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Ontario Beef Cow Calf Summary - 2006

Author: John Molenhuis, Cost of Production and Program Lead/OMAFRA
Creation Date: 25 April 2008
Last Reviewed: 27 May 2008

Average of 38 Beef Cow Calf Farms

High 12 farms by per cow enterprise income
Low 12 farms by per cow enterprise income

Table of Contents

Formulas Used to Calculate Resource Performance

  1. Net Farm Income = Total Farm Revenue - Total Farm Expenses. It is the Return to the Unpaid Family Labour, Operators Labour and Management, and Equity Capital Invested.
  2. Owner's Equity = Total Farm Assets - Total Liabilities
  3. % equity = (Equity ÷ Total Farm Assets) x 100
  4. Return on Owner's Equity and Unpaid Labour = (Net Farm Income ÷ Owner's Equity) x 100
  5. Return on Owner's Assets and Unpaid Labour = ((Net Farm Income + Interest Paid) ÷ Total Farm Assets) x 100
  6. Return on Investment ($36,000/Person) = ((Net Farm Income + Int Pd + Wages & Salaries - ($36,000 x Person Equiv)) ÷ Total Farm Assets) x 100
  7. Return to Owner's Labour (5% Investment Rate) = Net Farm Income + Interest Paid - (.05 x Total Farm Assets)
  8. Value of Farm Production = Total Farm Revenue - (Lvstk + Feed Purchased)
  9. Cost/$1.00 (VFP) = (Total Expenses - Depreciation - Feed Purchased - Livestock Purchased) ÷ Value of Farm Production
  10. Capital Turnover (VFP) = (Total Farm Assets ÷ Value of Farm Production) = Years
  11. Cost Control = (Net Farm Income ÷ Total Farm Revenue) x 100
  12. Working Capital = Current Assets - Current Liabilities
  13. Current Ratio = (Current Assets ÷ Current Liabilities) : 1
  14. Debt Structure = (Current Liabilities ÷ Total Liabilities) x 100
  15. Debt to Asset Ratio = (Total Liabilities ÷ Total Farm Assets) : 1
  16. Debt to Equity Ratio = (Total Liabilities ÷ Owners Equity) : 1

Notes

  • Additional information on the various performance criteria present may be found in the OMAFRA publication #379 - "Money Matters".
  • Re Formula 4 and 5:
    Imputed value for operator person equivalents was not deducted. Hence, these formulas reflect a return to labour and/or investment, whereas in formula 6 an allowance for labour was made.
  • Re Formula 6: Return on Investment
    The portion of this formula that reads "Wages and Salaries minus ($36,000 x Person Equivalents)" is used to allow both sole proprietorships (where usually no operator wages are paid) and corporations (where operator labour may be included as wages paid) to be included. The $36,000 is simply a standard figure. Other amounts could be substituted by the reader as desired.
  • Re Formula 7: Labour Income
    In calculating labour income, a figure of 5% return on total assets was used which permits year-to-year comparisons of management information.
  • Debt Servicing Capacity
    The calculation of the average amount available for debt servicing is provided for each commodity group. (Debt Servicing Capacity is more fully explained in "Money Matters"). In this calculation depreciation was used as a proxy for "Reserve for Asset Acquisition".

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Definitions

Farm Selection

The low one third and the average and the high one-third of farms were selected on the basis of net enterprise income on a per cow basis.

Calculation of Management Factors

Person Equivalents = an approximation of the number of full-time people actively participating in the operation of the farm.

Inventory Valuation and Transfer Value of Home-Grown Feed

The unit values shown below are suggested values for calculating beginning and ending inventories. Transfer values were used for estimating costs for home-grown feed.

