Listed below are price and yield estimates for the applicable period. This budget is prepared on a per-head basis with a stocking rate, for an additional 60 days, of one steer per acre of wheat. These categories are used to estimate the effects of a proposed change in business organization. Additional costs are those that will occur if the change takes place. In our example, the additional costs category includes costs that are incurred by keeping the steers through May 15.
Interest expense is increased because the cattle are held two and one-half months longer.
It is important to note that these costs are incurred only when the cattle are kept, not if they are sold. Reduced returns is the income that would not be received under the proposed change. In our example, reduced returns include the value for the calves which could be sold now plus the wheat sales not received when the grain is grazed out. The yield and prices shown are estimates based on current expectations. This represents the total negative economic impact of the proposal on the farm operation.