Beef Market Advisor

Friday, April 18, 2003

Economic Analysis Component Of Proposed Research Project

(The Full Project Being Coordinated By Dr. Lee Manske, Dickinson Research & Extension Center, North Dakota State University)

The economics analysis of this project will treat Strategy A (traditional practices) as the economic control and Strategies B & C will be compared directly to the control. The economic difference between the Control and Strategies B & C can then be attributed to that strategy.

Two economic questions will be specifically addressed in the economic component of this project. First, can economic profitability of a typical beef cow herd be increased by changing to one of the two 12-month pasture-forage systems being studied; and , if so, by how much? Second, will the net-cash-flow from a typical beef cow herd go up or down under these alternative 12-month grazing systems?

The economic analysis will be conducted in two phases. First, an economic analysis of each of the three management strategies will be applied to a typical 4-state beef cow herd based on current market prices and current capital investments. This analysis will directly integrate the detailed production factors researched under this project coupled with current economic prices and capital investments.

The second economic analysis will simulate the long-run economic potential impact of each 12-month livestock pasture-forage strategy over a complete cattle cycle. A complete cattle cycle will be used to establish the potential accumulated economic returns during the high price and low price phases of a typical cattle cycle. In addition, an analysis will be made to determine if the starting date for implementing a 12-month livestock pasture-forage strategy is sensitive to the phase of the cattle cycle.

All economic analyses will be reported in terms of the ranch operator's earned-net-returns and net-cash-flow generated by the beef cow profit center and the forage profit center. This profit center identification permits identification of where the profits and net-cash-flow are being generated ? in the cow herd or in the forage production.

North Dakota's Integrated Resource Management Financial And Reproductive Management System's (IRM-FARMS) model will be used to analyze the whole herd's economic profitability and net cash flow generated by each 12-month livestock pasture-forage management system being evaluated. A set of external spreadsheets will be constructed to convert the detailed research production data into the proper economic format for specific entry into the IRM-FARMS model.

posted by Dr. Harlan Hughes 6:02 PM [edit]

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