AGRICULTURAL ECONOMICS By Pieter Taljaard and André Jooste Agri Benchmark Beef conference 2007

AGRICULTURAL ECONOMICSAGRICULTURAL ECONOMICS

ByPieter Taljaard and André Jooste

Agri Benchmark Beef conference Agri Benchmark Beef conference 20072007


OutlineOutline

• Introduction and background• Co-workers and countries• Agri-benchmark Methodology• RSA representative data• Results• Conclusions


Introduction & Introduction & BackgroundBackground• International farm comparison analysis

– Beef finishing (feedlots)– Cow-calf production system

• Collaboration in RSAUP - NAMC –UFS

• NAMC (Membership sponsor)• UFS (Beef)• UP (Cash crops)

– Dairy (MPO)

• Overall objectives – competitiveness and potentials of regions


Introduction & Introduction & BackgroundBackground

• 2007 Beef conference and pre-conference training– Braunschweig, Germany– New countries: RSA, Australia and India– Beef finishing - 16 countries, 38 farms


Participating countriesParticipating countries• Western Europe

– Austria– France– Germany– Italy– Ireland– Spain– Sweden– UK

• Eastern Europe– Hungary– Poland

• North America– Canada– USA


Participating countriesParticipating countries• South America

– Argentina– Brazil

• Asia & Oceania– Australia– China– India

• Africa– South Africa


Co-workersCo-workers


Agri-Benchmark (AB) Agri-Benchmark (AB) methodologymethodology

• AB SOP– Select regions and locations– ID prevailing production system– Determine farm size of typical farm(s)– Data collection (2007) and updating

(2008)• Standard questionnaire (pannel of farmers)

– Farm data - Typical or representative figures

• Prices for inputs and outputs


RSA representative dataRSA representative data

• 1 Beef finishing (feedlot)– One time standing capacity 25 000

head (i.e. +/- 75 000 head annual through-put)

• 3 Cow-calve farms– Vryburg (250 cows)– Heibron (300 cows)– Howick (200 cows)


Results - Beef finishingResults - Beef finishing

Share of market returnShare of market return

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AT-2

5FAT

-35

AT-1

20AT

-150

T

DE-2

30DE

-260

DE-2

80DE

-800

DE-5

25T

FR-4

5FR

-70

FR-9

0AFR

-90B

ES-6

30ES

-940

ES-6

790

IT-91

0IT-

2880

T

IE-18

5

UK-3

5UK

-90

UK-9

8

SE-1

40SE

-230

T

PL-1

2PL

-30

CA-9

600

US-7

200

AR-8

00AR

-220

0

BR-1

40BR

-240

BR-3

40BR

-600

CN-3

00CN

-940

AU-2

7K

ZA-7

5K

Other farm enterprises

Dairy

Cow calf

Cash crops

Beef finishing


Results - Beef finishingResults - Beef finishingMarket returns and coupled government payments Market returns and coupled government payments

2006 2006 (US$ per 100 kg carcass weight)(US$ per 100 kg carcass weight)

0

50

100

150

200

250

300

350

400

450

500

AT-2

5FAT

-35

AT-1

20AT

-150

T

DE-2

30DE

-260

DE-2

80DE

-800

DE-5

25T

FR-4

5FR

-70

FR-9

0AFR

-90B

ES-6

30ES

-940

ES-6

790

IT-9

10IT

-288

0T

IE-1

85

UK-3

5UK

-90

UK-9

8

SE-1

40SE

-230

T

PL-1

2PL

-30

CA-9

600

US-7

200

AR-8

00AR

-220

0

BR-1

40BR

-240

BR-3

40BR

-600

CN-3

00CN

-940

AU-2

7K

ZA-7

5K

Whole farm payments Organic and environmental payments Livestock payments Crop paymentsBeef price


Results - Beef finishingResults - Beef finishingPurchase prices (US$ per 100 kg live weight)Purchase prices (US$ per 100 kg live weight)