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Suggested Feed Inventory and Transfer Values 2006

Crop Beginning Transfer Ending
$ per tonne $ per bushel $per tonne $ per bushel $ per tonne $ per bushel
Oats 120 1.85 128 1.97 135 2.08
Barley 120 2.61 128 2.79 135 2.94
Soybeans 240 6.53 250 6.80 260 7.08
Shelled Corn 110 2.79 130 3.30 150 3.81
Mixed Grains 110 2.00 113 2.05 115 2.09
Feed Wheat 144 3.92 165 4.49 185 5.92
Hay 75   75   75  
Straw 90   90   90  
Corn Silage 30   33   35  
Haylage 55   55   55  
Grainlage 30   33   35  
Pasture     60      
Rough Pasture    

25

      

 

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Whole Farm Income Statement

 

Revenue

  Low 12 Farms Avg 38 Farms High 12 Farms
Market Livestock
7,506
52,293
39,226
Feeder Livestock
30,148
45,291
59,257
Breeding Stock
1,566
1,983
2,979
Cull Stock
3,259
5,535
7,194
Other Livestock
5,173
4,383
6,715
Crop Sales
23,730
27,974
32,525
Custom Work
6,777
4,402
4,413
Other Sales
12,197
31,932
19,182
Total Cash Revenue
$90,356
$173,793
$171,491
Change in Accounts Receivable
45
-283
936
Changes in Inventory
13,649
4,095
14,956
Total Farm Revenue
$104,050
$177,605
$187,383

 

Expenses

Variable Expenses Low 12 Farms Avg 38 Farms High 12 Farms
Livestock - Purchased Livestock
6,926
32,807
13,473
Pur. Feed-Conc., Grain & Forage
6,342
20,480
15,904
Animal Health & Breeding
3,262
5,439
5,141
Other (lvsk Stabztn, Barn Sppls)
917
1,486
2,951
Crop Inputs - Seed & Plants
4,628
5,012
5,963
Fertilizer & Lime
8,534
11,365
13,687
Pesticides & Other Chemicals
1,524
2,083
1,796
Containers and Twine
1,222
1,512
1,759
Other (Lvsk Stabztn, Barn Sppls)
1,348
1,256
1,539
Marketing & Transportation Costs
2,051
3,456
3,176
Custom Work, Equipment Rent
4,756
5,900
6,393
Hired Labour
1,911
7,699
5,331
Machinery & Equipment - Fuel & Oil
5,666
8,929
10,453
Machinery & Equipment - Repairs
6,503
10,167
10,027
Motor Vehicle Expenses
2,819
2,621
2,535
Building, Fence Repairs
4,150
4,020
3,777
Heating Fuel
271
114
67
Electricity & Telephone
2,841
3,812
3,016
Accounting, Office Expenses
1,088
1,527
2,056
Interest (Operating)
3,987
2,673
1,282
Other Cash Operating Expenses
4,601
6,553
9,131
Change in Payables
-1,247
-405
840
Total Variable Expenses
$74,100
$138,506
$120,297
Contribution Margin
$29,950
$39,099
$67,086

 

Fixed Expenses

  Low 12 Farms Avg 38 Farms High 12 Farms
Property Taxes, Fire & Liab. Ins.
6,281
7,004
6,712
Lease & Rent Payments
2,616
4,584
4,272
Interest (Term)
5,653
4,016
3,976
Change in Interest Arrears
0
0
0
Depreciation
25,984
26,020
28,009
Total Fixed expenses
40,534
41,624
42,969
Total Expenses
114,634
180,130
163,266
- Less Personal Share of Expenses
0
-208
-618
Total Farm Expenses
$114,634
$179,922
$162,648
Net Farm Income
-$10,584
-$2,317
$24,735

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Beef Enterprise Report (per cow basis)

Revenue

  Low 12 Farms Avg 38 Farms High 12 Farms
Market Livestock
$0.00
$0.00
$0.00
Feeder Livestock
526.60
583.80
626.56
Breeding Livestock
25.76
20.83
22.12
Cull Stock
53.60
58.05
53.41
Livestock Stabilization
0.00
0.00
0.00
Other Livestock Enterprise Sales
7.22
2.03
0.04
- Livestock Purchased
-77.99
-101.17
-100.02
+ Inventory Change
21.96
51.66
73.47
+ Change in Receivable
-1.17
-1.51
0.00
Enterprise Production
$555.97
$613.69
$675.58

