-The-Farm Processing Costs To
Commercial.Processing Costs
Practicability of farm processing can be determined by comparing
the average costs of on-the-farm processing with commercial processing
rates prevalent in the state.
Survey results revealed that commercial charges for steam rolling
and adding supplement to barley ranged from $ 3*00 a ton to $ 5 .00 , with
$4.00 being the average as well as the most frequent charge.
Grinding
charges were approximately $ 1 .0 0 per ton lower or $ 3 .0 0 a ton average.
Some farm feed plants in the smaller size group used a grinder rather than
than roller mill.
In these cases the grinding rate was used in calculating
the comparable commercial cost.
$ 3 .8 0 was thereby determined.
An overall average commercial rate of
- 44 -
2.000 and
sr
1 ,0 0 0 to 1 ,9 9 9
I to 999
Number Head of Cattle Fed Per Year
Figure 3 .
Farm processing costs per ton of feed by size groups.
“ ^*5 “
Effect of Varying Commercial charges
The effect of the different observed commercial processing charges
can be seen in Figure 4 e
The farm processing curve is the curve derived
in Figure 2 and indicates an average of all farm feed plant observations
according to size groups„
At the $3»00 per ton rate the breakeven point
of farm processing to commercial processing falls at about 1 ,2 0 0 tons
of feed or 900 head of cattle fed per year,
At the average reported
commercial rate of $3»8 0 , the breakeven point was 480 head fed per year.
While at the $5.00
per ton charge, all but two of the most inefficient’of
the observed farm plants could effectively compete with the commercial
charge.
Transportation Costs
Up until this point in the analysis, the comparisons have not included
transportation costs from the commercial plant to the farmer5s feedlot. ’ In
other words the assumption was made that the feedlot was either located
adjacent to the commercial feed plant or that all of the feed ingredients
must be hauled from the same general area as the commercial plant,
These
assumptions are certainly not realistic for the Montana area where feed
production is often on the same farm .as the feedlot, or feed ingredients
can be delivered to the feedlot by the neighbors at the prevailing elevator
price o
How let us assume that the feed is. on the feedlot location and that
transportation costs to and from the commercial plant must be added.
Figure 5 emphasizes the effect of additional distance of feedlot from
commercial plant.
Arbitrary five and ten mile distances are shown for
comparative purposes*
The. per mile rates for operating trucks used are the
ones outlined in the procedure section of the first chapter and in Appendix
Bo
One survey respondent reported that trucking costs were about $,50 per
v
C
$5.00 rolling rate found in one Montana area
Processing Cost Per Ton of Feed
$5
&
2000
I
4000
\
6000
8000
10, 000-
- 12 ,000 -
14,000
Tons of Feed Processed Annually
Figure 4. Effects of varying commercial processing rates.
480 head
»
Ii-rJ «,
loaded mile ( $ .2 5 each way on the round trip) and another estimated $ 1 .0 0
per ton truck charge for a seven mile haul. '
Waiting Time
Waiting time at the elevator can also have its effect on feasibility
of on-the-farm feed processing.
The two hour waiting time was most fre­
quently given as an answer to a "waiting time" question on the survey.
One
operator reported that he allowed a half day to get a five ton load of
barley rolled^ others figured $1.00 per ton plus labor for hauling and
waiting.
A two hour wait, times $2 .5 0 per hour (derived in the methods section)
is indicated by the upper solid lines on Figure 5«
theoretically feasible wait of l/ 2 to
broken lines.
3/k
A more conservative but
hour is indicated by the lower
This shorter waiting time was reported by users of commer­
cially rolled grain who had worked out satisfactory arrangements with the
commercial operators.
It can be noted from this diagram that savings for the smaller feeder
can be realized by commercial processing (if the trucking distance is not too
great.and if the service at the elevator is good.
Savings By On-The-Farm Processing
According to the results of the survey, substantial savings were
being made by farm feed processors.
Savings of $2.64 and $1.29 for the
large and medium size groups and a loss of $0,34"per ton for the small size
group were indicated when no allowance was made for farmer's transportation
costs.
When transportation,costs were included, the savings were $4.50,
$2 ,6 5 and $2 .6 6 per ton for the large, medium and small size groups
respectively.
: 1 ■■■.
s
10 mile haul with 2 hour wait
5 mile haul with 2 hour wait
_10 mile haul with 3/4 hour wa.it_
5 mile haul with 1/2 hour wait
Processing Cost Per Ton of Feed
Prevalent custom processing rate
Farm cost for processing
6000
8000
Tons Processed Annually
Figure 5. Effects of varying distance from commercial processor.
These results should not he surprising to the reader when certain
factors are considered®
(l)
Montana commercial processing rates appear
to he higher than the Midwest areas where similar studies have been made®
This also should not he amazing since the seasonality of Montana feeding
has certainly not been conducive to maximum efficiency of commercial
operations„
(2)
Farm processors have access to lower cost labor than
most commercial feed plants®
(3)
Labor requirements for the farmer are
often no higher for processing"his own feed at home than waiting at the
commercial roller.
(4)
Transportation costs that the farmer must incur
to get feed to and from, the commercial processor ranged from $1.36 for the
medium size group to $3.00 for the small size group.
Differences in distance from the feedlots to the commercial plants
were not significantly different for. the medium and large size groups
but the distance from the small size group was significantly greater.
The
explanation for this probably lies in the fact that the I - 999 head group
was made up of more typical farm type operations where the feedlot was
secondary in importance to the other farm enterprises.
The farms with the
larger feedlots, on the other hand, were often owned by livestock dealers
or other city residents and were purchased.for the primary purpose of
feedlot development.
Location was therefore a consideration a t .the time
of the farm purchase. ~
Ironically, distance becomes more of a prohibiting factor to the
very size group that should otherwise have been able to gain an economic
advantage by commercial processing.
■•
Additional information on -reported commercial processing rates can
be noted in Table XIX.
The cost of commercial processing actually declines
as the lot size decreases'.
This is perhaps misleading, but can be explained
by the fact that the smaller size group farm plants used a greater percent­
age of hammermills than did the other size categories.
The comparable
I=
50 =
commercial charge for these specific lots was based on. the custom plant’s
charge for similar processing.
Uhis procedure was necessary to permit an
unbiased comparison between on-the-farm and commercial processing.
Errors
due to nutritional and processing quality differences of the farm hammer
mill plants would have otherwise biased this study in favor of the farm
processor.
The two columns listing calculated savings by on-the-farm processing
were based on two assumptions as to location.of feed ingredients.
con­
sideration of these two assumptions can be the key to the feasibility of
on-the-farm .feed processing.
Other Commercial Processing Methods Observed
Processing home grown feeds at the feedlot location can be accom­
plished by portable custom feed mills.
One lamb feeder was having his home grown feeds ground and pelleted
on the farm by a portable custom pellet mill.
