2013 Beef Production
SPA Lab
Denise Schwab
ISU Extension Beef Program Specialist
www.iowabeefcenter.org
Enterprise
Analysis
What is SPA?
• Standardized Performance Analysis
• Developed by National Cattleman’s
Association in cooperation with USDA
Extension Service.
• To assist producers with analyzing herd
economic and production records.
So we all calculate records the same way
What Can Standardized
Performance Analysis (SPA) Do?
• Know
your OWN economic &
reproductive productivity
• Analyze your operation by enterprise
• Compare to benchmarks!
SPA can keep you in business!!
The Value of Information
Producers on the program for 5 years have
reduced annual production costs by nearly
$175 per cow.
Total Cost per Cow
Illinois
What Records are Needed?
•
•
•
•
•
•
Balance Sheet
• Pasture/Hay acreage
and rental values
Net Worth Statement
Tax Forms (Schedule F) • Breeding stock deaths,
Cattle Inventories (Jan. 1) sales, and purchases
• Calf weaning or sales
Feed Records
weights and prices
Pasture In/Out Dates
• Hay Produced (Bale
number & average wt.)
Financial Analysis
Evaluate assets at their cost or depreciated value (book value)
Fiscal year being evaluated
Increased
Herd 30%
Silage
Harvest
Equip
Water
Well
Cross
Fence
Bull
Purchase
Preg
Test
2010
Land
Inheritance
Tractor
Purchase
Built New
Silo
Land
Purchase
Bull
Baler
Turnout
Purchase
Cumulative affect of management decisions on
current fiscal year.
Dunn, BIF 2002
Economic Analysis
Evaluate assets at their current market value.
Dunn, BIF 2002
Capital Intensive Business!!!
Assets valued at
cost or depreciated
value
Financial
Breeding Stock
$604
Equipment & Structures
$152
Real Estate
$677
Current Assets
$133
TOTAL
$1566
Investment in the Business on a per Cow Basis – ISU SPA
Assets valued at
market value or what
they could be sold for
Economic Management
efficiency
$668
$287
Exit
$969
strategy
$182
$2106
Financial vs. Economic Cost
Example
Pasture Land – Example 1
– 40 acres being purchased with an $800/acre debt at 8% contract,
land taxes of $12/acre, fertilized at $10/acre, depreciation on
improvements at $3/acre and a current rental value of $35/acre
Financial
Depr Land cost
Ins
Taxes
Repairs
Tax
Operating
Int
Deprec.
Total
Economic
$64
Land cost
$35
$12
Taxes
$ 0
$10
Operating
$10
$ 3
Deprec.
$ 0
$89
Total
$45
Financial vs. Economic Cost
Example
Pasture Land – Example 2
– 40 acres purchased 20 years ago with no debt, land taxes of
$12/acre, fertilized at $10/acre, all improvements are
depreciated out and a current rental value of $35/acre
Financial
Economic
Land cost
$ 0
Land cost
$35
Taxes
$12
Taxes
$ 0
Operating
$10
Operating
$10
Deprec.
$ 0
Deprec.
$ 0
Total
$22
Total
$45
IRM/SPA Production Cost Areas
• Feed
– Stored (purchased or raised)
– Grazed (owned or leased)
• Operating
• Depreciation
– Cattle
– Equipment
• Labor
– Hired
– Family (Only in Economic costs)
• Interest (allocated to cattle)
What Drives Profit?
Iowa BCBR Data
Correlation to RLM
Herd Size
.04
Calf weaning weight
% Calf crop weaned
Calf weight sold/cow
Weight produced/cow
.28
.10
.23
.18
Cull breeding weight sold/cow
Cattle value sold/cow
Calf price
Cull breeding stock price
-.06
.14
.01
.04
Strohbehn, 1995 ISU Beef Research Report
What Drives Profit?