0

100

200

300

400

500

600

700

800

900

AT-2

5FAT

-35

AT-1

20AT

-150

T

DE-2

30DE

-260

DE-2

80DE

-800

DE-5

25T

FR-4

5FR

-70

FR-9

0AFR

-90B

ES-6

30ES

-940

ES-6

790

IT-9

10IT

-288

0T

IE-1

85

UK-3

5UK

-90

UK-9

8

SE-1

40SE

-230

T

PL-1

2PL

-30

CA-9

600

US-7

200

AR-8

00AR

-220

0

BR-1

40BR

-240

BR-3

40BR

-600

CN-3

00CN

-940

AU-2

7K

ZA-7

5K

Calf price Weaner price Backgrounder price


Results - Beef finishingResults - Beef finishingTotal cost by cost items (US$ per 100 kg carcass Total cost by cost items (US$ per 100 kg carcass

weight)weight)

0

200

400

600

800

1000

1200

AT-2

5FAT

-35

AT-1

20AT

-150

T

DE-2

30DE

-260

DE-2

80DE

-800

DE-5

25T

FR-4

5FR

-70

FR-9

0AFR

-90B

ES-6

30ES

-940

ES-6

790

IT-9

10IT

-288

0T

IE-1

85

UK-3

5UK

-90

UK-9

8

SE-1

40SE

-230

T

PL-1

2PL

-30

CA-9

600

US-7

200

AR-8

00AR

-220

0

BR-1

40BR

-240

BR-3

40BR

-600

CN-3

00CN

-940

AU-2

7K

ZA-7

5K

Total capital cost Total land cost Total labour cost Non-factor costs incl. depreciation


Results - Beef finishingResults - Beef finishingNon-factor costs by animal purchases and other cost Non-factor costs by animal purchases and other cost

(US$ per 100 kg carcass weight)(US$ per 100 kg carcass weight)

0

100

200

300

400

500

600

700

AT-2

5FAT

-35

AT-1

20AT

-150

T

DE-2

30DE

-260

DE-2

80DE

-800

DE-5

25T

FR-4

5FR

-70

FR-9

0AFR

-90B

ES-6

30ES

-940

ES-6

790

IT-9

10IT

-288

0T

IE-1

85

UK-3

5UK

-90

UK-9

8

SE-1

40SE

-230

T

PL-1

2PL

-30

CA-9

600

US-7

200

AR-8

00AR

-220

0

BR-1

40BR

-240

BR-3

40BR

-600

CN-3

00CN

-940

AU-2

7K

ZA-7

5K

Animal purchases Other


Results - Beef finishingResults - Beef finishingNon-factor costs excluding animal purchases (US$ per Non-factor costs excluding animal purchases (US$ per

100 kg carcass weight)100 kg carcass weight)

0

50

100

150

200

250

300

350

400

AT-2

5FAT

-35

AT-1

20AT

-150

T

DE-2

30DE

-260

DE-2

80DE

-800

DE-5

25T

FR-4

5FR

-70

FR-9

0AFR

-90B

ES-6

30ES

-940

ES-6

790

IT-91

0IT-

2880

T

IE-18

5

UK-3

5UK

-90

UK-9

8

SE-1

40SE

-230

T

PL-1

2PL

-30

CA-9

600

US-7

200

AR-8

00AR

-220

0

BR-1

40BR

-240

BR-3

40BR

-600

CN-3

00CN

-940

AU-2

7K

ZA-7

5K

Other inputs

Other inputs beef enterprise

Insurance, taxes

Vet & medicine

Buildings (maintenance, depreciation)

Fuel, energy, lubricants, water

Machinery (maintenance, depreciation, contractor)

Feed (purchase feed, fertiliser, seed, pesticides)


Results - Beef finishingResults - Beef finishingShort and medium term profitability (US$ per 100 kg Short and medium term profitability (US$ per 100 kg

carcass weight)carcass weight)

-400

-300

-200

-100

0

100

200

AT-2

5FAT

-35

AT-1

20AT

-150

T

DE-2

30DE

-260

DE-2

80DE

-800

DE-5

25T

FR-4

5FR

-70

FR-9

0AFR

-90B

ES-6

30ES

-940

ES-6

790

IT-91

0IT-

2880

T

IE-18

5

UK-3

5UK

-90

UK-9

8

SE-1

40SE

-230

T

PL-1

2PL

-30

CA-9

600

US-7

200

AR-8

00AR

-220

0

BR-1

40BR

-240

BR-3

40BR

-600

CN-3

00CN

-940

AU-2

7K

ZA-7

5K

Short-term: Total returns less cash cost

Medium-term: Total returns less cash cost+depreciation


Results – Cow-calf farmsResults – Cow-calf farms

Share of market returnShare of market return

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40 AU-

ZA-2

00ZA

-250

ZA-3

00

Cow calf Beef finishing Cash crops Other farm enterprises (forestry, manure, etc.)