The charge was $12.00 per
ton, which added to the feeder’s reported $ 3 0 .0 0 ingredient cost, resulted
in a complete pelleted feed for $42,00 per ton*
This was a, $4.00 saving
from the delivered price of a similar commercially prepared pellet.
Portable custom milling and mixing units were observed.
rates for these units ranged from ■ $12«;00 to $18.00.
The hourly
Their capacity is three
to five tons per hour; therefore the per ton price varied from $3«50 to
$5»00,
This method of processing should prove economically feasible for
many small feeders.
Summary
Despite a relatively small sample, highly significant and conclusive
results were obtained.
Montana feeders are shifting toward home processing
of their feeds in an effort to reduce their feed costs.
TABLE XIX,
S
CU
COMPARING MILEAGE FROM COMMERCIAL FEED PLANT, TOTAL COSTS OF PROCESSING
FEEDS AT FARM PLANT AND CORRESPONDING COMMERCIAL RATE PLUS TRANS­
PORTATION COSTS TO FARM FEEDLOTS AS REPORTED BY SURVEY RESPONDENTS.
W
cd
N
i-t $
co
w
4J CU
O EXc
r—4
rO rO
cu
cu
1 %
S
CO
CO i—C
CO
'I CO
CU
*— I
I-- I
S
CU
60
Cd
Fe
.3
O
U
a>
Cd
F=c M
<y
s-ga
cd H
.-I bO 60
X 0 0
O cH *H
H 4J r-4
Ay g
S Eti
I
9
2 .2 hrs.
1,000 to 1,999
. 7"
1.6 hrs.
I to 999
16.6
3.2 hrs.
2 ,0 0 0 & over
a/
CU Cd
O 1-t
2 2
U
A' g
cd
-CH
O
U
Q
I
°5
4J
CO 60
«8.5
$4.00
.5
Savings By On-The-Farm
Processing
i-4
O
ti
U m
O w
CO
O
O
I -U
-X3
CO - o
8 ^ 5
S5CO
•H
4J
-H
44
A O
W
0
(U ,<U
I
-
§
M
*H PQ Pu
$5.86
$1.36
$4.50
$2.64
3.86 a/
5.22
2.57
2:65
1.29
3.55 a/
6.55
3.89
2 .6 6
-.34
Reported as grinding rather than rolling in some cases. therefore rate is lower
Evidence from this survey would indicate that on=the-farm feed
processing is economically feasible for all size groups if the plant is
properly designed to match required output and ration and to gain ma-xTirripm
labor and power efficiency.
Distance from the feedlot to the commercial
processor as well as waiting time have been shown to be relevant factors
in on-the-farm processing feasibility.
CHAPTER III
HYPOTHETICAL MODELS
T h i s ■chapter deals with hypothetical feed plants, based on case
studies from the empirical observations discussed in the previous chapter
and modified slightly by the application of present day building and
equipment costs.
Case plants of types and sizes that had superior
operating efficiency were used.
Graphical comparisons of operating
costs for different models are presented together with the average costs
for each size group as discussed in Chapter II,
This chapter is there­
fore designed to remove from this thesis any observed inefficiencies which
might otherwise tend to bias the conclusions or recommendations».
. Plant Cost Derivation
Quality, and consequently price, of feed processing equipment varies
considerably.
In the -following examples, farm type equipment was chosen
rather than the more costly, heavy duty industrial type.
A n expected life
of 15 years was therefore used in arriving at depreciation allowances.
Size of equipment- to meet feed production requirements were based
on a combination of empirical observations and equipment manufacturer's
theoretical or advertised capacity.
An, allowance for reserve capacity
has been made in all models.
Prices of equipment were arrived at by consulting the price lists
of several leading feed processing equipment manufacturers.
Only "working" storage was included in each model.
This includes
only enough storage to receive semi-truck loads of feed ingredients with
ample reserve for-holidays and emergencies.
More storage would no doubt
be desirable to enable the feeder to take advantage of seasonal ingredient
price fluctuations and quantity discounts.
However for comparative
purposes only minimum storage was included.
One plant model showing floor plan and cost breakdown has been
-
-
included in Appendix C to demonstrate the procedure used in arriving at
the plant investment for the following models.
These models are -designed to be examples of relatively efficient
plants of their type and size and are used herein for comparative purposes.
Their portrayal here should not be construed to imply that these models
are ideal in every respect.
In reality, there are numerous designs and
brands of equipment that are well suited to farm feed processing in
Montana that have-not been incorporated into these models.
However,
investment costs and- operating costs for variations will not be far
different from"the illustrative models used in this chapter.
- Operating Cost Determination
Complete elaboration of operating cost determination should not be
necessary in this section because the methods are essentially the same
as for Chapter Il'.
However, exceptions and generalities will be brought
forth.
Depreciation'allowances for these theoretical models were derived
by the straight -line method, using a 15 year life expectancy, and no
salvage value (10 years was used for tractor powered mill and mixer).
An average, annual interest charge was determined by using three
and one half percent of the initial investment.
Insurance, though not carried by all of the feeders in the sample,
was included in all theoretical models.
An annual charge for insurance
and taxes was calculated by using one and one half percent of the initial
investment.
Power requirements for feed processing varies according to type of
processing and number of times the feed must be moved or handled.
The
model plants have relatively low power requirements because the continuous
flow system has been utilized in all instances except the tractor powered
model.
- 55 “
Repair and maintenance costs were arrived at by using the reported
costs of case plants studied#
This per ton cost varies some by plant
type_and size»
Labor requirements are also based primarily on case studies that
indicated efficient labor use.
Models For Size Group I - 999 Head Per Year
In the small size group a comparison was made between a virtually
automatic electrically powered mill and mixer and a tractor power-take­
off operated mill-mixer combination.
Automatic mill and mixers are available with either roller mill
or hammermill with no Significant price differential.
The automatic plant
whose operating costs are shown on Figure 6 has a capacity of one ton per
hour.
The mixing is done by percentage type ingredient feeders that can
feed in either before or after the grinder.
There is no provision for hay
processing nor-molasses blending in this model.
The grinder is protected
by overload cut-outs and other safety switches that shut.off the main power
source if one ingredient supply should become exhausted or the finished
ration bin-should become filled.
Automatic timers can be set to commence
and terminate plant operation at predetermined times without attendance.
This plant has -virtually no labor requirement, and initial material and
installation costs are not exceptionally high because low capacity equip- '•
ment can be used.
The tractor powered mill and mixer consists of a 10M x 20" roller
mill or a 16 " hammermill and a one to one and one-half ton vertical batch
mixer.
Power-requirements call for a 50 horse power tractor.
Tractor
operating costs- are taken from the table in Appendix A.
1Total per ton- processing costs used for these two lypothetical models
are compared with the average for the I - 999 size group and are shown in
Table XX.
=■ 56 "
Azmual fixed costs are used in the table because these costs remain
constant despite feed processing volume,
Various annual feed output rates
■were divided into the annual fixed costs to determine points on the average
fixed cost curves for Figure 6.