 

Variable Expenses

Livestock Expenses Low 12 Farms Avg 38 Farms High 12 Farms
Purchased feed & grain
37.42
67.11
64.74
Purchased forages
31.83
28.52
35.68
Home-grown grains transferred
20.94
10.46
10.88
Home-grown forages transferred
447.88
366.41
297.97
Total Feed Cost
$538.06
$472.50
$409.28
Animal Health & Breeding
52.45
37.59
34.71
Other (Stabilization, Supplies)
11.71
7.92
7.95
Marketing, Transportation
25.10
19.23
17.01
Custom Work, Equipment Rent
8.37
4.17
4.28
Hired Labour
8.83
19.23
15.55
Machinery & Equipment - Fuel & Oil
34.18
25.37
20.09
Machinery & Equipment - Repair
38.42
25.88
18.26
Motor Vehicle Expenses
24.49
10.40
6.34
Building, Fence Repairs
47.83
25.20
13.48
Heating Fuel
1.51
0.45
0.25
Electricity & Telephone
22.15
13.73
10.56
Accounting, Office Expenses
11.61
7.80
6.45
Interest - Operating
25.51
8.43
4.86
Other Cash Variable Expenses
39.39
20.45
18.20
Change in Payables
-14.19
-2.09
0.00
Total Variable Expenses
$875.43
$696.28
$587.27
Contribution Margin
-$319.46
-$82.59
$88.32

 

Fixed Expenses

  Low 12 Farms Avg 38 Farms High 12 Farms
Property Taxes, Fire & Liab. Ins
44.88
23.71
14.43
Lease & Rent Payments
8.78
5.53
5.42
Interest - Term
45.05
12.55
4.32
Depreciation
121.78
68.78
45.70
Total Field Expenses
220.49
110.57
69.87
Total Enterprise Expenses
$1,095.93
$806.85
$657.14
Net Enterprise Income
-$539.96
-$193.16
$18.44

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Beef Enterprise Report (per calf weaned basis)

  Low 12 Farms Avg 38 Farms High 12 Farms
Market Livestock
$0.00
$0.00
$0.00
Feeder Livestock
597.33
639.56
684.49
Breeding Livestock
29.22
22.82
24.16
Cull Stock
60.80
63.59
58.35
Livestock Stabilization
0.00
0.00
0.00
Other Livestock Enterprise Sales
8.19
2.22
0.05
- Livestock Purchased
-88.47
-110.83
-109.27
+ Inventory Change
24.91
56.59
80.27
+ Change in Receivables
-1.32
-1.66
0.00
Enterprise Production
$630.65
$672.30
$738.05

 

Livestock Expenses Low 12 Farms Avg 38 Farms High 12 Farms
Purchased feed & grain
42.44
73.52

70.73
Purchased forages
36.10
31.24
38.98
Home-grown grains transferred
23.76
11.46
11.89
Home-grown forages transferred
508.04
401.40
325.52
Total Feed Cost
$610.34
$517.63
$447.12
Animal Health & Breeding
59.50
41.19
37.92
Other (Stabilization, Supplies)
13.28
8.68
8.69
Marketing, Transportation
28.47
21.07
18.58
Custom Work, Equipment Rent
9.50
4.57
4.67
Hired Labour
10.02
21.07
16.99
Machinery & Equipment - Fuel & Oil
38.77
27.79
21.95
Machinery & Equipment - Repair
43.58
28.35
19.95
Motor Vehicle Expenses
27.78
11.39
6.93
Building, Fence Repairs
54.25
27.61
14.73
Heating Fuel
1.72
0.49
0.28
Electricity & Telephone
25.13
15.04
11.53
Accounting, Office Expenses
13.17
8.55
7.05
Interest - Operating
28.94
9.24
5.30
Other Cash Variable Expenses
44.68
22.41
19.89
Change in Payables
-16.10
-2.29
0.00
Total Variable Expenses
$993.03
$762.78
$641.56
Contribution Margin
-$362.38
-$90.48
96.48

