The MacDougall family runs a 180 head self-replacing commercial Charolais enterprise on 800 hectares near Mendooran, NSW. Construct a livestock reconciliation table, a gross margin and a whole farm budget to show the potential profitability from producing beef cattle for the domestic market. Use the following information: Heifers breed from their second year and are cast-for-age (CFA) at 7 years of age or at the end of their 5th breeding season. On average 1 old cow dies each year. Joining occurs in October with calving from early July. The calving rate averages 98%, and a 99% survival rate is usually recorded for calves at weaning. Calves are marked and tagged in October and, at the same time, all adult stock are drenched and vaccinated. Calves are weaned, drenched and vaccinated in February and cows are pregnancy tested at the same time. All calves except heifers kept for replacement are destined for sale. Sale progeny, on average, reach target domestic supermarket specifications at 12 months of age with an average slaughter weight of 390 kg/hd live weight. Bulls are kept at a rate of 1 per 45 cows, 1 bull is CFA each year (after its 5th year on the farm) and a new bull is purchased each year to replace it at an average price of $5,000/head. The property has existing yards, sheds, fences, water and other infrastructure with a combined depreciation rate of $5,850 per annum. All work is carried out by the family so no external labour is required. The cattle are grazed on pasture improved country with a fertilizer application rate of 40 kg/ha/year.
Overhead costs are provided below: Administration expenses: Accounting: $7,300 Bank charges: $630 Insurance: $800 Telephones: $2,150 Stationary and office supplies: $250 Permanent labour: $0 Fuel and oil: $4,950 Electricity: $1,500 Repairs and maintenance: $3,200 Rates: $4,500 Tasks Construct and show a livestock reconciliation budget for the cattle activity.
Construct and show a gross margin budget for the activity. Construct and show a whole farm budget. Advise the farmer on the current and future profitability of the farm and possible options to improve performance.
Tip: You will need to calculate how many replacement heifers will need to be retained and the number of CFA cows that will be sold. Most of the information you need to complete your budgets has been given to you, but you will need to locate price information from various sources to complete this task.
A good starting point is to look at the gross margin budgets constructed by NSW DPI. Do not simply reproduce these budgets as prices and costs are not current and variable costs are not necessarily relevant to the enterprise under analysis. You will need to find current prices of livestock and fertiliser. All sources of your information, including dates where relevant, should be referenced in small font below the gross margin budgets. Presentation Your gross margin budget should include the date and the name of the activity. Make sure your budgets are contained on a single page.
All numbers should be in whole dollars ($987) or in dollars and cents ($986.78). When you select a method use it consistently throughout your budgets. Do not report values beyond two decimal points ($987.7676) round these values up or down. All numbers should be aligned by the decimal points. Use bold numbers to highlight relevant numbers or values.