The average per ton variable costs were
then added to each output rate to locate the average total cost ,curve for
the models»
,TABLE XX.
See Table XXIV in Appendix D«
PROCESSING COSTS FOR MODELS IN THE I - 999 HEAD CLASS
Average From
Survey
Per Y r .
Depreciation '
Interest
Insurance & Tax
Total Fixed Costs
Per Year
Tractor Powered
Mill and Mixer
Per Yr »
$ 2 5 0 .0 0
87.50
134.00
$ 400.00
210.00
100.00
1,599.00
710.00
.3 5 0 .0 0
Per Ton
Per Ton
$
943.00
5 2 2 .0 0
1 .1 8
Labor
power
Repair
Average Variable
Costs Per Ton
Semi-automatic
Electric Mill
Per Y r .
0 .2 3
0.05
0.20
0.07
2 .0 5
0 ,3 2
0.64
1 2 .5 0
Per Ton
0.70
. 1.03
0.47
I
2.20
In Figure 6 economies of size become apparent <, .especially toward the
left hand side of the curves.
The very small feeder (100 head or less)
would probably never want to take the time and effort to learn about feeding
systems or gain the nutritional knowledge that would be desirable before
setting up a feed plant.
This diagram indicates that such an operation
would at best be borderline in the economic analysis.
However as the
-
57
-
number of head fed per year increases "beyond this number, on-the-farm
feed processing can "become feasible.
Proper balance between plant invest­
ment and feed -requirements must be maintainede
The tractor powered mill is revealed to be more feasible at low tonnage
requirements.
This mill would also be more ideally suited to the seasonal
feeder who is trying to utilize his off season labor and idle tractor power.
In this instance the labor charge could be less than the model indicates
and the tractor fixed costs could be practically eliminated, thereby
lowering its ATC by a considerable extent on Figure 6 .
When the feed requirements increase beyond 200 tons per year and when
the feeding enterprise becomes one which requires all season feed produc­
tion, the automatic mill becomes more feasible.
However be cats e.,,,of,the
higher fixed costs, this mill will be at a comparative disadvantage If it
is not operated throughout all seasons and all years.
It can be -noted from studying the ATC and AFC curves for the- two mills
that the -automatic mill with the low operating cost continues to reduce
the ATC as production increases.
Conversely, the tractor powered mill with
its relatively high variable .costs has a flatter ATC curve and total costs
remain high despite increased feed output®
When the small semi-automatic mill approaches the 1,000 head per
year level, it would have to operate five or six hours per day.
leave no-margin of safety for breakdowns.
This would
Likewise the tractor powered
equipment would become impractical at higher outputs because of its high
variable costs.
The feedlot operator with anticipated feeding volume of
over I ,'000 head per year will do well to design a plant to fit these higher
feed requirements.
Models For Size Group 1000 «= 1,999 Head Per Year
As tonnage requirements increase, the plant must have more capacity.
More storage is needed to provide reserves for emergencies and to facilitate
- $8 buying and receiving feed ingredients®
To meet -the needs of this medium size group a large size semi-auto­
m a tic mill was used as one model®
The capacity was estimated two tons
per hour. - Grain storage was increased by about 3;000 bushels over the
model in the previous section.
For the second model in this size group, molasses blending and stor­
ing facilities were added to the preceding model.
Enough molasses storage
was included to permit receipt of full semi-truck loads®
Table XXI shows the cost comparisons of these two models with the
average of the sample plants for this size group.
TABLE XXI,
PROCESSING COSTS. FOR MODELS IN THE 1,000 - 1,999 HEAD CLASS
. Average From
Survey
.y;
Depreciation
Interest
Insurance & Tax
Total Fixed Costs
Per Year
Per Yr.
$1,093.00
6 2 3 .0 0
1 6 3 .0 0 .
1 ,8 7 9 .0 0
Per Ton
Labor
Power ’
Repair
Average Variable
Costs Per Ton
Semi-Automatic
Electric Mill
per Y r .
$ 7 0 0 .0 0
3 6 8 .0 0
1 6 0 .0 0
1 ,2 2 8 .0 0
Per Ton
Semi-Automatic
Electric Mill
With Molasses
Per Y r »
$ 1 ,0 2 0 .0 0
536.00
2 3 2 .0 0
1 ,7 8 8 .0 0
Per Ton
0.73
0 .0 5
0,42
0.19
0 .2 5
0 .0 6
0 .0 9
0 .2 1
0 .0 1
1.40
0.30
o . 4o
Here again fixed costs must be divided by various annual feed outputs
to determine an average fixed cost.
The average fixed cost plus the per
ton variable cost gives the location of the ATC curves shown on Figure 7-®
... Tractor Powered Roller Mixer (synthesized model)
xxx Electric Powered Automatic Mill
(synthesized model)
tzV / Based On Average For 11 Surveyed Plants
I
Vl
VO
I
700
800
90
Tons of Feed Per Year
Per Year 67
467
533
60i
Figure 6. Comparing total per ton processing costs of automatic electric powered mix mill
and tractor powered roller-mixer with average for 11 plants in the 1-999 size
group.
Cattle Fed
*» 6o «=»
See Table XXV in Appendix De
To avoid clutter, only the ATC curves are
shown on Figures 7 and 8 »
In this size group it can be noted from Figure 7 that the total per
ton costs -for the models are well below the average for the surveyed
group®
Many of the sampled feedlots were not using their feedmills to
capacity.
Neither was labor use as efficient as might be desirable.
Also some hay processing mills were included in the sample groupj these
tended to-raise the labor costs as well, as power requirements.
Other
factors increasing the power requirements .of .sampled plants were tractor
powered mills and mills, not having continuous material flow.
Care must be exercised in per ton cost comparisons between the two
semi-automatic mills as shown in Figures 6 and 7»
In. reality, plant
capacity could be increased in smaller gradations than were used in these
models.
In other words feeding processing equipment is available to make
plant capacities almost continuous rather than discrete as these models
might imply.
Models for Size Group 2000 and Over Per Year
In the larger size group a comparison was made between a feed plant
which was designed to meet the requirements of a feedlot located in the
irrigated valleys of eastern Montana and a plant designed for areas of
surplus barley production in northern Montana.
The irrigated area feed plant is made up of a hammermill of sufficient
size to grind hay as well as grain.
and one vibratory feeder.
Mixing i s .done b y two percentage augers
One percentage auger is used to meter grain
to the grinder while the other percentage auger and the vibratory feeder
by-pass the grinder to deliver other feeds such as beet pulp and premix
directly to an overhead molasses blender.
For this size.group, platform
scales to weigh silage and other ingredients should be.included since most
V'Vv
Based on average of 7 surveyed plants
xxx
Electric powered automatic mill and mixer (syn­
thesized model)
Similar mill with the addition of molasses
equipment (synthesized model)
...