Results - Cow-calf farms Results - Cow-calf farms Weight at weaning per head (kg live weight per head)Weight at weaning per head (kg live weight per head)

0

50

100

150

200

250

300

350

400

450

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40 AU-

ZA-2

00ZA

-250

ZA-3

00

Male Female Av. male & female


Results - Cow-calf farms Results - Cow-calf farms Weaner prices per head (US$ per head)Weaner prices per head (US$ per head)

0

200

400

600

800

1000

1200

1400

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40 AU-

ZA-2

00ZA

-250

ZA-3

00


R2800/head


Results - Cow-calf farms Results - Cow-calf farms Weaner prices per 100kg live weight (US$ per 100kg Weaner prices per 100kg live weight (US$ per 100kg

live weight)live weight)

0

50

100

150

200

250

300

350

400

450

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40 AU-

ZA-2

00ZA

-250

ZA-3

00



Results - Cow-calf farms Results - Cow-calf farms Total returns (US$ per 100 kg live weight sold)Total returns (US$ per 100 kg live weight sold)

0

100

200

300

400

500

600

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40 AU-

ZA-2

00ZA

-250

ZA-3

00

Government payments

Weaner and transfer to beef receipts

Breeding livestock receipts Cull animals and slaughter receipts


Results - Cow-calf farms Results - Cow-calf farms Total cost by factor and non-factors costs (US$ per 100 Total cost by factor and non-factors costs (US$ per 100

kg live weight sold)kg live weight sold)

0

100

200

300

400

500

600

700

800

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40 AU-

ZA-2

00ZA

-250

ZA-3

00

Total capital cost

Total land cost

Total labour cost

Non-factor costs incl. depreciation


Results - Cow-calf farms Results - Cow-calf farms Labour intensity (hours per suckler-cow and year)Labour intensity (hours per suckler-cow and year)

0

10

20

30

40

50

60

70

80

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40AU

-190

0

ZA-2

00ZA

-250

ZA-3

00


Results - Cow-calf farms Results - Cow-calf farms Total returns and costs by cash and non-cash costs Total returns and costs by cash and non-cash costs

(US$ per 100 kg live weight sold)(US$ per 100 kg live weight sold)

0

100

200

300

400

500

600

700

800

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40 AU-

ZA-2

00ZA

-250

ZA-3

00

Opportunity cost Depreciation Cash cost Weaner + transfer + cull + breeding + government payments Weaner + transfer to beef + cull animals + breeding Weaner and transfer to beef receipts


Results - Cow-calf farms Results - Cow-calf farms Short and medium term profitability (US$ per 100 kg Short and medium term profitability (US$ per 100 kg

live weight sold)live weight sold)

-100

-50

0

50

100

150

200

250

300

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40 AU-

ZA-2

00ZA

-250

ZA-3

00

Short-term: Total returns less cash cost

Medium-term: Total returns less cash cost+depreciation


Results - Cow-calf farms Results - Cow-calf farms Whole farm profitability (‘000 US$ per farm)Whole farm profitability (‘000 US$ per farm)

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

250,000

300,000

AT-2

5CAT

-30

DE-1

100

DE-1

400

FR-6

5FR

-80

FR-8

5

ES-9

0ES

-160

IE-2

5

UK-4

0UK

-60

SE-1

50

HU-1

50T

HU-8

80T

CA-1

70

US-2

40US

-500

AR-7

30AR

-130

0

BR-4

00BR

-107

0

CN-2

AU-5

40 AU-

ZA-2

00ZA

-250

ZA-3

00

Net cash farm income (NCFI)

Farm income (profit)

+ 1,125,604+ 1,102,136

+ 727,126+ 384,322


20082008

• Annual update – expand• Local network (regional)• Emissions benchmarking• Quarterly price info• Trade profiles• Beef conference (Brazil)

– Bio-energy and beef production– SA farm story (case farm)


ConclusionConclusion

• Larger representation in SA• Useful info• Further analysis

– Comparative advantage analysis

• Involvement of industry


Thank you!Thank you!

Documents

AGRICULTURAL ECONOMICS By Pieter Taljaard and André Jooste Agri Benchmark Beef conference 2007