 

  Low 12 Farms Avg 38 Farms High 12 Farms
Property Taxes, Fire & Liab. Ins
50.91
25.97
15.77
Lease & Rent Payments
9.96
6.05
5.92
Interest - Term
51.10
13.75
4.72
Depreciation
138.13
75.35
49.93
Total Field Expenses
250.11
121.13
76.33
Total Enterprise Expenses
$1,243.14
$883.91
$717.90
Net Enterprise Income
-$612.49
-$211.61
$20.15

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Farm Balance Sheet (assets at estimated value)

Farm Assets

Current Assets
 Low 12 Farms Avg 38 Farms High 12 Farms
Cash (on hand and in bank)
7,702
20,555
8,005
Accounts Receivable
1,320
2,379
1,839
Market & Feeder Livestock
16,651
62,127
71,117
Home-grown Crops
34,668
44,037
54,329
Purchased Feed & Supplies
1,542
4,007
7,482
Other Current Assets
0
0
0
Total Current Assets
$61,883
$133,105
$142,772

 

Long Term Assets
 Low 12 Farms Avg 38 Farms High 12 Farms
Breeding Livestock
70,586
108,457
140,645
Market Quota
0
0
0
Field Machinery
145,633
155,126
174,642
Barn Equipment
9,936
8,471
7,000
Farm Buildings
208,533
208,911
218,333
Land
401,139
468,685
668,750
Other Long Term Assets
52,500
81,832
70,913
Total Long Term Assets
$888,327
$1,031,482
$1,280,283
Total Farm Assets
$950,210
$1,164,587
$1,423,055

 

Liabilities
 Low 12 Farms Avg 38 Farms High 12 Farms
Accounts Payable
1,974
1,258
986
Interest Arrears
0
0
0
Operating Credit
32,577
37,514
21,349
Current Portion of Term Debt
12,613
10,306
11,983
Total Current Liabilities
$47,164
$49,078
$34,318
Term Debt
130,490
98,863
87,165
Total Farm Liabilities
$177,654
$147,941
$121,483
Equity in Farm Business
$772,556
$1,016,646
$1,301,572

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Measures of Financial Strength (from the balance sheet at year end)

Low 12 Farms Avg 38 Farms High 12 Farms
Percent Equity
81.30%
87.30%
91.46%
Working Capital
$14,719
$84,027
$108,454
Current Ratio xx:1
1.31
2.71
4.16
Debt Structure
26.55%
33.17%
28.25%
Debt to Asset Ratio xx:1
0.19
0.13
0.09
Debt to Equity Ratio xx:1
0.23
0.15
0.09

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Farm Business Analysis Section

Measures of Performance Efficiency
 Low 12 Farms Avg 38 Farms High 12 Farms
Capital Turnover (years)
10.47
9.37
9.01
Value of Farm Production
$90,782
$124,318
$158,006
Cost per dollar of VFP
$0.83
$0.81
$0.67
Cost Control Index
-10.2%
-1.3%
13.2%

 

Expenses & NFI Relative to VFP
 Low 12 Farms Avg 38 Farms High 12 Farms
(Adj. Prod. Cst. - Int)/VFP
72.4%
75.6%
63.3%
Depreciation / VFP
28.6%
20.9%
17.7%
Interest / VFP
10.6%
5.4%
3.3%
Net Income / VFP
-11.7%
-1.9%
15.7%
Interest & Principal / VFP
23.9%
16.3%
17.2%

 

Measures of Profitability
 Low 12 Farms Avg 38 Farms High 12 Farms
Net Farm Income
-$10,584
-$2,317
$24,735
Return on Total Assets
-0.10%
0.38%
2.11%
Return to Equity
-1.37%
0.23%
1.90%
Return on Investment (at $36000 per person)
-4.82%
-3.60%
-1.31%
Return to Owners Labour (at 5.0% investment rate)
-$48,455
-$53,857
-$41,160