Year
100 Head
Per Yr. 5 6 7 8 9 10
11
12
13
14
15
16
17 18 19 20 21
Figure 7. Comparing total per ton processing costs for mix-mill, mix-mill plus molasses
and average of seven plants in 1000 - 1,999 size group.
- 65. of the' sampled -feedlots in-this size groap had scales a
(See Appendix C
for complete material and price list.)
The barley area feedplant includes a 12" x 30" roller-mill with a
capacity of about five tons of dry rolled barley or three tons of steamed
or water tempered barley per hour®
(The investment cost does not include
steam or water tempering facilities ®)
To reduce labor requirements for
roller-mill attendance, a scalper and magnet were included to remove
foreign matter that might otherwise plug or damage the mill.
Table XXII reveals the total per ton cost comparisons for the models
used in the larger size group.
costs.
T h e .hay grinding mill has higher labor '
The higher labor requirement is due to the need for manual hay
handling and constant grinder supervision to prevent plugging and over­
loading.
Power requirements are also higher for hay grinding1.
Fixed
costs are higher since a larger electric motor and electrical entrance
installation is needed for the hay mill.
-The total cost curves shown on Figure 8 are derived in a similar
manner as the ones on Figures 6 and 7®
TABLE XXIIe
See Table XXVI in Appendix D.
TOTAL PER TON COSTS FOR MODELS -IN THE 2000 AND OVER HEAD CLASS
/
Depreciation
Interest
insurance & Tax'
Total Fixed Cost
Per year
Average From
Survey
Per Y r .
Hammermill
Plant (hay)
Per Xr.
Roller Mill
Plant
Per Y r .
$ 1,630,00
1 ,150.00
463.00
$ 1 ,980,00
1,-039.50
445.50
$ 1, 910.00
1,004.50
3,243.00
3,465.00
3,345.00
Per Ton
Per Ton
0,46
0.54
0.33
Labor
Power
Repair
Total Variable Costs Per Ton
0.30
0.06
0.82
430.50
Per Ton
0.08
0.05
0.19
0.06
0.95
0 .30.
- 63 "
Figure 8 compares these two models with the average of observed
plants size group.,
It can be noted that the model plants in this group
are not significantly superior to the sample average.
efficiency of operation for observed plants.
This indicates
It must also be remembered
that a plant -producing a large annual tonnage will cover up a multitude
of apparent inefficiencies.
For example if a man is required to be on hand
continually during plant operation and turns out five tons of feed per
hour the plant labor requirement would only be one fifth as high as for a
man constantly attending a plant producing one ton per hour.
Referring to the extreme left hand side of the average total cost
curves of Figure 8 , it can be noted again that plants that are overpriced
in- relation to their production will have sky rocketing per ton costs.
This can be the case when the feeder has grandiose plans for feeding and
is later forced to cut back his scale of operation because of lack of
capital or lack of management ability.
It would be better to build
moderately with plans to expand in the future when the added production
is actually needed.
(See Appendix C for plant with planned expansion.)
Break-even Points
Figure 9-indicates the number of head required to be fed per year
to make the specified feed plant models profitable relative to commercial
processing.
In this break-even point analysis it is assumed that the distance
from feedlot to commercial plant is seven miles, that waiting time is
held to a very minimum, and that the commercial processing rate is the
average of reported charges.
This procedure results in a $4.63 charge
for commercial processing and transportation, and is conservative in
comparison to survey findings.
It is further assumed -that the average feed consumption per head fed
is 3,000 pounds.
A small amount of silage and/or unprocessed hay must also
£
Per Year
1000
Figure 8.
Comparing total per ton processing costs for hay grinding plant, grain roller
plant and average of seven plants in 2000 and over size group.
2000
3 0 0 0
4 0 0 0
5 0 0 0
6 0 0 0
7 0 0 0
m
^5^ «9
be fed to make this assumption true®
In using the graph on Figure 9 , the prospective on-the-farm feed
processor can adjust these break-even points to allow for distance from,
rates charged by, and services extended by, the commercial processor
in their area®
Present plant owners can a l s o .compare their plants to
these models as a check on their own operating costs and plant investments®
The-graph also re-emphasizes the need for the small and medium size
feeders to adopt more efficient plants than the average found in the survey.
These models have aided in demonstrating that feed processing on
the farm can be feasible for most feedlots feeding over 100 head per year,
if suitable plant size and type is used®
/
- 66
V z Z / / / / / / / / / / ; n / m '/ / / / / / / / / / / / / W l l l l h
Average of samples plants
o
w
N
•H
'///////// /////SP^
9
'/S////////////////77)
Hay grinder plant
V
Plant Type and Group
Size
60
M
cd '/////////////^///////!////////X
Roller mill plant
’/ /
O
M
O
v
/
/
/
' / / / / / / / / ZTZK
Average of sampled plants
N
-H
CO
//////y//Gd V////SA
Electric mill with molasses equipment
§
-H
<%%% VJ//7X
S
Semi-autcmatic electric mill
WZZZZZZZZM7ZZZZ2ZZZZZD,
Average of sampled plants
S
o
<u
N
-H
CO
Semi-autcmatic electric mill
§
CO
Tractor powered mill
o
io o
200
300
to o
500
600
Head fed per year to break-even
Figure 9»
Required number of head fed annually to equate farm
processing costs to commercial charge.
CHAPTER IV
SUMMARY AHD RECOMMEEDATIOHS
Summary
-Montana barley production has increased rapidly during the past ten
y e a r s C a t t l e feeding has also exhibited considerable expansion during
the same time period, partly as a result of the increased availability
of feed grain=
This has been a contributing factor in the growing demand
for both commercial feed processing and on-the-farm feed processing in
the state»
Livestock feeding has been going through a revolutionary period with
new-nutritional and equipment advances coming forth almost daily.
The
keen competitive spirit of Montana feeders drives them on to accept these
improve# feeding methods, thereby becoming another factor in the expansion
•
i . ''
'
of on~the«ifarm feed processing,
- The--question arises"as to the economic feasibility of locating feed
processing -facilities at the feedlot in an effort to minimize feed costs.
Does feasibility of on-the=farm processing become
more likely when trans­
portation- costs to and. from.the -commercial plants are considered?
Analysis from the survey data points out that Montana feeders can
indeed find it feasible to do at least a portion of their'own feed pro­
cessing,
In the analysis, the surveyed feed plant data ..was divided into
three size ■categories according to the number of head fed per year.
Total
operating costs for averages of these categories indicate that a degree
of economy of size does'exist, with the average of the smaller size group
(those feeding .under 1 ,0 0 0 head per year) being only marginally feasible
.in -comparison to commercial processing.
However, further, analysis
.exhibited extreme variation in total operating costs among feed plants
of this group.
This indicates that some of the small plants were able to
process feed at almost as low a cost as' could those in the larger size
groups.