Correlation to RLM
Feed cost / cow
Operating cost / cow
Depr, tax & insur / cow
Total capital charge / cow
Total cost / cow
-.41
-.25
-.30
-.27
-.47
Feed cost / cwt
Operating cost / cwt
Depr, tax & insur / cwt
Total capital charge / cwt
Total cost / cwt
-.49
-.42
-.40
-.41
-.61
Strohbehn, 1995 ISU Beef Research Report
Variation in Return to Labor & Management
Dependent Variable R2
Feed Cost
.567
Depreciation Cost .086
Operating Cost
.049
Calf weight
.046
Capital charge
.024
Calf price
.027
Weaning percentage.017
Herd size
.007
Total
.823
-8 financial measures explain
over 82% of farm-to-farm
variation
-Cost factors were far more
influential than production or
marketing factors.
Bottom line: Feed cost is the
most important factor in
determining profit!
1996-99: 225 herd observations Iowa and Illinois SPA records
Biggest Value of SPA
Return and Cost Summary for Cow Herd
2003
2004
2005
2006
2007
Financial Financial Financial Financial Financial
Costs for Cow-Calf Enterprises
January 1 Number of Cows in Herd
249
266
263
261
250
a. Pasture Cost per Cow
$48.83
$53.43
$57.33
$43.97
$42.85
b. Crop Residues per Cow
$1.81
$1.69
$1.52
$1.23
$2.20
c. Harvested Forages per Cow
$150.72
$44.21
$70.00
$55.52
$32.34
d. Non-Purchased Raised Feed Fed per Cow
$41.18
$67.86
$82.43
$42.18
$81.86
e. Purchased Feed per Cow
$21.17
$32.49
$10.34
$21.01
$18.51
f. Total Feed Cost per Cow
$263.70 $199.68 $221.62 $163.91 $177.76
a. Operating Cost per Cow
$76.78
$61.96
$94.84 $128.02 $101.74
b. Vet Med Cost per Cow
$16.77
$14.04
$11.69
$17.61
$8.88
Depreciation Cost per Cow
$52.29
$27.82
$20.67
$22.33
$14.26
Capital Charge per Cow
$0.00
$0.00
$0.00
$0.00
$7.72
Hired Labor Cost per Cow
$59.38
$22.26
$20.85
$24.92
$17.88
Family & Operator Labor Charge per Cow
xxxxxxx
xxxxxxx
xxxxxxx
xxxxxxx
xxxxxxx
Total Cost per Cow in Herd, January 1
$452.16 $311.72 $357.98 $339.18 $319.35
Biggest Value of SPA
2003
Reproduction & Production Measures
Pregnancy Percentage
Pregnancy Loss Percentage
Calving Percentage
Calf Death Loss
Calf Crop or Weaning Percentage
Female Replacement Rate
Calving Distribution:
Beginning Calving Date:
Calves Born During 1st 21 Days
Calves Born During 1st 42 Days
Calves Born During 1st 63 Days
Calves Born After 1st 63 Days
2004
2005
2006
2007
91.6%
4.1%
87.5%
0.0%
87.5%
19.6%
94.1%
3.0%
91.1%
0.0%
91.1%
15.3%
92.9%
8.5%
84.5%
0.0%
84.5%
15.3%
93.8%
10.7%
83.1%
0.0%
83.1%
16.1%
92.9%
9.4%
83.5%
0.0%
83.5%
18.5%
03/06/03
48.7%
82.4%
93.3%
6.7%
03/12/04
44.3%
76.5%
91.4%
8.6%
03/14/05
46.0%
75.7%
99.2%
0.8%
03/03/06 03/20/07
21.2%
43.0%
57.6%
78.3%
84.0%
97.1%
16.0%
2.9%
Three Producers
• Son/Father
• Young Producer
• Established Producer
Today’s Task: Consultant
•
•
•
•
Strengths
Weaknesses
Oreos
Recommendations
Assignment
• Paper comparing the strengths and
weaknesses of the three operations
• Include recommendations for them to
improve their operation
Thank You
Are there any
questions?
www.iowabeefcenter.org
Denise Schwab
Benton County Extension Office
501 First Ave
Vinton, IA 52349
Phone 319-472-4739
email: dschwab@iastate.edu