 

 Low 12 Farms Avg 38 Farms High 12 Farms
Farm Labour (person eq.)
1.3
1.5
1.5

 

Debt Servicing Capacity Analysis

 Low 12 Farms Avg 38 Farms High 12 Farms
Cash Revenue minus Cash Expenses
$459
$19,278
$37,074
plus Interest Payment
9,640
6,689
5,258
plus Non-farm Revenue
24,648
14,967
7,361
minus Owners Withdrawals & Income Tax
-7,476
-18,313
-20,679
Cash Avail. for Debt Serv. and Cap. Purc.
$27,271
$22,621
$29,014
minus committed Interest & Principal*
-19,870
-16,411
-21,280
minus Reserve for Capital Purchases (Depreciation)
-25,984
-26,020
-28,009
Available After Reserve to Service Additional Debt
-$18,583
-$19,810
-$20,275

 

Physical Summary for the Beef Cow Enterprise

 Low 12 Farms Avg 38 Farms High 12 Farms
Average Number of Cows
60.8
95.2
134.7
Calves Born
58.0
90.0
130.0
Calves Died
6.0
6.0
9.0
Calves Weaned
53.6
86.9
123.3
Calves Born per Cow
1.0
0.9
1.0
Calves Weaned per Cow
0.9
0.9
0.9
Average Cows per Person (Enterprise)
86.9
158.7
192.4
Average Cows per Person (Whole Farm)
46.8
63.5
89.8

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Crop Enterprise Report (per tillable acre basis)

Revenue
 Low 12 Farms Avg 38 Farms High 12 Farms
Wheat
$19.40
$13.13
$8.33
Spring Grains
11.04
10.53
11.60
Grain Corn
0.00
6.39
8.77
Soybeans
7.21
11.64
9.12
Forage
9.92
10.77
10.85
Fruits
9.20
2.40
0.00
Vegetables
0.00
0.54
0.00
Homegrown Seed
0.00
0.46
0.00
Other Crops Sales
3.71
1.99
0.86
Crop Insurance
6.90
6.92
5.26
Crop Stabilization
3.31
3.97
2.87
Value Grains Fed to Livestock
10.96
22.26
8.98
Value Forages Fed to Livestock
84.97
105.78
91.22
+ Inventory change
32.30
12.76
15.13
+ Change in receivables
0.29
-1.16
0.77
Value of Enterprise Production
$199.21
$208.37
$173.76

 

Expenses

Variable Expenses
 Low 12 Farms Avg 38 Farms High 12 Farms
Seed & Plants
13.79
12.31
10.57
Fertilizer & Lime
25.42
27.92
24.27
Pesticides & Other Chemicals
4.54
5.12
3.18
Containers and Twine
3.64
3.71
3.12
Other (Stabztn, Insurance Etc.)
4.02
3.09
2.73
Marketing & Transportation
1.14
1.29
1.02
Custom Work, Equipment Rent
10.45
11.72
9.06
hired Labour
4.04
8.35
5.74
Machinery & Equipment - Fuel & Oil
10.22
14.08
13.28
Machinery & Equipment - Repair
11.97
15.89
13.19
Motor Vehicle Expenses
1.74
2.26
2.37
Building, Fence Repairs
0.96
1.40
2.25
Heating Fuel
0.15
0.07
0.06
Electricity & Telephone
2.70
2.03
1.42
Accounting, Office Expenses
0.50
1.21
1.68
Interest (Operating)
6.01
2.69
0.98
Other Variable Cash Expenses
4.78
9.20
11.48
Change in Payables
0.00
-0.48
0.00
Total Variable Expenses
$106.05
$121.88
$106.41
Contribution Margin
$93.16
$86.49
$67.35

 

Fixed Expenses
 Low 12 Farms Avg 38 Farms High 12 Farms
Property Taxes, Fire & Liability Insurance
8.17
6.82
4.37
Lease & Rent Payments
5.75
8.01
5.43
Interest (Term)
7.63
5.72
5.84
Depreciation
48.51
41.63
33.75
Total Fixed Expenses
$70.06
$62.18
$49.39
Total Expenses
$176.12
$184.07
$155.80
Net Enterprise Income
$23.10
$24.31
$17.96