These more efficient, small plants could easily compete with the
• i
- •,
~ 68 cost
of
delivered commercially processed feeds*
'Per ton savings to the, farmer "by on=-the-fa m processing 'as indicated
by the survey were $2 ,66 , $2 .6 5 and $4*50 for the small, medium and large
size groups respectively when transportation costs were included in the
analysis.
If transportation costs were ignored or if the assumption was
made that f e e d .ingredients must-all-be hauled, -the savings were $-=»34 ,
$ 1 .2 9 and $2.64 respectively*
Three general types of feed processing plants were noted.
These were
influenced b y area and purpose for which feeding was being done.
Farmers
in the irrigated valley areas of eastern Montana tended to have feeding
systems set up to utilize after-math and ,by-product feeds from cash crops,
hay produced because of rotation, and barley from nearby surplus barley
areas-*
Hay processing facilities were therefore prevalent.
Northern areas
of Montana, which have surplus barley production, had plants with roller
mills designed to retain the roughage effect of the barley.
The ranchers
in the ,intermountain areas of western Montana have plants adapted to pro­
cessing hay, along with small amounts of concentrates, for the purpose of
wintering, their livestock.
. Nutritional diseases were not found to be of major consequences in
the lots o f -those feeders doing their own processing.
This indicates that
adequate nutritional knowledge does prevail among the feeders sample that
were surveyed.
Plants for the small scale feeder can be designed that are more
economical than the average of the existing small size group.
Model
plants based on the more efficient observed cases and adjusted by feed
plant, equipment manufacturer 6s recommendations were included in Chapter III
to indicate■economic, feasibility of more ideally designed plants.
parisons-of these models indicate several findings.
Com­
Feasibility of on-the-
farm-processing is questionable if less than 100 head are fed per year.
Tractor powered, portable plants are more feasible at low feeding rates
«=> 69 *"
especially if the feeding operation is to "be seasonal®
If the feeding:
plans call for feeding about 150 head per year and the operation is to
run continuously— -both seasonally and yearly=-^ plant powered by
electricity and controlled by automatic devices becomes most practical®
Plants processing for feeding rates above 1,000 head per year were
determined to be feasible almost regardless of design®
In the larger
size plants, the addition of molasses adds approximately $®40wto the
production costs of a ton of feed®'
Steam equipment, sufficient to permit
steam rolling will add at least $ 3 ; 500®00 to plant investment or about
$«35 per ton of feed produced, while water tempering of barley increases
operating-■costs by about"half this amount®
■■■- *The survey gave support to the hypotheses that feed processing on
the farm is economically feasible in Montana®
However, feeders who are
presently feeding or are anticipating feeding small numbers of cattle
must ,carefully consider several factors before determining practicability
in their individual cases®
Feedlot operators with under 100 head per
year will find on-the-farm processing impractical unless a majority of the
following factors favor his doing so®
Those plants processing for 100
head to 1 ,0 0 0 head will be practical with fewer of the following variables
on the favorable, side, while those processing for over 1 ,0 0 0 head per year
will nearly always gain an economic advantage "by farm processing®
The following variables are of major importance in the determination
of the -economic feasibility of on farm feed processing;
’I®
. -
Unused resources available on the farm that could be utilized
by feed' processing® Some farms have unused human resources
in the form of surplus labor and management ® Some have
excess capital resources such as equipment, storage facilities,
capital or "more commonly— feed grain® If these resources
.are truly surplus throughout the anticipated feeding season
and if other more promising enterprises do not exist for
their use, then operating costs can be reduced beyond the
analysis of this thesis to the extent that these resources
are utilized®
1J O
2»
Distance from feedlot to commercial plant® As distance
increases, the feasibility of ©n-the-farm processing
increases so long as the assumption is made that the
majority of the feed ingredients are on the farm. Costs
of operating farm trucks are relatively high and even
small feedlots located Ip or 20 miles from the commercial
plant will likely find farm processing feasible relative
to commercial processing. If the feed ingredients must
be hauled from a distance approximately equal to the
mileage from the commercial plant, the farm plant will
not be feasible at as low a feeding rate.
3o
Service at the commercial processing plant. If excessive
waiting time is imposed on the farmers by the commercial
processors, the farm plant again becomes more feasible.
Other elevator services such, as grain banking (storage),
credit, and nutritional advice can. also be major con­
siderations in feasibility determinations.
4.
Cost of commercial processing. The survey indicated
that commercial rates varied from $ 3*00 to $ $ .0 0 per
ton. I t 'can be readily seen that this is an important
factor since the cost of farm, processing at the sampled
plants fell in the same general range ($ ,7 8 to $ 6 .2 6 per
,ton). It must also be remembered that part of the
commercial processing costs can be hidden in the excessive
price of premixes, supplements and molasses* These
prices should be compared with prices from other ingred­
ient suppliers and the excess added to the commercial
rolling rate*
5»
Management ability of the farmer* Feed processing does
take a degree of skill and experience as well as a desire
to develop a new enterprise. Some' feeders may better
apply their managerial efforts in feed purchase or
livestock marketing. For instance., a $1.00 per ton
savings in feed processing costs will result in about
$1.50'more profit per head fed. The same Increased
profit may also be achieved by buying feed barley at
2|$ less per bushel, by buying the feeder cattle at
$ .2 5 per hundredweight cheaper or by selling fat cattle
at a $ .1 5 per hundredweight advantage.
c
*= Tl —
60
I
7«
Continuity of feedinge Plant.investment becomes a fixed
cost rather than a variable cost,once construction has
taken place „ Feeding throughout the expected life of
the plant becomes necessary to spread these costs over
as many tons of feed as possible. If the feeder has
doubts as to his future feeding volume he should consider
the effects of the reduced feed volume on his t o t a l '
operating costs. Feed processing on the fazm is
definitely not practical for the In^and=Quter or
sporadic feeder. The high investment costs incurred
by installing feed processing facilities reduces the
flexibility of the farm to switch-enterprises if
this should seem desirable at a later date,
Future trends are unpredictable. While it is not the
purpose of this thesis to determine the feasibility
of cattle feeding in" Montana, this question becomes
relevant when on= farm feed processing is to be con=
sidered, Questions arise in regard to the relative
economic advantage that Montana has in comparison to
areas in the C o m Belt and the Southwest, Will this
advantage, if it does exist, continue with the changed
wheat program? Are Montana farms better adapted to
other enterprises such as calf production? Can the
marketing of Montana fat cattle and carcass beef be
improved? These and other similar questions regarding
future trends are of concern to feeders contemplating
feed processing.
Recommendations
To the Farmer
Feed costs comprise about 70 percent of the cost of a pound of gain in
livestock feeding.
Therefore a savings in cost of feed or feed processing
can have a great impact on feeding profits.
The study has demonstrated
that total feed costs can be reduced by farm feed processing in many
instances,
Total operating costs are dependent upon the fixed and variable costs.
The fixed costs are primarily dependent upon the initial investment and
• f •• ; ;
!
Ok
^2
the depreciation, interest and taxes calculated therefrom.
