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REALIZING ECONOMIC POTENTIAL

THE SMART MONITORING SYSTEM IN A MEDIUM SIZE FARM

Example Calculation of Incremental Profitability from Use of iNOVOTEC / smaXtec Smart Monitoring System

Inputs:

Size of Herd (Cows) 500

Herd Turnover Frequency (years) 3

Susceptability to Improvement 50%

Calculated Quantities:

Number of new lactations cows per year 167

Number of cows with previous lactations 333

Number of first lactation cows in optimization mode 33

Number of first lactation cows in maintenance mode 8

Number of cows with previous lactation in maintenance mode 33

Number of pH & Temp Sensors required annually 75

Annual Cost of pH & Temp Sensors $45,000

Annual Cost per Cow for the Herd $90

Daily Cost per Cow for the Herd $0.25

Total number of Cows with pH & Temp Sensors at Steady State 225

Calculated from USDA data (below):

Baseline Expected Milk Output 112,895

Baseline Expected Production Value $2,534,493

Baseline Expected Cost of Feed $1,757,775

Baseline Expected Operating Profitability $388,359

Baseline Expected Net Profitability ($277,722)

Cost of feed after application of efficiency factor $1,625,942

Annual Incremental profitability based on added production $125,000

Annual Incremental profitability based on herd health improvement $125,000

Annual Incremental profitability based on increased feed efficiency $131,833

Total Annual Incremental Profitability from Use of Sensor $336,833

USDA Annual Milk Production Data – 20134

Upper Threshold Herd Size 49 99 199 499 999 1000+

Milk Output (cwt) 153.65 171.37 189.27 198.42 225.79 230.16

Production Value (per cwt) 24.88 24.21 23.42 23.09 22.45 21.14

Feed Cost (per cwt) 21.31 19.35 18.21 17.72 15.57 13.4

Operating Profit (per cwt) -1.09 0.39 1.39 1.39 3.44 5.27

Net Profit (per cwt) -26.03 -16.19 -9.58 -7.07 -2.46 0.83

Assumptions:

pH & Temp Sensor Price (quantity 1) $600

Optimization Mode Rate 20%

Maintenance Mode Rate 5%

Production Premium (per cow) $500 References 1-3.

Health Premium (per cow) $500 Reference 2.

Feed efficiency improvement 7.5% Anecdotal customer experience (Germany).

Optimization Mode is applied to all cows in their first

transition to lactation. Maintenance Mode is applied to

all other cows in any phase of lactation including dry.

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Example Calculation of Incremental Profitability from Use of iNOVOTEC / smaXtec Smart Monitoring System

Inputs:

Size of Herd (Cows) 1000

Herd Turnover Frequency (years) 3

Susceptability to Improvement 50%

Calculated Quantities:

Number of first lactation cows per year 333

Number of cows with previous lactations 667

Number of first lactation cows in optimization mode 67Number of first lactation cows in maintenance mode 17

Number of cows with previous lactation in maintenance mode 67

Number of pH & Temp Sensors required annually 150

Annual Cost of pH & Temp Sensors $90,000

Annual Cost per Cow for the Herd $90

Daily Cost per Cow for the Herd $0.25

Total number of Cows with pH & Temp Sensors at Steady State 450

Calculated from USDA data (below):

Baseline Expected Milk Output (cwt) 230,160

Baseline Expected Production Value $4,865,582

Baseline Expected Cost of Feed $3,084,144

Baseline Expected Operating Profitability $1,212,943

Baseline Expected Net Profitability $191,033

Cost of feed after application of efficiency factor $2,852,833

Annual Incremental profitability based on added production $250,000Annual Incremental profitability based on herd health improvement $250,000

Annual Incremental profitability based on increased feed efficiency $231,311

Total Annual Incremental Profitability from Use of Sensor $641,311

REALIZING ECONOMIC POTENTIAL

THE SMART MONITORING SYSTEM IN A LARGE SIZE FARM

USDA Annual Milk Production Data – 20134

Upper Threshold Herd Size 49 99 199 499 999 1000+

Milk Output (cwt) 153.65 171.37 189.27 198.42 225.79 230.16

Production Value (per cwt) 24.88 24.21 23.42 23.09 22.45 21.14

Feed Cost (per cwt) 21.31 19.35 18.21 17.72 15.57 13.4Operating Profit (per cwt) -1.09 0.39 1.39 1.39 3.44 5.27

Net Profit (per cwt) -26.03 -16.19 -9.58 -7.07 -2.46 0.83

Assumptions:

pH & Temp Sensor Price (quantity 1) $600

Optimization Mode Rate 20%

Maintenance Mode Rate 5%

Production Premium (per cow) $500 References 1-3.

Health Premium (per cow) $500 Reference 2.Feed efficiency improvement 7.5% Anecdotal customer experience (Germany).

References:1. J. Gasteiner, B. Boswerger, T. Guggenberger, Der Praktische Tierarzt, 93, 2-10 (2012).2. K. M. Krause & G.R. Oetzel, Animal Feed Science and Technology, 126, 215-236 (2006).3. W.C. Stone in Proceedings of the Cornell Nutrition Conference for Feed Manufacturers, Cornell University, Ithaca, New York, 40-46 (1999).4. http://www.ers.usda.gov/data-products/milk-cost-of-production-estimates.aspx#.U9Fq5FbTwkJ

Optimization Mode is applied to all cows in their first

transition to lactation. Maintenance Mode is applied to

all other cows in any phase of lactation including dry.