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Crops Grown and Fed Report

Crop Acres & Yields

Crop
 Low 12 Farms Avg 38 Farms High 12 Farms
Acres Grown Total Yield Yield per Acre Acres Grown Total Yield Yield per Acre Acres Grown Total Yield Yield per Acre
Wheat
42.5
65.6
1.5
31.2
50.9
1.6
26.4
33.9
1.3
Spring grains
31.0
42.9
1.4
23.9
30.6
1.3
21.2
22.9
1.1
Grain Corn
2.5
12.9
5.2
18.1
71.8
4.0
31.7
123.3
3.9
Soybeans
6.2
8.1
1.3
19.1
21.0
1.1
29.2
31.0
1.1
Straw
xxx.x
13.4
 
xxx.x
24.2
 
xxx.x
26.3
 
Other Crop
10.3
4.8
0.5
4.1
3.0
0.7
0.4
0.2
0.5
Other Crop
1.3
3.3
2.5
0.4
1.1
2.8
0.0
0.0
0.0
Corn Silage
3.0
51.7
17.2
10.9
168.4
15.4
11.9
117.4
9.9
Hay
150.8
269.1
1.9
200.6
372.9
2.1
311.8
468.5
1.7
Haylage
xxx.x
48.3
  
xxx.x
86.6
  
xxx.x
133.2
  
Tillable Pasture
88.3
 
 
98.6
 
 
131.5
 
 
Rough Pasture
50.7
 
 
157.6
 
 
158.8
 
 
Non Crop Land
42.8
 
 
129.7
 
 
321.8
 
 
Total Acres
429.4
 
 
694.2
 
 
1,044.7
 
 
Tillable Acres Report
335.7
 
 
407.0
 
 
564.0
 
 

 

Total Feed Fed and Feed Allocated to the Livestock Enterprise

Crop
 Low 12 Farms Avg 38 Farms High 12 Farms
Acres Grown Total Yield Yield per Acre Acres Grown Total Yield Yield per Acre Acres Grown Total Yield Yield per Acre
Wheat
0
0
0
3
479
5
8
1,304
10
Spring grains
10
1,141
19
4
396
4
1
102
1
Soybeans
0
0
0
1
78
1
0
39
0
Straw
0
0
0
0
0
0
0
0
0
Other Crop
15
1,323
22
15
1,368
14
14
1,251
9
Other Crop
1
132
2
0
44
0
0
22
0
Corn Silage
1
48
1
2
96
1
4
258
2
Hay
26
858
14
69
2,277
24
63
2,079
15
Haylage
41
2,244
37
57
3,152
33
93
5,093
38
Tillable Pasture
87
5,238
86
84
5,022
53
107
6,438
48
Rough Pasture
50
1,260
21
88
2,193
23
58
1,445
11
Total
 
28,504
469
 
35,878
377
 
41,603
309

 

Crop and Livestock Enterprise Investment

Allocated Investment from the Balance Sheet
(year end values)
Low 12 Farms Avg 38 Farms High 12 Farms
Crops per Acre Lvsk per Cow Crops per Acre Lvsk per Cow Crops per Acre Lvsk per Cow
Home Grown Crops & Supplies
105
1
111
20
99
39
Feeder & Market Livestock
 
155
 
173
 
258
Breeding Stock
 
1,161
 
1,098
 
1,044
Market Quota
0
0
0
0
0
0
Machinery & Equipment
434
155
381
72
310
49
Land & Farm Buildings
1,298
2,195
1,251
1,111
1,275
896
Enterprise Assets/Unit
1,837
3,701
1,744
2,482
1,685
2,285
Total Enterprise Assets
616,643
224,993
709,878
236,330
950,246
307,767
Debt per Acre & per Cow
529
2,922
363
1,554
215
902

 

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