The volume
of feed processed per year therefore determines the per ton fixed costs.
The per ton fixed costs and variable costs then becomes the criteria by
which feasibility of farm processing may be judged.
Before deciding whether or not to install on-the-farm processing,
equipment, the farmer must appraise his capital position, expected volume
of feed, his management ability, labor resources, etc.
If the capital
is not available to build the plant without jeopardising other farm
enterprises, the feeder might be better off utilizing the services of
his commercial processor until he gains a better financial position.
If
his future volume of cattle on feed is uncertain, -that is, if his lack
of experience prevents him from making an accurate estimate of future
feeding numbers, he might also do well to consider a delay in plant
construction until such time as a stable feeding rate is established for
the farm unit.
It must be remembered that each farm and feedlot is unique, and the
feasibility of a feed processing mill for a particular operation must be
finally determined b y the operator after due consideration of the factors
listed in the previous section.
After the decision to build has been made, several more factors
should be .considered.
volume requirements,
Plant investment should be kept in line with feed
As the diagrams in Chapter Il and III have pointed
out, -high per ton fixed costs can cause farm feed processing to become
unfeasible at the lower feeding rates,
"Keeping up with the Joneses"
is not a good criteria for the small feeder to use in determining feasi­
bility.
Continuous material flow tends to reduce variable operating costs
as do timers and safety switches.
Plants that do not make use of these
labor saving devices must be quite large to avoid prohibitive per ton
” 73 "
labor costs,
Plants having high labor requirements are iagpractical for
smaller feedlots.
Batch mixers, despite their superior mixing capabilities,
are not well adapted to small automatic mills because of their high labor
requirements, ' If a batch mixer is to be used, a surge bin beneath the
outlet can make the flow nearly continuous.
Steam rolling equipment does not appear to be feasible for the farm
plant unless volume of feed produced is extronely high (1500 tons per
year) and then only if the operator disagrees with the majority of the
nutritional researcher’s findings on the desirability of steam-rolling.
Molasses equipment, can be added to any plant either in the continuous
feed flow or at the load out point.
Since molassified-feed is extremely
difficult to remove from a storage bin it is recommended that the mixed
feed be stored dry and the molasses, he added at the load out point.
This necessitates a much larger molasses blender than would be required
if the molasses were added to the feed flow.
However, the reduced delay
of feeder truck and driver should justify the additional investment of
the larger size blender,
''
-
Plant design must also be matched to the type.of ration that shows
the greatest economic advantage for the area being- considered.
Areas
where barley is the logical basic ingredient should have plants' with rollermills so that the ration may retain the microbial stimulating roughage
effect of the barley hull.
Areas where hay and beet" pulp can make up
a significant portion of the ration can better use a- hammermill to process
bay and/or grain..
If the feeding, rate is low, the feeder will most
likely find a field chopper more feasible for hay processing than an
electric hammermill since large hammermill installations are needed to
grind hay effectively.
Capacities of mills should be calculated to allow for approximately
a 50 percent reserve capacity,
A small capacity would leave inadequate
reserves for emergencies and planning errors while a plant with too much
.I.J
'd: ;
at
ea
capacity will result in higher than optimum fixed costs e
Plants should he designed with expansion possibilities in mind„
Additional stora||e and more milling equipment can be added to most
carefully planned basic designs.
Beginning farm feed processors should
start with a minimum.plant and expand when more feed capacity is needed.
Premix or supplement mixing on the farm seems impractical except
for the very largest feedlots®
Precision mixing equipment is needed for
this task while annual tonnages, over which fixed costs must be spread,
are extremely low.
Purchasing premix components competitively' is very
difficult because of low volume used per year.
Food and Drug Administration
rulings are being imposed on new feed mixers and more controls on micro®
ingredient mixing are likely to be added in the future,
OJhe preceding
factors decrease the feasibility of supplement mixing at the feedlot»
.The Commercial Feed Processors
Increased service at the feed mill can help retain -customers.
Waiting
time at the mill should be reduced as much as possible through farmer
appointments, longer mill operating hours, larger capacity mills and
pre-rolling barley for immediate delivery to the feeders,
Commercial
processors should consider delivery of processed barley to the feedlots
to save farmer's high trucking costsj processor's
trucks should have
much higher per year mileage and therefore lower per mile operating costs,
Sound nutritional advice is also a good public relations service®
New nutritional advances should be brought to the feeders attention.
Delivering-consistent, quality products and service to the farmer can
be an important factor in developing continued customer support,
In some
instances, survey respondents reported receiving barley of lower quality,
than they had bargained for at the elevator.
Some- feeders gave this as
the reason for installing their own processing -plant,
Bvezy effort should
be made by the commercial processor to keep the farmer's faith in his integ­
rity strong.
- 75
Supplements? formulated with the feeder's needs in mind, should he
made available at competitive prices.
Mixing facilities for the addition
of these supplements to the feeder should be available at the processing
plant#
Custom processing rates should be maintained or reduced if possible
by increasing operating efficiency.
Feeders cannot be expected to continue
having their feed commercially processed after a break-even point has been
reached.
If the commercial processors will adopt as many of these recommendations
as are practical for their particular situation, customer satisfaction will
be improved.
For Further Research
The following research projects need to be considered;
1.
A study to determine capital availability for small feedlot
operations» Large feedlots attract outside capital but small
feedlots seem to have difficulty in obtaining proper financing.
2,
A study to determine feed ingredient purchasing policy by the
feeders might aid in marketing surplus barley.
3®
A study to determine the existence and extent of Montana's
CGHparitive economic position with other areas would aid
Montana feeders in planning future expansion.
4® ,Fat cattle marketing research to determine actual movements
and projected markets would also assist feeders®
j
5«
■ ■'
A study to determine the, relative nutritional quality of
farm processed and commercially processed rations would give
vital information on the practicability of. on-the-farm pro­
cessing. •*
76
TABLE XXlXI. FAEM TRACTOR O P E R A T I N G COSTS PER HOUR. eJ
Horse'
Power
Rating
Purchase
Price
Depreciation a/
Fixed
Costs
Per H r . c/
Interest b/
Fuel
Other
Total VarL
Costs
Costs
Costs
Per Hr. Per Hr. d/
Per Hour
Gasoline
20
30
40
50
a/
bj
c/
d/
e/
$280.00
320.00
500.00
600.00
$ 84.00
96.00
150.00
180.00
4,5.00.00
5,500.00
6,500.00
410.00
550.00
650.00
123.00
165.00
195.00
.
$0.45
.52
.81
.98
$0.46
.60
.72
.90
$0.39
.40
.63
.70
.67
.89
1.06
.38
.42
.51
,57
.95
,6 8
1 .1 0
.79
1.30
$0.85
1 .0 0
1,35
1.60
Depreciation calculated on 10 year useful life; no salvage value.
Interest figured at 6 percent of 1/2 of the initial investment,
Hourly fixed costs are based on 800 hours of annual use.
