Farm Gate Values

[IluvABbeef]

...For Purchased Calves versus Home-Grown Calves


Introduction

Farm gate value is what a farm-raised calf is worth going into a feedlot after all selling costs have been estimated and deducted from the market price. In other words, it is the estimated cost of placing a farm-raised calf in an on-farm feedlot. It is important to know the farm gate value when calculating breakeven feeder prices and deciding whether to feed the calves further or sell the calves.

Home-raised calves should have selling costs deducted from their market price to get their net value on the farm or at the farm gate. By contrast the net value of purchased calves is determined by adding the buying costs to the market price. Because of these differences, home-raised calves and purchased calves have different values going into the on-farm feedlot even though both would sell for the same market price. That difference in value is important when comparing the breakeven price of purchased calves and home-raised calves in the same feedlot. This module outlines how to calculate farm gate values for home-raised calves and compare this to purchased calves.

Farm Gate Value of Home-Raised Calves

The calculations that follow estimate the farm gate value for a home-raised calf sold through an auction market. To determine the actual value of a home-raised calf, selling costs are deducted from the market price. In this calculation it is easier to view the farm feedlot as a separate enterprise from the cow-calf operation.

$/head
Market price
Shrunk weight x auction market price (475 lb. X $1.45/lb.) $688.75
Less estimated selling costs:
Auction Commission charge 18.50
Alberta Beef Producers Check-Off 3.00
Brand inspection 1.00
Transit insurance (0.22%) 0.0022 x $688.75 1.52
Trucking from farm to auction (40 km.) 3.50
Farm gate value of home-raised calf $ 661.23

The $661.23 is the net dollars the cow-calf enterprise would have received if the calf was actually sold. This represents the actual market value of a home-raised calf.

Farm Gate Value of Purchased Calves

The following calculations estimate the farm gate value of a calf purchased at an auction market. In this instance buying costs (cost of locating, buying and delivery) are added to the market price to determine the total cost of buying the calf at the auction market before placing it in a feedlot.

Market price:$/head
Shrunk weight X auction market price
475 lb. X $1.45/lb = $688.75
Add buying costs: $10.00
Trucking from market to farm (40 km) $3.50
Farm gate value of purchased calf $702.25

The farm gate value of the home-raised calf is $41.02/head lower than the value of the purchased calf in this example. The lower the cost of an animal placed into a feedlot the greater the profit potential.

Producers should do breakevens before they decide to keep calves or buy calves for the home feedlot. Use the estimated farm gate value as the calf purchase cost or feeder purchased cost in a breakeven analysis. The farm gate value of a home-raised calf is used for comparing returns from different feedlot alternatives.

 

[icandoit]

Iluv ya iluvabeef but who wrote this, some ecnomist or someone?

I think it's just a way to sell something like scales,feed and some kind of new formula that the economist or theroist can come up with. I'm sorry , but I sell my calves at the market price. If it's good, great, if not , I still have the option of not selling. I am not that hard up for money or is my operation losing money. This article, either written by woman or man sounds like they are going for thier PHD and need aone of them thesus dealies.....blah,blah,blah ba,blah


Dick

 

[IluvABbeef]

here's the website ICan:

http://www1.agric.gov.ab.ca/$department ... l/sis10400

Ours are sold by market price too, but I thought this was kinda interesting since...well, it seemed kinda interesting.

 

[BrianL]

... and I thought this was going to be a thread about gates!

 

[poorboy]

I was wondering how much they got for the one they stole from me.

 

[Sir Loin]

Re:

I thought this was kinda interesting since...well, it seemed kinda interesting.

True, it is interesting.
But in the US you could go to jail for Income tax evasion for what is being suggested by Diane McCann-Hiltz.

IMO: Farm Gate Value of Home-Raised Calves is
shrunk weight x auction market price (475 lb. X $1.45/lb.) $688.75
Unless you actually sold and bought back your own calves.
And
Farm Gate Value of Purchased Calves equals $702.25 (plus labor costs that were not mentioned)

SL