Repair costs based on various California research work.
Table derived from; A. D. Reed, Machinery Costs And.Related Data, Agricultural Extension
Service,'University of California, Davis, California
"
APPENDIX A
Diesel
30
40
50
$2,800.00
3,200.00
5,000.00
6 ,0 0 0 .0 0
APPENDIX B
TOTAL PER MILE TRUCK COSTS
In estimating average per mile truck costs it must be remembered
that Montana roads and climatic conditions result in excessively high
investment and operating costs®
The operating costs are based on the commonly used Ig- to 2 ton truck
delivered to Bozeman and equipped as followss '
Medium size six cylinder engine
Heavy duty rear axle
8 .2 5 x 2 0 , 12 ply tires
Spare tire and wheel
Standard cab with heater
Subtotal
14* grain bed
Farm quality hydraulic hoist
Total
$4,200.00
6 0 0 .0 0
6oo.oo,
$5,400.00 a/
An eight year useful life was set with trade in or increased repair
expected at that time.
A salvage or trade in value of $600.00 has been
allowed®
Per Year Operating Costs
Depreciation
$4,800.00 |
Interest
$5,400.00 x
Taxes, license, and insurance
Total annual fixed costs
a/
8
= $
6 0 0 .0 0
1 8 9 .0 0
=
2 5 0 .0 0
$ 1 , 0 3 9 .0 0
Less share to be added to "waiting" time
to make more realistic comparison
between long and short hauls.
3 7 5 °OQ
Total fixed costs to be used in per
mile costs.
$664.00
Based on interviews with truck dealers.
en
rJ^ 6»
APPMDn B
Upkeep and tires
(Cont6)
Gasoline — 750 gallons x 36 cents
Oil and lubrication
2 7 0 .0 0
2 7 0 .0 0
5 0 .OO
Total annual fixed & variable
$1,254.00
An annual mileage of 6,000 per-year was assumed.
The annual
operating costs, divided b y 6 ,0 0 0 miles per year gives a 2 0 »9 ^ per
mile operating cost.
A 2 1^ per mile rate was therefore used in the
analysis of Chapter II and Chapter III.
Variations in road type and loaded vs. empty were given con­
sideration b y using t h e .following rates while maintaining an average
rate of 21 ^ per mile.
Paved loaded
Paved empty
Gravelled loaded
Gravelled empty
21^
13p
29^
2
/
80
APPENDIX C
MODEL PLANT COST BREAKDOWN
Qoantity
Description
Price
I
Hammermill with motor frame, coupling,, "bale "buster,
75 &p 1,800 RFM motor
$3,133,00
I
9 m flanged sqmre-to-round connector
I
9 ’' flanged magnetic separator
36 f t ,
8 " flanged blow pipe
31.00
435.00
97.20.
I
8 " flanged elbow
104,50
I
Cyclone dust collector
478.00
4o f t
Hay conveyor with §• hp, varidrive motor
36 f t ,
6 " mill collector auger with I hp, $ 0 0 EFM motor
.-2
Percentage augers with ^ hp, varidrive motors
1.294.00
7 0 8 .0 0
1 .2 5 0 .0 0
I
2 ” submersable pump with 2 hp, motor
7 6 5 .0 0
I
l|r" molasses meter and filter
245.00
I
Molasses blender with 3 hp, 1,200 RPM motor
8 9 5 .0 0
I
Steel mixer overhead tower
445.00
I
Set molasses plumbing
1
6 ,0 0 0 gallon molasses tank (3 6 tons)
2
25 tons, 60 ° center draw percentage tanks
3
"Steel auger supports
95.00
8 9 5 .00
1 .2 8 3 .0 0
1 0 5 .0 0
- 81
AEPEttDIX C
Quantity
Description
Leg, 6 5 ’ .discharge height with 6 way distributor,
ladder, platform., 2 hp» 1,800 EBl motor ,
I
60 ft.
6 ft.
6 " flanged elevator spouting
Flanged, flexible steel elevator spouting
Price
1 ,7 1 5 .0 0
150.00
1 8 .0 0
Steel dump pit hopper with control gate
6 2 5 .0 0
I
Steel drive over frame
390.00
I.
Vibratory premix feeder
475.00
I
Steel building with doors, windows and skylight
panels
I
„
1,624.50
89.OO
I
Steel cover for mill blow out pit
I
Steel elevator dump pit cover
20 0 .0 0
I
3 0 " collecting auger to molasses blender
6 8 0 .0 0
I
Motor control center
Parts for control center
'I
2 , 285.25
59.00
I
Control console
425.00
I
Over-under controller
1 0 0 .0 0
2
Reversing switches
I
5 KVA Transformer .
I
Load center and circuit breakers
46.00
■1 4 5 .0 0
52.00
' 3 0 .0 0
I
■
Molasses pipe.heater
I
'
Molasses pipe thermostat
15.00
Stop-start station
1 9 .0 0
I
82
—
•=
APPENDIX C
Quantity
■ 6
3
Description
Price
Dust tight lights
120.00
3 0 .0 0
Dust tight outlets
Wire, conduit, misCo
322.55
Loading at factory
1 75-00
Elevator guyposts, guywlre, etc.
4 0 0 .0 0
Engineering and planning
443.00
Freight
80 0 .0 0
Add for totally enclosed motors
9 1 1 .0 0
580 hours of labor to install @ $2 .5 0 per hour
91 hours electrician labor
Concrete —
I
976 ft.
Platform scales for
TOTAL
@
$4.00 per hour
2 @ $1.00
feeder truck driveway
1 .4 5 0 .0 0
364.00
976.00
2 .3 6 0 .0 0
$29 , 753.00
-83 -
L__
Dotted lines indicate expansion
possibilities.
Figure 10.
Model plant floor plan
^
Figure 11.
Material flow diagram for model plant.
Not to scale.
«* 85 °
LEGEHD FOR MODEL FLAZT
Present Installation
I.
Haydrag with g hp, varidrive motor
2»
Full circle hammermill and magnetic separator
3.
Motor 75 hp«
4.
8 " blow pipe
5«
Molasses tank; 6,000 gallon
6 » Molasses pump
7»
Molasses blender with 3 h p e motor - over driveway
8.
Cyclone dust collector
9»
Molasses meter arid valve
IOe
Electrical control panel
Il 0
2 0 ' x 2 0 ' x 1 2 * building and 6 " concrete slab
12,
6 " x 3 6 * Collector.-auger with I hp» motor
13=
Vibratory premix feeder
l4e
4" percentage auger with
15«
Center draw percentage tank
16e
6 " reinforced concrete slab
17 0
Dump pit, 6 5 * leg and 2 way distributor
18»
6 ” Distributor spouting
-
hp« varidrive motor
1 9 . A u g e r .to molasses blender
20.
Truck scale in driveway
Future Expansion
-■
•
50, ■Premix mixer-and auger
51»
Silage dump pit and elevator
52.
Roller mill
53« .,Storagej fill with leg
54.
Percentage bins
TABLE XXIV.
AVERAGE FIXED, VARIABLE AND TOTAL COSTS FOR MODELS IN SIZE CATEGORY I « 999.
Annual Feed
Production
In.Tons
$15-. 99
7.99
5.33
3.99
2.05
2.05
2.05
2.05
3.18
2.05
2.65
2.05
2.28
2.05
1.99
1.77
1.60
2.05
2.05
'
2.05
Semi-automatic
Electric Mill
AFC . . AVC
ATC
$18.04 $7.10
10.04 3.55
7.38 2.37
6.04 1.78
5.23 1.42
4.70 1.18
4.33 1.01
4.04
.89
.79
3 .82
.71
3.65
$0.32
.32
.32
.32
.32
.32
.32
.32
.32
.32
$7.42
3.87
2 .69
2.10
1.74
1.50
1.33
1.21
1.11
1.03
Tractor Powered
Mill and Mixer
AFC
AVC
ATC
$3.50
1.75
1.17
$2.20
.88
2.20
.70
2.20
.
2.20
2.20
.58
2.20
.50
.44
.39
.35 '■
2.20
2.20
2.20
2.20
$5.70
3.95
3.37
3.08
2.90
2.78
2.70
2.64
2.59
2.55
APPENDIX D
100
200
300
40.0
500
600
700
800
900
1000
'
Survey Average .
AFC
ATC
AVC
TABLE XXV.
Annual. Feed
Production
In
Tons
750
900
1200
"
'’ Survey Average. . ...
AFC
AVC - ATC
$2.51
2.09
1.57
1.25
1.04
.89
. .78
.70
.63
$1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
$3.91
3.49
. 2.97
2.65
2.44
2.29
2.18
2 .1 0
2.03
'
S emir automat i-c
Electric MillATC
AFC
AVG
$1.64
1.36
1 .0 2
.82
.6 8
.58
.51
.45
.41
$0.30 $1.94
1 .6 6
.30
.30
1.32
.30
1 .1 2
.98
.30
.30
.88
.30'
.81
.30
.15
.30
.71
~ Semi-automatic Mill
With Molasses
AFC ■ AVC
ATC
$2.39
1.98
1.49
1.19
.99
.85
.74
.66
.60
$0.40
.40
.40
.40
.40
.40
.40
.40
.40
$2.79
2.38
1.89
1.59
1.39
1.25
1.14
1.06
1 .0 0
APPENDIX D
(Cont)
1500
1800
'210.0
2400
2700
3000
AVERAGE FIXED, VARIABLE AND TOTAL COSTS FOR MODELS IN SIZE CATEGORY 1,000 - 1,999
TABLE XXVI.
7
Annual Feed
Production
In Tons
600
900
1200
1500
3000
4500
6000
7500
9000
10,500
AVERAGE FIXED, VARIABLE AMD TOTAL COSTS FOR MODELS IN SIZE CATEGORY 2,000
AND OVER.
"
Survey Average
AFC
$5.41
3.60
2.70
2.16
1.08
.72
.54
.43
.36
.36
- AVC
ATC
Hammermill Plant
(Hay)
AFC
ATC
AVC
$0.82 $6.23 $5.78 $0.95 $6.734.80
.82 4.42
.95
3.85
3.84
3.52
2.48
.95
.82
.82 2.98
2.31
.95 . 3.26
2.11
1.16
.82 1.90
.95
1.72
1.54
.77
.95
.82
1.53:
.82 1 . 3 6
.58
.95
1.41
1.25 . .46
.95
.82
1.34
1.18
.39
.95
.82
1.28
.82 1.13
.33
.95
Roller-mill Plant.
AFC
AVC
$5.58
3.72
2.79
2.23
1.12
.74
.56
$0.30
.30
.30
.30
.30
.30
.30
.30
.30
.30
.45
.37
.32
ATC
$5.88
4.02
3.09
2.53
1.42
1.04
.86
.75
.67
.62
I
89
LITERATURE CONSULTED
American. Feed Manufacturers Association, Factors to Consider in Manufac­
turing Feed on the Farm , Chicago, Illinois; American Feed Manufacturers
Association, i96S® .
Economic Research Service, 1962 Grain and Feed Statistics°~Supplement to
Statistical Bulletin E o a 159.? United States Department of Agriculture,
Washington, D® C=: Government Printing Office, 1 9 6 3 «
Eubanks, Kenneth, "The Feed Manufacturing Industry in Montana", Unpublished
thesis, Montana State College,. Bozeman, Montana, 1 9 6 2 »
The Farm Index, Feedlots, Beef for America, Economics Research Service,
United States Department of Agriculture, Washington, D= Cog Government
Printing Office, July, 1 9 6 3 =
French, Charles E= , Labor Efficiency "in Grinding and Mixing Feeds in
Indiana Grain E l e v a t o r s Agricultural Experiment Station, Purdue 'ir'
University, Lafayette, Indiana, Bulletin 639; 1956®
■ Glas co, Gerald Dean, "An Economic Analysis of Feed Processing in Hog
Production”, Unpublished thesis. The University of Illinois, Urbana,
Illinois, 1958=
Hale, W= H=, "Utilization of Barley and Milo for Fattening Steers",.
Feedstuffs, May 11, 1 9 6 3 ®
McCqy, John H=, Some Economic Aspects of Commercial Cattle Feeding in
Kansas, Agricultural Experiment Station, Kansas State University^
Manhattan, Kansas, i 9 6 0 ®
McDowell, James and Willard Williams, Feed Use in Oklahoma Feedlots,
Oklahoma State University, Stillwater, Oklaho^, Bulletin P«433, 1962 =
Morrison, Frank B», Feeds and Feeding, 22nd Edition, Ithaca, Hew York,
The Morrison Publishing Company, 1957®
Morrison, S= H=, "Estimated Feed Value Table of Various Ingredients for
Fattening Cattle and Sheep", Feedlot, November, 1962®
Reed,. A= D=, Machinery Cost's and Related Data, Agricultural Extension
Service, University of California^ Davis, California®
-
90
-
'
Roy, Oakley Mo, "On-The-Farm Milling", Paper presented at the Feed Manu­
facturing School, Kansas City, Missouri, September 2 3 , i 9 6 0 *
Statistical Reporting Service, Montana Agricultural Statistics, Volo H o
Montana Department of Agriculture cooperating with United States
Department of Agriculture, Helena, Montana, December, 1 9 6 2 *
Steele, Robert GoS*, and James H. Torrie, Principles,and Procedures of
Statistics, Hew York: McGraw-Hill Book Company, Inc*, I960*
MONTANA STATE UNIVERSITY LIBRARIES
762 100 3551 4
I
4
I
NS 78
DS64
cop.2
Degn, Arne.
Economic opportunities for
on-the-farm feed processing...
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